In January, Watchtower Capital Management, a new hedge fund firm in San Francisco, will open a fund it has been incubating since last year.
The firm's co-founders, Alex Beringer and Allan Mendell, have been running a proprietary long/short strategy since August 2005 that uses an analysis of the options market to predict price movements in the underlying individual stocks. The firm combines option analysis with fundamental analysis to run the portfolio but invests exclusively in stocks.
The fund targets a net exposure of ±15%. The portfolio is generally made up of 30 to 50 positions with