Risk Mitigation Through Structural Advantages
Our off-market arbitrage and discounted block trades inherently avoid traditional market risks while capturing valuation inefficiencies unavailable in public markets.
Pre-IPO
Arbitrage
OTC
Discounts
Limited
Volatility
Non-Correlated
Returns
How Our Arbitrage Strategies Mitigate Market Risk
Arbitrage-Based Protection
Our pre-IPO and off-market arbitrage strategies fundamentally differ from public market investing. By transacting in private markets, we avoid the daily volatility that plagues publicly traded securities. These negotiated deals are priced based on fundamental valuation metrics rather than market sentiment or algorithmic trading patterns.
The very nature of arbitrage - capturing price discrepancies between markets - provides built-in downside protection. We secure positions below comparable public market valuations, creating an immediate margin of safety. This structural advantage is further reinforced by the illiquidity premium inherent in private transactions.
- No mark-to-market volatility from daily price fluctuations
- Valuation gaps provide immediate downside protection
- Illiquidity premium enhances long-term returns
OTC/Block Trade Advantages
Our OTC and block trade executions provide unique risk mitigation benefits unavailable in standard market transactions. These discounted purchases occur because we're providing liquidity in situations where sellers have limited options. This creates asymmetric risk/reward profiles favoring our investors.
Unlike public markets that react hysterically to geopolitical events or economic data, our private transactions maintain their fundamental valuation anchors. A trade negotiated at specific valuation multiples doesn't suddenly change because of macroeconomic events. This insulation from macro noise is a critical differentiator in our risk management approach.
- Entry discounts provide immediate downside cushion
- Negotiated pricing ignores short-term market irrationality
- Limited correlation to broad market movements
Structuring for Asymmetry: Our Engineered Approach
The Engineered Trade Process
Our trades are carefully engineered through a rigorous process. We identify unique opportunities, negotiate favorable entry points, and structure exits at premium valuations, securing the price differential as our return. This model allows us to control risk at both entry and exit points.
Each transaction undergoes comprehensive due diligence examining all potential risks. We don't simply find opportunities, we structure them to maximize upside while minimizing exposure to market volatility and other common investment risks.
But structuring alone isn't enough. Our risk mitigation strategy goes deeper, incorporating rigorous assessments across every layer of the investment. From valuation to execution, we apply safeguards that preserve capital and maintain integrity in both stable and stressed environments.
Comprehensive Risk Considerations
While our strategies provide structural advantages, we rigorously assess and mitigate all potential risks across our deal types:
Counterparty Risk
We vet all counterparties thoroughly and often require escrow arrangements or third-party verifications to ensure transaction integrity.
Illiquidity Risk
Our strategies account for holding periods through careful cash flow planning and position sizing appropriate for each investment's timeline.
Valuation Risk
We employ multiple valuation methodologies and conservative assumptions to ensure appropriate pricing with margin for error.
Structural Risk
Every deal includes tailored protections - from liquidation preferences to anti-dilution provisions - appropriate for its specific characteristics.
Regulatory Risk
We maintain dedicated compliance expertise to navigate complex regulatory environments across jurisdictions.
Information Risk
Our deep due diligence processes and industry networks help mitigate information asymmetry in private transactions.
Why Our Strategies Avoid Traditional Risks
The structural advantages of our approach become particularly evident during market stress periods. While traditional portfolios suffer from correlated drawdowns, our arbitrage-based strategies maintain stability because their valuation anchors remain unchanged. A private company's discounted cash flow model doesn't fluctuate with the VIX index.
Our risk mitigation isn't achieved through complex derivatives or market timing, but through careful security selection and market positioning. By focusing on situations where we can buy at significant discounts to intrinsic value, we build in permanent loss protection at the time of purchase. This is fundamentally different than trying to hedge risks after they've appeared in a portfolio.
No Daily Mark-to-Market
Private valuations update monthly or quarterly, not minute-to-minute like public markets.
Built-In Discounts
Acquired at 25–35% lower valuations than similar publicly traded companies.
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