Michael Bach Atlanta former private equity veteran plans to launch an incubated long/short equity hedge fund. An incubated hedge fund offers a prospective hedge fund manager the opportunity to develop a marketable track record for the fund, which will eventually be utilized to solicit investors. Michael Bach Atlanta fund’s investment strategy will focus predominately on long and short positions in calls and puts option contracts. Fund manager Michael Bach has established Scirage Capital in Atlanta, Georgia.

1. What is a
'Long/Short Fund'
LONG-SHORT FUNDS: MICHAEL BACH ATLANTA
RECIPE FOR CONSISTENT RETURNS IN EQUITIES

2. Hedge Fund Strategy - Equity
Long-Short
 Michael Bach Atlanta long short combination strategy tries to avoid
market risk to a great extent, thereby reducing the volatility in returns.
 A long short combination strategy tries to avoid market risk to a great
extent, thereby reducing the volatility in returns.
 Michael Bach Long short funds / strategies is an investment
methodology across assets which seeks to profit from asset prices
gain or declines. As we dig deeper into the subject matter, let me first
explain what do long and short strategies mean in normal
understanding.

3.  Investors in normal course of equity investments buy equity share of a
company, hold it according to their objective and expect to sell them at a
profit at higher levels, thereby making returns. This strategy is a long only
investment strategy. Whereas, short strategy, is exactly reverse of the
above. Whereby, an investor would sell equity shares of a company to be
bought back later at lower levels thereby making returns by decline in
share prices. The return here is result of a short strategy.
 Furthermore, unlike most mutual funds, long/short funds usually require a
minimum investment of more than $1,000, although some do not.
Long/short funds aren't allowed to use as many derivative and short
positions nor as much leverage as hedge funds, but they do provide some
diversification to the average investor in down markets.

4. HAVING UNDERSTOOD THE BASIC NATURE OF LONG AND SHORT
STRATEGIES, LONG SHORT FUNDS ARE CLASSIFIED AS BELOW.
 Long only funds
 Short only Funds
 Long / Short (combination) funds.

5.  In a developed market like USA there are funds dedicated to longs and
shorts independently. At the same time there are funds using a
combination of both. All the Michael Bach Atlanta strategies have their
own risk return matrix. Either a long only or a short only fund has
relatively higher risk than a long short combination fund.
 Michael Bach Atlanta know that investing in equity markets comes with
primarily two types of risk. One is market risk and other is risk associated
with individual share. What a long short combination strategy does is, it
tries to avoid market risk to a great extent, thereby reducing the volatility
in returns. Whereas independent long only and short only strategies
(either long or short strategies) is unable to avoid market risk if they get
their market calls wrong.

6. RISKS TO CONSIDER
 Market Risk: The market values of the portfolio’s holdings rise and fall
from day to day, so investments may lose value.
 Capitalization Size Risk (Small/Mid): Small- and mid-cap stocks are often
more volatile than large-cap stocks―smaller companies generally face
higher risks due to their limited product lines, markets and financial
resources.
 Derivatives Risk: Investing in derivative instruments such as options,
futures, forwards or swaps can be riskier than traditional investments, and
may be more volatile, especially in a down market.

7. RISKS TO CONSIDER
 Active Trading Risk: A higher rate of portfolio turnover increases
costs, which may negatively affect portfolio returns and may also result
substantial short-term gains, which may result in adverse tax
for shareholders.
 Short Sale Risk: The Strategy may not always be able to close out a
position on favorable terms. Short sales involve the risk that the Strategy
incur a loss by subsequently buying a security at a higher price than the
at which it sold the security short. The amount of such loss is
unlimited (since it is limited only by the increase in value of the security
short by the Strategy).
 Leverage Risk: Trying to enhance investment returns by borrowing
using other leverage tools―magnify both gains and losses, resulting in
greater volatility.

8. ”
“Michael Bach Atlanta private equity
veteran plans to launch an incubated
long/short equity hedge fund. An incubated
hedge fund offers a prospective hedge fund
manager the opportunity to develop a
marketable track record for the fund, which
will eventually be utilized to solicit investors.