Performance to date
- Start date: August 24th. £2,000 invested.
- Realised profit to date: £3234 (+162%)
- Current Mark-to-Market -£120 (out of the money)
Short positions: Game Digital (UK), Supergroup (UK), Etsy (US).
Longs: Centrica (UK), Peugeot (France).
FX positions: Long EUR/CHF, USD/JPY. Short EUR/GBP.
Commentary: Evidence of a Certain Type of Madness (or More Fool than Hero).
Unless a more disciplined risk approach can be adopted a blow up surely awaits around the corner. On the face of it Quixote Ventures started off on a pretty sound footing, parlaying a grubstake of £2,000 into £5,100. However, the devil is in the detail and the detail suggests things are not well. First, there is a clear reluctance to cut losing positions, a classic flaw that of often ends in fatality. Compounding matters, the portfolio has repeatedly leveraged to astronomical heights. To illustrate the extent of this sin consider that a single USD/JPY position (now closed) had a notional value of over £131,000 (i.e. leverage of 32.7x or 3275%). Total exposure at the peak was about 60x equity. For context, most hedge funds have a leverage ratio of between 1 and 2. Funds that trade around 10x equity are considered to be very high risk while those in the 30x range are few and far between.
Lest these adventures end before they begin, this wild recklessness must be put to bed. There is much work to be done.
