ScarletStorm. The most sophisticated of private investment funds. Managed by ScarletStream Capital Management.

Strategies

At ScarletStream, we minimize risk by utilizing a multi-strategy approach to investment. By diversifying our positions, our gains tend to not track the overall market or industry, as many mutual funds do. The following are some of our most common strategies for extracting value out of mispriced markets:

Value

Investment in securities selling at deep discounts to their intrinsic value. These securities are often found operating industries that are out of favor in the market, and are therefore priced low. In-depth research, macroeconomic insight, industry knowledge, patience and strong discipline are all required until the ultimate value is recognized by the market, when the security is sold and its gain is realized.

Emerging Markets

Investment in equity or debt of emerging (less mature) markets.

Market Neutral - Securities Hedging

Invests equally in long and short equity portfolios generally in the same sectors of the market. Market risk is greatly reduced, but effective stock analysis and stock picking is essential to obtaining meaningful results. Usually low or no correlation to the market. Attains goals of capital appreciation while significantly reducing market risk.

Performance of many hedge fund strategies, particularly relative value strategies, is not dependent on the direction of the bond or equity markets -- unlike conventional equity or mutual funds (unit trusts), which are generally 100% exposed to market risk.

Distressed Securities

Buying equity or debt at deep discounts of companies in or facing bankruptcy or reorganization. Profits come from from the market’s lack of understanding of the true value of the deeply discounted securities and because the majority of institutional investors cannot own below-investment-grade securities. (This selling pressure creates the deep discount.) R esults generally not dependent on the direction of the markets.

Opportunistic

Investment theme changes from strategy to strategy as opportunities arise to profit from events such as IPOs, sudden price changes often caused by an interim earnings disappointment, hostile bids, and other event-driven opportunities. May utilize several of these investing styles at a given time and is not restricted to any particular investment approach or asset class.

Special Situations

Investing in event-driven situations such as mergers, hostile takeovers, reorganizations, or leveraged buy outs. May involve simultaneous purchase of stock in companies being acquired, and the sale of stock in its acquirer, hoping to profit from the spread between the current market price and the ultimate purchase price of the company. Results generally not dependent on direction of market.