Due Diligence
We seek to invest with and assist professionals with a history of ethical actions, especially when faced with challenging circumstances. The cornerstone of our due diligence process is independent verification of a fund manager’s character, previous accomplishments, track record, and expertise.
The experience and relationships we’ve developed over the past 16 years across multiple non-traditional asset classes afford us the capability to assess the viability of a particular strategy and the competence and integrity of its manager.
Corroboration may be sought from industry peers, prior employees, other managers and investors. Background checks are also conducted.
We apply our due diligence process to 100-200 managers per year to select 1-2 funds we believe achieve the alignment and potential for risk-adjusted outcomes worthy of our capital and our investors' careful consideration.
Private Markets
Illiquid strategies should have defensible and growing information advantages which reward investors with deeper margins of safety and ownership of more robust businesses and assets.
We focus on managers that have durable competitive advantages, a leadership position in their sector, and appropriate investment structures to match the liquidity of the underlying investments.
Our primary illiquid focus is on secondary venture investments and select primary venture funds. We also carefully consider niche strategies, including specialty finance, growth lending, and other emerging areas.
Hedge Funds
Generally, we prefer hedge fund managers seeking to generate alpha on both short and long positions in public markets. We believe managers are poorly rewarded for market timing decisions. Increased correlation among stocks also means that concentrated portfolios are often required to outperform.
Occasionally, we find intriguing managers in niche markets that possess high barriers to entry and, at times, illiquidity premiums. Such strategies often generate alpha that is difficult to measure, and a higher beta component that can be described as “exotic” due to its often-uncorrelated nature (e.g. electricity trading, volatility arbitrage).
Distilled Alternatives prioritizes niche strategies that preserve capital and have asymmetric return profiles. Such strategies have usually had a sustainable advantage created by complex structures, illiquid markets, distressed market participants, few competitors, sudden regulatory changes, and/or other market characteristics that reward diligent expert investors.