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Commentary (UPDATED: 4/29/2010)

The Activist Masters TOP1 Holdings Clone holds the single largest holding from each of the fourteen current activist funds that make up the group. The clone's current portfolio reflects John Paulson's love affair with gold (NYSEARCA:GLD), Pershing Square's Target (NYSE:TGT) holding, Carl Icahn's Motorola (MOT) position and Relational Investors' Home Depot (NYSE:HD) stake. Other positions include Cablevision (NYSE:CVC) from Gamco Investors, Wendy's/Arby's (NASDAQ:WEN) from Nelson Peltz's Trian Partners and Convergys Corp (NYSE:CVG) from Jana Partners.

The clone has outperformed it's benchmark index by more than two fold so far this year returning 18.2% vs. 7.5% for the S&P500TR index. Since inception (2000), the clone has returned 87% vs. -1.4% for its benchmark index.

Investment Objective

The AlphaClone Activist Masters TOP1 Holdings Clone was developed for investors seeking aggressive long term capital appreciation potential.

The clone's long only variant will exhibit similar risk and volatility as the broader stock market while its hedged variants will exhibit less overall volatility, less downside risk exposure during bear markets and less returns during bull markets.

Strategy

The clone seeks to invest quarterly in the single largest holding from each of 14 activist investors, equal weighted.

Group Description

The Activist Masters group combines and clones the collective intelligence of 14 activist fund managers. Amongst the funds included are: Icahn Capital, Relational Investors, Jana Partners, Trian Partners and Gamco Investors.

General Stats

  • Update frequency: quarterly, last rebalance on 2/19/2010
  • Turnover in group disclosures: 28.7% (avg. last four quarters)
  • Clone Turnover: 36.1% (avg. last four quarters)
  • No. of clone holdings: up to 14

Yearly Backtested Returns (4/28/2010)

Year Clone SP500 +/-
2000 -6.9% -8.2% 1.3%
2001 -13.7% -11.9% -1.8%
2002 -11.9% -22.1% 10.2%
2003 27.1% 28.7% -1.6%
2004 40.9% 10.9% 30.0%
2005 4.0% 4.9% -0.9%
2006 31.7% 15.8% 15.9%
2007 -2.2% 5.5% -7.7%
2008 -33.5% -37.0% 3.5%
2009 39.9% 26.5% 13.4%
2010 18.2% 7.5% 10.7%

Source: Activist Masters Core Strategy