Mach 100 LP is a non-correlated, activist, small and micro-capitalization ($50 MM-$2B) long/short, equity focused fund, possessing concentrated positions and capitalizing on discovery premium and information arbitrage. The Fund utilizes fundamental quantitative and qualitative analysis, technical analysis, assessment of securities and broad market behavior, trading psychology and return risk profiling to determine security selection and portfolio exposure across asset classes, instrument types, industry sectors and geographies. The Fund’s objective is to generate absolute returns with lower correlations than typical equity market benchmarks.
Activism: Mach 100 LP often takes an activist role with our small cap and microcap portfolio companies. This is a positive, supportive role; not an adverse one, with no desire for a change in control and without undue publicity. Our activism is generally in four main areas: Capital structure; Financing; Investment Community Visibility; and Business development. These are the areas where small cap and microcap companies require the most assistance and support. We work closely supporting the CEO, executive management and board to effect major positive change, specifically to create more shareholder value in a shorter period of time and to maximize long term shareholder value; more so than if we were merely passive.
Portfolio Structure: The Fund is structured such that its portfolio composition seeks non-correlation to equity benchmark indices with high return-risk profiles and balance in terms of instruments, liquidity, volatility, sector weighting and their corresponding method to be effectively hedged. The Fund invests both long and short and executes its hedged strategy in the portfolio in several ways, with the goal of keeping its hedging as simple as possible while maintaining significant flexibility to pursue its investment objectives. The Fund may also participate in structured transactions. The Fund invests primarily in the United States in securities that are traded on U.S. markets and U.S. dollar denominated, but occasionally some securities may represent foreign companies or trade on a foreign exchange (e.g. Canada, Europe and Asia).
Structured Transactions: We have deep and broad experience with structured transactions and have been investing in them successfully for the last 25 years, since our first fund, DNB Fund Partners LP, in 1994. Accordingly, a component of our portfolio consists of structured transactions, including but not limited to: PIPE’s (private investments in public equity); hybrid securities; equity linked notes (ELN’s); convertible debentures with equity and equity linked derivatives; and unregistered common stock with warrants. These structured transactions have several advantages over buying straight equity. Advantages vary by instrument purchased and include: Significantly enhanced returns; Principal protection (until call, conversion or maturity); Creditors preference (until call, conversion or maturity); reduced volatility; ability to earn a positive return in low-yield or flat equity environments; and tax efficient access to fully taxable investments. In terms of portfolio construction, these instruments provide the potential for high alpha with low beta. Applying our deep experience with forensic diligence and comprehensive analysis, enables us to navigate the complexities (e.g. instrument characteristics, credit quality, initial limited liquidity, valuation, registration process, deposit method) of structured equity transactions and capitalize upon their high return-risk profiles and other advantages.