Extraordinary Value Partners LLC Case Solution

Posted by John Smith on February 23rd, 2018

Extraordinary Value Partners LLC Case Solution

Sun Non profit organizations comes with an endowment of 0 million. Parker, the main investment officer of Sun Non profit organizations, comes with an chance to purchase Extraordinary Value Partners (EVP), a hedge fund. He's thinking about trading $ten million in EVP. How should he assess the investment chance?

Excel Calculations

·         Benchmarks

·         EVP Returns

·         Mean

·         Standard Deviatons

·         SR (Monthly)

·         Beta

·         Alpha

·         Correlation with the Microcap Index

·         Correlation with S&P 500 Index

·         Correlation with MSCI EAFE Index

·         Long-Short Fund             

·         Long Only Fund                                

·         Portfolio 1          

·         Portfolio 2          

·         Long-Short Fund return in excess of the Index  

·         Long Only Fund return in excess of the Index

Questions Covered

1.       What were the properties of EVP’s Historical Returns, and how did the Russell microcap index compare?

2.       Consider the returns of the EVP funds in excess of the microcap benchmark. What were the properties of that excess return?

3.       Was EVP truly a microcap stock picking fund? Use Return Based style analysis to answer this question.

4.       Within the microcap universe, did EVP focus on value or growth stocks?

5.       Was EVP just a leveraged version of the microcap benchmark, or some other indexes available to you?

6.       What was the style of the EVP fund returns? Did this analysis give any insight into as to how EVP added value relative to microcap benchmark?

7.       Suppose the historical returns represented what one could expect going forward. How would a 90% in M plus 10 percent in EVP long only fund compare with 90% in M plus 10% in a Russell Microcap Index Fund?


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John Smith

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John Smith
Joined: June 21st, 2014
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