Nocturne offers two standard strategies as well as a customizable, values-based strategy that caters to the personal ethics of the client or institution. All of our strategies are informed by our proprietary research into behavioral mispricing and macro sentiment. Nocturne strategies can be accessed directly by institutions and qualified investors as well as via the network of trusted financial professionals with whom we work.
Nocturne High Conviction Strategy
Our High Conviction Strategy is a long-only, equity strategy that holds between 25 and 30 of our highest conviction picks. Initial ideas are sourced by a quantitative selection process that seeks to minimize manager bias and irrationality. We then perform fundamental research along five dimensions to further narrow the field. The dimensions examined conform to our "what works weighted" approach that considers Price, Properties, Pitfalls, Push, and People. The end result is a high conviction portfolio that holds high quality stocks with momentum, selling at a discount to what we consider true value.
Price - Is the company attractively valued?
Properties - Is it of the highest quality?
Pitfalls - What are potential hidden dangers?
People - How are insiders behaving?
Push - Is it enjoying some momentum?
Nocturne Tactical Strategy
Our Irrational Alpha Strategy holds the same underlying securities as the High Conviction Strategy, but becomes more or less fully invested based on our proprietary measure of macro market irrationality, the Nocturne Investor Sentiment Index (NOISI). This measure includes seven different quantitative measures of market sentiment, weighted by their historical power in predicting market moves. The NOISI is a proprietary index that becomes elevated during periods of irrational exuberance and depressed during times of pessimism. Investing with the NOISI as a tactical overlay seeks to automate the oft-quoted-but-seldom-followed first maxim of investing, "Buy low, sell high."
Bespoke Values-Based Strategies
At Nocturne, we understand that our clients' values are as diverse as the people and institutions themselves. Accordingly, we offer high conviction portfolios that correspond directly with the particular values of the person or institution, not just one dimension of their values. By combining "what works" in investing with "what matters" to the client, we are able to handcraft individual strategies that combine conviction with convictions and value with values. This bespoke approach can include both positive and negative screens, meaning that clients can both screen out objectionable brands and screen in those acting in accordance with their personal ethics.