Pecora Capital

Portfolio management requires diverse strategies to bring capital to its fullest potential and deliver consistent investment returns. Given the hyper-correlation in financial markets, investors find it challenging to achieve meaningful diversification. This overexposes them to market beta, making them more vulnerable to market risks.

Pecora Capital, a boutique investment management firm, reduces exposure to market beta by offering sophisticated diversification tools and niche and risk adjusted investment strategies that are differentiated and tailored to investor needs. It manages and distributes investment funds across equities, fixed income and liquid alternatives to deliver higher returns with low risk.

“We aim to deliver crisis alpha—excess ROI after adjusting for market volatility by offering tools capable of acting as an airbag for the investment portfolio during market stress,” says Aaron Smith, founder and managing director of Pecora Capital.

Starting his career at Morgan Stanley, Smith launched Pecora Capital with backing from anchor investors. Today, the firm has offices in the United States, Liechtenstein and Germany, along with robust strategic global partnerships.

Benefiting from over a decade of expertise in providing institutional grade tools to financial intermediaries like financial advisors and external asset managers, Pecora Capital extends investors the chance to engage in a value oriented, long-term investment approach. Its strategies are best encompassed in its three representative investment funds Chatrier Equity Fund, Pecora Manning and Napier High Yield Bond Fund and Pecora QMS Fund.

Its flagship Charter Equity Fund is a daily liquid, long-only value fund that stands out through its focus on unique, largely founder-owned and operated companies with no debt, often with undervalued stocks trading below book value or occasionally below liquidation value. Investing in them resembles purchasing a dollar for much less than holding the stocks while waiting for the market to acknowledge their true value to make a sale and book high returns.

This conservative approach consistently delivers high returns while mitigating risk, as reflected in the fund generating solid double-digit returns for over a decade.

The company’s fixed income plan offering is the Pecora Manning and Napier High Yield Bond Fund, which employs a 'bottom-up' investment strategy to preserve capital. Its distinctive tactical risk overlay feature is designed to transition the portfolio to cash during periods of market turbulence, mitigating downside risk and volatility.

For example, the portfolio of long, high-yield bonds can be shifted into risk free treasuries in case of a market crash. This high-yield strategy stands out as best in-class, consistently delivering exceptional results.

In the hedge fund sector, Pecora Capital offers a liquid alternative in the form of the Pecora QMS Fund. It employs a sophisticated multi-strategy solution that leverages fully automated and systematic trading techniques across 35 global markets. It offers daily liquidity by trading in various asset classes, including stock indices, interest rates, currencies, energies, metals and commodities, encompassing long and short positions.

The diverse quant multi-strategy minimizes correlation to traditional market benchmarks like the S&P 500, ensuring consistency regardless of prevailing market conditions. This makes the fund an exceptional diversification tool that minimizes downside volatility in a portfolio.

The fund managers at Pecora Capital maintain strict discipline in their methodology for acquiring and retaining stocks while adhering to consistent investment principles. They adopt a versatile, value-oriented strategy that transcends geographical and market-cap boundaries. This mitigates the risk of style drift or sudden shifts in investment processes, ensuring predictability and success in market returns.

A heightened emphasis on active investing strategies, intelligent security selection and resilient risk management defines a forthcoming paradigm shift in the investment landscape. Embracing this evolution, Pecora Capital is well-positioned to offer the right strategies and investment disciplines that will serve as the difference maker for investors.