Kopis Capital, LP (the “Fund”) seeks to deliver broad exposure to a diversified portfolio of global securities using two main underlying investment strategies, the “Global Commodity Barter” and the “Equity Market Neutral”. The Fund seeks to achieve long-term positive absolute returns with low correlation to traditional asset classes. The Fund will invest long and short in exchange traded securities to achieve dollar neutrality at the beginning of the annual investment period and the Fund controls drawdown risk through one main driving principal: AVOID THE BUBBLE!
The construction of the Global Commodity Barter philosophy works through applying a uniquely specialized cross valuation strategy consisting of over 200 pair trade evaluations to determine asset class inclusion and position weighting. This process seeks to ensure that, in the opinion of the Fund’s investment manager; risk is fairly and consistently compensated. Each asset in the Global Commodity Barter has to earn its position in the portfolio. All assets start with a zero weighting and for each value unit given to one asset a corresponding value unit is taken away from another. This process naturally supports our driving principal of AVOID THE BUBBLE and skews the return distribution to the positive while creating negative kurtosis, thus helping to reduce the potential of large negative tail events.
The Equity Market Neutral Strategy begins with a rules based quantitative process, screening for companies with valuations that are attractive in relation to their Return on Invested Capital (ROIC). Next we apply a contrarian intrinsic value method of determining whether or not a company is a candidate for the portfolio. Because the Equity selection criteria does not limit the Fund’s portfolio to specific location, capitalization, or industry, this Strategy affords the Fund’s investment manager the freedom to select equity investments from wherever the best opportunities may be found. Next we work to remove systematic risk associated with certain sectors and global markets from the Fund’s portfolio. These short positions are determined through a process similar to our Global Barter Strategy so that only the most overpriced sectors and countries are sold short.
HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.
ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.
Derivatives. Derivative instruments, or “derivatives,” include futures, options, swaps, structured securities and other instruments and contracts that are derived from, or the value of which is related to, one or more underlying securities, financial benchmarks, currencies or indices. Derivatives allow an investor to hedge or speculate upon the price movements of a particular security, financial benchmark currency or index at a fraction of the cost of investing in the underlying asset. The value of a derivative depends largely upon price movements in the underlying asset. Therefore, many of the risks applicable to trading the underlying asset are also applicable to derivatives of such asset. However, there are a number of other risks associated with derivatives trading. For example, because many derivatives are “leveraged,” and thus provide significantly more market exposure than the money paid or deposited when the transaction is entered into, a relatively small adverse market movement can not only result in the loss of the entire investment, but may also expose the Fund to the possibility of a loss exceeding the original amount invested. Derivatives may also expose investors to liquidity risk, as there may not be a liquid market within which to close or dispose of outstanding derivatives contracts, and to counterparty risk. The counterparty risk lies with each party with whom the Fund contracts for the purpose of making derivative investments (the “Counterparty”). In the event of the Counterparty’s default, the Fund will only rank as an unsecured creditor and risks the loss of all or a portion of the amounts it is contractually entitled to receive.
Futures Contracts. A portion of the Fund’s capital may be invested in futures contracts or other commodities interests. Futures prices are highly volatile. Because of the low margin deposits normally required in futures trading, an extremely high degree of leverage is typical of a futures trading account. As a result, a relatively small price movement in a futures contract may result in substantial losses to the investor. Like other leveraged investments, any purchase or sale of a futures contract may result in losses in excess of the amount invested.