At SkipStone Partners (SSP), we are puzzled by the notion of investments that are meant to deliver attractive returns over the ‘long-term’ but often fail to meet investor’s short-term expectations in reality. At the risk of stating the obvious: Long-term performance is nothing but the aggregate of short-term results. Consequently, short-term disappointments are often indicative of inadequate risk management and/or poor execution of fiduciary duty.

That’s why our partners concentrate their relentless efforts on maximising the Compound Return for our investors at any given moment. Large drawdowns are the single most significant impediment to achieving double-digit compounding. Therefore, our partners take great care to identify and avoid the drivers of large downside risks for hedge funds: excessive illiquidity, leverage, structural complexity, security concentration and correlation, style drift, and operational deficiencies as forward-looking threats with highly predictable outcomes.

In statistical terms, rather than using volatility as a risk measure and the Sharpe Ratio, we instead focus on the higher moments of statistical distribution: Excess kurtosis and Sortino Ratio, which we believe to be a more accurate reflection of portfolio risk. The partners of SSP employ innovative and distinctly unique techniques that seek to deliver sustainable return asymmetry, where the upside capture should significantly exceed the downside capture. Portfolios are designed to minimise drawdowns in times of Financial Crisis, as well as generate profits against vastly differing Economic Backdrops and add significant Alpha vs. peers and benchmarks.