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Interview with CLC Management
Eurekahedge

September 2004

CLC Managament manages the Global Partners LP, a long/short equity fund focused on exchange-traded closed-end funds trading at historical high or low variations from its NAV. The Chicago-based firm is co-founded by Anthony Cutinelli and Andres Lucas.

  1. Can you first give us a brief outline on the key individuals at CLC Management LLC / Global Partners LP?

    Tony Cutinelli is the CEO and Chief Portfolio Manager of CLC Management, the general partnership that runs Global Partners LP. Andres Lucas is Managing Director and in charge of operations for the same entity.

  2. Can you give a brief background of yourself and your past achievements?

    Anthony Cutinelli

    Anthony began his career as a proprietary floor trader at the Chicago Mercantile Exchange where he gained experience trading 14 different futures and options markets. His time there was highlighted by his successful management of customer and proprietary accounts. Anthony became a US equity trader with Electronic Trading Group, LLC in 1996 and in 1999, he co-founded CLC Management. Anthony is a graduate of Miami University in Oxford, Ohio. He currently resides in Chicago.

    R. Andres Lucas

    Andres began his career as a junior financial analyst for Prudential Securities in New York City where he specialised in the chemical sector. Andres became a US equity trader with Electronic Trading Group, LLC in 1996 and in 1999, he co-founded CLC Management. Andres graduated with a degree in Finance from Arizona State University. He currently resides in New York City.

  3. Which markets have you find the best returns in 2003 / 2004?

    The areas that have provided us with the best returns over the past 18 months have been in the closed-end funds focusing on high yield. We have profited in this area from both the long and short side.

  4. What are the key characteristics of your strategy and how are you different from your 'peer group'?

    The main focus of our strategy is the trading of stock exchange-traded closed-end funds. The main characteristic is that we try to take advantage of historical high or low discounts and/or premiums to NAV in the closed-end fund sector while hedging out risk. We have done extensive research and haven't found that we belong to any 'peer group' per se since there are no funds out there, that we have seen, that focus as much as we do on this area. There are activist hedge funds that unwind the discounts, but they tend to be far more static than the strategy we incorporate.

  5. What are the key themes on the long and short books? How do you identify them?

    On the long side, we are simply looking for stock exchange-traded closed-funds trading at historical high discounts to their NAV and whose underlying holdings have a catalyst that could grow its NAV. The short side is simply the opposite. We are looking for stock exchange-traded closed-funds trading at historical high premiums to its NAV and whose underlying holdings might be susceptible to some downturn in the market.

  6. What's your performance been like?

    Please refer to the attached spreadsheet. We also would like to point out that these returns have been delivered with a Sharpe Ratio over 6, a standard deviation under 5% and a beta under 0.4.

    Click here to view the table

  7. What risk controls and measures do you have in place?

    Our portfolio runs usually 40-50 positions so the risk is spread out. Also, our fund doesn't exceed Reg-T margin regulation of 2-1 so this portfolio is never overly leveraged. In fact, the average leverage used is 1.4-1. Options are used to hedge out overall market risk and we constantly evaluate the positions and the hedges to make sure we have the appropriate asset allocation to limit risk and volatility.

  8. How has the capital raising been for your products and do you have a 'typical' investor?

    The capital raising process started slowly but has picked up significantly recently. We believe the reasons why it was so slow to start off with was the bad performance from the previous strategy and starting up with such a small amount of capital. But we have found recently that our strategy isn't one with a lot of competition and coupled with our returns and lack of volatility, is creating a demand from the fund of funds space and from other investors looking for consistency and an "edge".

  9. Do you run any other products?

    We run a couple of managed accounts along with the portfolio.

  10. How do you construct your portfolio?

    We do regular screenings of closed-end funds taking into account the historical high and low discounts and premiums of each closed-end fund. Once we determine these funds, we look to initiate positions close to that historical high or low. After initiating positions, we look for appropriate hedges to our positions. These hedges can be in the form of an ETF that tracks an index of the underlying closed-end fund or a similar closed-end fund trading at a higher valuation.

  11. How extensively have you back-tested your ideas? What models did you use?

    We haven't back-tested our strategy.

  12. Do you or your team have any plans to visit Asia in the coming months?

    We don't have any plans at this time.

Contact Details
CLC Management LLC
Tel: 1 312 362 3496
Email: cutinelli@globalpartnerslp.com


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