Sourcing:

Includes the work with internal client teams to identify accretive risk sources unique for each institution, and mapping these criteria against differentiated arbitrage opportunities and managers. It entails the evaluation of intangible & tangible drivers towards shaping a sourcing process set to select suitable components for institutional portfolios. The scope is generally to accomplishing this outcome while minimizing the buildup of causal left tail concentrations in the total portfolio, a craft that draws on 20 years of experience, network and genuine interest for the subject matter.

 

Investment Diligence:  

Leveraging a local presence to contribute capacity to execute this objectives based task with detailed diligence. Match criteria specific to a given institution’s objectives, seeking to further sure up investments vs alternatives. Contribute insights to identify investment attributes that contribute uncompensated risks and raise the competitive pressure on individual managers in the pipeline. Ultimately contributing to a more robust investment due diligence.

Monitoring: 

Frequent interaction via on- and off-site meetings with core staff at managers and their peers to enhance the transparency and gain more pertinent insights. Knowing which stakeholder might be considering to transition out from a firm, or which dynamics prevail that may impact the risk or stability is all but impossible without frequency of interaction. S3 offers continuous follow up and monitoring in between and in preparation for the institutions direct visits.

Portfolio Construction: 

Portfolio construction with a tail focus is a core building block towards more deliberate sourcing. NYC is hardly a shield against consensus behavior, but one needs to know where the biases are to avoid sharing them unintentionally. 

 

Often a very internal process, portfolio construction sometimes has to be, but stress-testing the logic is sound practice. The bias from S3 is to use portfolio sleeve-specific criteria to shape exposures. “The treasury or short dated portfolio” may benefit greatly from regression math, but to decorrelate higher order risk factor concentrations, factoring in Private Equity and infrastructure contributions to GDP, cyclicality, stock market and price multiple factor risks is crucial practice.  The dicipline of knowing what tails are deliberate and which metrics are relevant for a given portfolio,  adds more pertinent sourcing and ongoing monitoring.