AlphaClone

Top Ten '09 Clone Portfolios

Nothing puts a cap on a roaring year for stocks like the performance in our top ten clone portfolios.  These clones returned two and three times your money in 2009.  How?  Baker Bros focuses on medical and pharmaceutical companies and hit home runs with Vanda Pharmaceutical [VNDA] and Ariad Pharmaceutical [ARIA].  Pershing Square did well with Borders Group [BGP] and General Growth Properites [GGWPQ].  OZ Mangement "banked" on the financial sector and succeeded with investments in Bank of America [BAK] and State Street [STT]. Greywolf Capital bet and won big with investments in mobile operator IPCS Inc [IPCS], shipping and logistics operator Navios Maritime [NM], and security firm Protection One Inc [PONE].  Rounding out the top ten, Symphony Asset Management did very well with Walter Energy [WLT] and Fortress' Top Holding clone benefited from having Brookdale Senior Living [BKD] as its top equity position throughout most of the year.   Finally, Eagle Value Partners did well with Interface Inc [IFSIA], Whirlpool Corp [WHR] and Discover Financial Services [DFS].  Here's the top ten list:

AlphaClone Helps Investors Take Control

AlphaClone was listed as one of six new financial startups seeking to help investors take more control of their portfolios. It's nice to be on that list. Here's the article in Smart Money magazine and again in the Wall Street Journal.

A Big Thank You

It’s been a fantastic first year for AlphaClone and none of it would have been possible without the tireless efforts of my co-founders, Meb Faber and Jason Jones, our core technology team, Gary, Robby, Allison and Carlos and our patient and supportive families.  We also want to thank everyone who became a fan of ours and everyone who helped us fulfill our mission this year (too many to mention but you know who you are).  Last but not least we want to thank you – our members for the fantastic enthusiasm, patience and support you’ve shown.  From all of us at AlphaClone, we want to wish everyone a happy and safe holiday season and a joyful and prosperous 2010.

What a Difference AlphaClone and a Year Make

The latest edition of Fortune magazine entitled “2010 Investor Guide” had a great piece by Pat Regnier on how hard it is to pick winning stocks consistently for most investors – individuals and pros alike.  The article highlights how only a third of mutual funds beat their index over a five year period.  For what its worth, the numbers are vastly worse for mutual funds when the hurdle test is raised a bit.  Only 5% of US equity mutual funds beat the S&P500 by ten percentage points or more so far this year.   How does that compare to AlphaClone?  Over 70% of our 3,100 clone portfolios are beating the market and over 50% (yes half) are beating by ten percentage points or more. 

Many of you may not know this but I decided to build AlphaClone out of a personal sense of frustration with the stubborn reality above.   It turns out that same feeling of frustration is nearly ubiquitous amongst investors who want more control in their investment lives; pros and individuals alike.  That’s why it’s particularly gratifying that I find myself, for the first time in my investing life beating the market by nearly 3x!  As of 12/10/2009 I am returning over 58% in my ETrade IRA account – and every single trade I executed this year was based on using AlphaClone.  Here’s a rather beautiful graph:

 

What clones did I follow – there were several including those based on Kingdon and Kleinheinz but, importantly, I also was opportunistic and tended to over-weight smart money holdings in beat down sectors.  It worked for me but with over 50% of our clones beating the market by ten percentage points or more this year, chances are if you’re an AlphaClone member, you did just as well and very likely even better. 

Entitlement Changes to Guest Pass & Basic Tiers

Effective January 1, 2010, we’re changing entitlements in our Guest Pass and Basic membership levels based on feedback from you.  A lot of you have told us you’d like to see more of our clones made available for free and others have said they would like to see more value in our Basic membership tier.  We’ve responded to both suggestions.  Here’s what’s changing.

Guest Pass

The Tiger Cubs and Berkshire Hathaway clones are no longer a part of the Guest Pass membership tier.  Instead we are granting access to our Top 3 Holdings strategy for EVERY individual fund we track (including Berkshire).  That’s right – now Guest Pass members will have access to about 280 clones, one for each hedge fund in our database.  We hope you’ll enjoy free access to these clones and share them broadly with your investor colleagues.

Basic Membership

The Tiger Cubs is now available to Basic and Full members ONLY (it is no longer available to Guest Pass members).  In addition, Basic members will continue to have access to all clones based on individual funds.  That is over 2,500 clones across 280 funds and nine different clone strategies.   The Basic membership price will remain at $29.95 per month but effective January 1 we will be converting to quarterly billing cycles. 

In 2009, our clones saw stellar returns including those accessible by Basic members – as of 12/3/2009 over 63% of our single fund Best Ideas clones and 40% of our Top Holding clones were beating the market by 10 percentage points or more.  As an example of those returns, our Top 10 Holdings clone for Appaloosa Management is up more than 125% so far this year as of this writing – rumor has it that performance (gross) is on par or better than what the ACTUAL fund has returned this year (net)!  Finally our Tiger Cubs Top 10 Popularity clone is returning 56% this year – all this for less than half the price of your cable bill!

Full Members

The entitlements for the Full membership level are unchanged – as a Full Member you get access to all single fund and fund group clones and you get access to our custom fund group generator where you can custom create your own hedge fund based on your preferences.  As announced in your monthly billing statements, on 1/1/10 the Full membership price will revert to its standard price of $99.95 per month and just like the Basic tier, we’ll be converting to quarterly billing cycles from monthly.