Market Folly's  Instablog

We're not sure how much longer this will last, so we wanted to make sure everyone who wants it has taken advantage of it; we sure did. These types of deals are one of the only good things about a recession.

Here's the print edition: 75% Off The Wall Street Journal
And here's both the print & online editions: 75% Off The Wall Street Journal

We want to introduce you to a tool that lines up directly with the content you see here at MarketFolly on a daily basis: hedge fund portfolios.

Today, we want to talk about Alphaclone, a web-based software tool developed by Maz Jadallah and Mebane Faber (of the World Beta blog). Quite literally, their tool allows you to create, customize, and replicate hedge fund portfolios. They have 200+ funds listed which can be turned into 15,000+ portfolio clones that are rebalanced quarterly and backtested on a daily basis. And, through a series of posts, we're going to show you what exactly you can do with this powerful tool.

We have been using Alphaclone for the past few weeks and are extremely impressed with vast array of information you can generate in a matter of minutes. You can create clones of individual managers (for instance: Greenlight Capital's portfolio) and can customize the existing portfolio or create your own based on criteria you define. Additionally, you can also create clone groups that create and track a portfolio of multiple managers. For instance, we just went through and for fun cloned a combination portfolio of 'activist' managers in Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, and Dan Loeb's Third Point. The combinations are endless.

You can also select various strategies and backtest their performance. You can take the top 10 holdings of an individual manager, the 'most popular' holdings from a group of managers, the 'best ideas' of managers, and many, many more options. You can also select a level of hedging (long only or hedged: 25%, 50%, 75%, 100%) to see how the portfolio performs when hedged. You can backtest tons of strategies and I've found myself sitting on Alphaclone for hours at a time creating unique hedge fund portfolios that outperform the S&P500 and various other indices.

Here are some of the highlights of Alphaclone, taken directly from their site: