We believe markets are semi-efficient. Companies that possess good investment characteristics do not necessarily generate positive returns or alpha. We focus instead on those for which we can explicitly quantify a positive gap between market perception and reality.

  • During moments of fundamental change, companies are generally more difficult to analyze and forecast. Due to market inertia, analysts tend to be more conservative in their projection assumptions, which can lead to significant gaps between consensus expectations and actual results.
  • Alpha is created when there is a material divergence between market perception and reality. When a positive information event is released to the public, market perception resets upward to match this newly discovered reality.
  • Blackcrane’s empirical study, “Extracting Alpha During Positive Earnings,” (available by request) demonstrates that investing in companies that consistently deliver earnings above market expectations led to persistent excess returns throughout the market cycle.
  • We set a minimum 10% upside on earnings delta target for each of our investment candidates. This is one of the core drivers that define our entry point.

Our goal is to achieve at least 500 basis points of excess returns over the full market cycle or a long-term absolute return of 10-15%.

For Accredited Investors Only

For Accredited Investors Only – By accessing this portion of the site, the User agrees that they are an accredited investor as defined by Regulation D promulgated under Securities Act of 1933. The User agrees to immediately contact the Manager if there is any change in their status as an “accredited investor”, which may include, for example, a User’s net worth declining below $1,000,000, an expectation that income for the next 12 months may total less than $200,000 or an expectation that the User’s combined income with his or her spouse may total less than $300,000 in the next 12 months. All Users, including individuals and entities, should communicate with their legal advisors if they are unsure of their status or believe that their status as an accredited investor has changed. If a User’s status as an accredited investor has changed, such User agrees to immediately notify the Manager of such change. Nothing in the Site may be considered an offer or solicitation to purchase or sell securities or other services. If any provision in this Disclaimer Agreement is held to be invalid or unenforceable, then the remaining provisions shall continue in full force and effect. The Manager reserves the right to terminate, at any time, any User’s access to the Site. Please see the full definition of the term accredited investor here.