INVESTMENT STRATEGIES
Our Philosophy
Denali’s investment philosophy rests with the fundamental premise that superior long-term results can be achieved with a systematic process that eliminates cognitive biases and subjective weaknesses that negatively impact many investors.
We compare the core of our philosophy to a well understood investment principle that involves the value of networks, and more recently, social networks. For example, the value of Facebook’s platform increases as more users join and actively use the network. Our Network Value approach to investing simply means that in a stock’s case, its liquidity (or size of network) should be factored into its value and expected return forecast. Most of our peers may ignore liquidity until portfolio construction. Our research shows that liquidity, or the size of the stock’s network, is a key component to its value and is often underappreciated.
What We Have to Offer
We offer institutional investors equity strategies covering value oriented approaches in US Micro, US Small, US Smid, US Mid, US Large and EAFE International Small and Large. Most of our portfolios have ‘value’ styles and benchmarks. Our micro strategy has a core style and benchmark. While we adhere to strict risk management rules, we believe in high conviction investing, high active share, and concentrated portfolios relative to a traditional systematic manager.
Domestic
Investment Objective
The Denali NV Micro Core investment strategy is measured against the Russell Microcap Index, and seeks to return 2-4% gross excess above benchmark.
Benchmark
Russell Microcap
Key Strengths
- The fundamental equity valuation insights from Denali Advisors published and unpublished research
- A time varying factor forecast designed to capture investment themes
- Fundamental inputs to a systematic approach
- Emphasis on high earning stocks that possess low (but increasing) liquidity and low market cap leads to exposure to stocks our peers may ignore
Key Data *
Excess Return Objective: 2-4%, Gross of fees
Tracking Error Objective: 5-7%
Typical Market Capitalization: $50 Million – $1.5 Billion
Approximate Holdings: 70-120
* This key data is the strategies objectives; however, the actual results may vary due to market impacts.
Investment Objective
The Denali Network Value Small investment strategy is measured against the Russell 2000 Value Index, and seeks to return 2-4% gross excess above benchmark.
Benchmark
Russell 2000 Value
Key Strengths
- The fundamental equity valuation insights from Denali Advisors published and unpublished research
- A time varying factor forecast designed to capture investment themes
- Fundamental inputs to a systematic approach
- Emphasis on high earning stocks that possess low (but increasing) liquidity and low market cap leads to exposure to stocks our peers may ignore
Key Data *
Excess Return Objective: 2-4%, Gross of fees
Tracking Error Objective: 4-6%
Typical Market Capitalization: $200 Million – $3 Billion
Approximate Holdings: 80-120
* This key data is the strategies objectives; however, the actual results may vary due to market impacts.
Investment Objective
The Denali Network Value Mid strategy, measured against the Russell Midcap Value Index, seeks to return 2-4% gross excess above that benchmark.
Benchmark
Russell Midcap Value Index
Key Data *
Excess Return Objective: 2-4%, Gross of fees
Tracking Error Objective: 4-6%
Typical Market Capitalization: $1-$15 Billion
Approximate Holdings: 60-100
* This key data is the strategies objectives; however, the actual results may vary due to market impacts.
Key Strengths
- The fundamental equity valuation insights from Denali Advisors published and unpublished research
- A time varying factor forecast designed to capture investment themes
- Fundamental inputs to a systematic approach
- Emphasis on high earning stocks that possess low (but increasing) liquidity and low market cap leads to exposure to stocks our peers may ignore
Investment Objective
The Denali Network Value Large investment strategy is measured against the Russell 1000 Value Index, and seeks to return 1-3% gross excess above that benchmark.
Benchmark
Russell 1000 Value Index
Key Strengths
- The fundamental equity valuation insights from Denali Advisors published and unpublished research
- A time varying factor forecast designed to capture investment themes
- Fundamental inputs to a systematic approach
- Emphasis on high earning stocks that possess low (but increasing) liquidity and low market cap leads to exposure to stocks our peers may ignore
Key Data *
Excess Return Objective: 1-3%, Gross of fees
Tracking Error Objective: 3-5%
Typical Market Capitalization: $30-100 Billion
Approximate Holdings: 50-60
* This key data is the strategies objectives; however, the actual results may vary due to market impacts.
International EAFE
Investment Objective
The Denali Network Value EAFE Small investment strategy is measured against the MSCI EAFE Small Index, and seeks to return 3-4% gross excess above that benchmark.
Benchmark
MSCI EAFE Small
Key Strengths
- The fundamental equity valuation insights from Denali Advisors published and unpublished research
- A time varying factor forecast designed to capture investment themes
- Fundamental inputs to a systematic approach
- Emphasis on high earning stocks that possess low (but increasing) liquidity and low market cap leads to exposure to stocks our peers may ignore
Key Data *
Excess Return Objective: 3-4%, Gross of fees
Tracking Error Objective: 4-6%
Typical Market Capitalization: $500 Million – $5 Billion
Approximate Holdings: 100-150
* This key data is the strategies objectives; however, the actual results may vary due to market impacts.
