How to Use this Service:
The Sabrient Investor's (H)edge newsletter is a quantitative long/short portfolio. It is based on an institutional-quality strategy designed to be unbiased, emotionless, and highly disciplined.
Each week, Sabrient's forward-looking company outlook model identifies one new long pick and one new short pick, both of which are intended for a 13- week hold. Each new pick replaces the oldest member of the portfolio from 13 weeks prior. (Note: During this initial ramp up period, we are identifying 2 longs and 2 shorts each week, with no deletions, until we reach a 12 long / 12 short portfolio. Then we will add one more long and short to complete the 13 long / 13 short portfolio.)
We will track performance assuming new positions were entered at Friday's opening prices. However, you should try to get the best price possible during the first few days following the initial recommendation.
We recommend allocating a set amount of capital to the strategy and taking on all positions in equal dollars (not equal shares).
Caution: We strongly recommend that you do not "cherry pick" only a few stocks. This is a quantitative model that relies upon a "basket approach" to ensure steady performance and to diversify the risk of one stock hurting the portfolio.
New Subscribers:
If you are new to the service, we suggest that you build a full portfolio over 4 weeks by selectively putting on 3 longs and 3 shorts each week. Besides the newest recommendations for the current week, you should look for opportunities to scale into the more recent picks in the Model Portfolio table.
Alternative Put Options:
For those who prefer not to short stocks or who are not authorized to short or whose broker cannot borrow shares of the given Short selection, we suggest using Put options. We leave it up to you as to how much time to buy and how far in-the-money you prefer. However, here are the guidelines that we prefer for attempting to replicate the performance of the model portfolio:
- Choose an expiration date that exceeds the projected 13-week holding period.
- Choose a strike price that is sufficiently in-the-money to produce a delta of around 0.50.
- Buy a sufficient number of contracts so that the given delta will approximate the dollar return of the short stock position.
