We screen the 14,000 names that are traded in the Asia ex Japan Equity Markets to eliminate any that do not trade over USD 2mln per day and that have less than 3 analysts actively covering them. This take us down to approximately 1300 names.
We view each company on five years historic reported accounts, the current year's consensus data and two years forward consensus data to see if they meet our requirements. This takes us down to approximately 556 potential long names and 111 potential short names.
LIST OF ACTIONABLE IDEAS
The above list of stocks are then subjected to further scrutiny to ensure that they meet our additional criteria which is required to initiate a trade n either the Long or the Short book. Consensus data is then double checked and we identify why any new names have appeared or indeed why any of our existing positions have dropped off of this list of names. This take the number of names down to approximately 34 on the Long side and 3 on the Short side.
Here we check to see if there are any reasons as to NOT initiate a position in a stock. Please see our REVERSE ACTIVE MANAGEMENT page for further details. This takes us down to 28 Long ideas and 2 Short ideas.
TRADE INITIATION / RISK CONTROLS
Here we check that any potential new positions do not break our risk parameters. If they do not, then the trade is initiated at a weight of 3.50%. At the same time as intiating any trade we place our 15% ABSOLUTE STOP LOSS as well as updating any HIGH WATERMARK STOP LOSS limits that need to be adjusted. As at 31st October 2012 we had 26 Long positions and 2 Short positions.