Mr. Rady: The firm has approximately $270 million in assets under management. We manage two different strategies, a long-only and a long/short portfolio. The Rady Opportunistic long-only has a track record in excess of 15 years and over that period has more than tripled the returns of the S&P 500. The long-only strategy was ranked in the top 1% of large-cap value managers by PSN Informa for the one, two, three, five, and 15-year time frames. One of the things that really differentiate us from other managers is my experience as the Chief Investment Officer of a multi-billion dollar financial, real estate, and investment conglomerate. The firm controlled and/or owned a number of public and private companies in more than a dozen different industries. I was in charge of M&A, financing, and investments which gave me experience and a perspective that many other portfolio managers simply don't have. Most portfolio managers come from top business schools then work their way up through the analyst ranks, but they've never run a company; they've never turned around a company, they've never been in the industries that we invest in. For these reasons we see this experience as a significant strategic advantage.
I would say that if there's one thing that we're most proud of it's our risk management. Most portfolio managers or investment firms talk about their risk management, but the proof is really in the pudding. If you look at 2008, our long/short product was down a little over 12% with most firms being down 40%, 50%, or 60% and our long-only product was down approximately 23% with most firms down 40%, 50%, or 60%. We generated similar out performance when the tech bubble burst as well as through other economic/market dislocations. The results of our rigorous risk management process are exemplified in our downside protection, or our downside capture ratio, which is something that's truly unique. Most money management firms don't deliver true downside protection; so we are very proud that we do what we say we're going to do and our focus is on managing risk and preserving capital. If you talk to any investor and you ask them what's most important to them, they'll say, "Don't lose my money, even if I make a little bit less on the upside, don't lose my money". We've heard that loud and clear. I have the vast majority of my liquid net worth invested in the fund, as do all my employees. We really eat our own cooking which provides an alignment of interest that is extremely important but something that most investors don't pay enough attention to.
When you're managing other people's money, you cannot expect investors to trust you with their lifesavings if everyone at the firm doesn't have their lifesavings invested alongside them. If this alignment of interest is missing, you often see managers taking inappropriate risks because the consequences are only paper and don't really impact their lives in a significant way. Our research and investment process is very rigorous and unique which has generated superior risk adjusted returns and preservation of investor capital during difficult times, and we're very proud of that. We use little traditional leverage, emphasizing again risk management, risk management, risk management!
While we manage two different products, long-only and long/short, we offer them in a number of different structures; two publicly traded mutual funds as well as an LP and Separately Managed Accounts. Different investors have different investment needs, as it relates to structures or vehicles, so we want to offer them as many options as we can to best serve their needs. I believe a lot of hedge fund managers are reticent or incapable of offering hedge fund strategies in mutual funds for the simple reason that they can't deal with the daily liquidity requirements and that's another aspect of what we do that we're very proud of.
On top of doing a very good job of managing risk, we offer superior transparency and liquidity to our investors. Consequently we didn't have any of the liquidity related problems that so many other managers faced in 2008, such as gating. In 2008 investors were not able to redeem because the portfolio manager didn't have adequate liquidity. That's simply not the case here. We typically invest in large cap, blue chip, liquid companies, so that we have the liquidity that we need and want, to be able to offer the type of risk/reward profile that is inherent in our products and that our clients have enjoyed and grown to expect from us.
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