INVESTMENT PHILOSOPHY & HISTORY

At Alpha Blue, LLC | Alpha Blue Capital our Investment Philosophy is implemented through Fundamental Research & Value-Focused Investment Management. We believe in investing with a long-term perspective across traditional and selective alternative asset classes & strategies.

Our investment management efforts begin with our Active Equity Investment Philosophy:


Our Investment Management efforts are also centered around our long history, success and expertise in active Small Cap, Micro Cap, Mid Cap, Large Cap & International Equity Investing & Research. As well as our risk averse approach and experience short selling stocks and equity options managing a more traditional long-biased equity hedge fund. And the strategic & tactical investment application of our Equity ETF research & knowledge thoughtfully implemented.

Our Active Equity Investment Philosophy & Strategy’s foundation and process has over a 30 year history and is an extension of those a former Partner/colleague developed from Greenbrae, California in the mid-1980’s for the “Dynamic Equity Fund” for Institutional Investors. As well as his highly successful long-biased equity hedge fund that he transitioned to a family office fund in 2018. The hedge fund, upon redeeming outside investors’ capital has had a 30%+ allocation to passive equity index ETFs. Both the “Dynamic Equity Fund” and Hedge Funds’ strategy focused on security selection and portfolio characteristics with attractive Valuation, sound Fundamentals & positive business Momentum (V.F,M). We later formally added Quality (V,F,Q,M) as part of our security selection and portfolio construction criteria. Additionally, he emphasized highly-diversified portfolios/funds and 1-3 person focused “generalists” investment teams that we continue to follow his lead on as well. We had a professional affiliation with him at The Boston Company Asset Management from 1991-1995 and Boston Partners Asset Management L.P. from 1995-2002 and we were a Limited Partner of his hedge fund from 1995 to 2018.

Our Equity Investment Philosophy & Strategies are also derived from Fama-French’s 3-Factor Model research work in 1992 (University of Chicago) that the Small-Cap Factor and Value Factor added to the Market Risk Factor outperforms the market. In 2015, this was extended to a 5-Factor Model, adding Quality Factors. Additional influences are Cliff Asness of AQR Capital Management’s related work to consider a Momentum Factor & insights of his and others on active extension (≈130/30) strategies. As well as the investing strategy influences of Warren Buffett, Berkshire Hathaway, Sir John Templeton, Templeton Growth Fund and John “Jack” Bogle, Vanguard Group.

Our Passive Equity Index Investment Philosophy & Strategies’ foundation began in 2013. Until that time, we had a very small allocation to the S&P (Standard & Poor’s) 500 Index ETF, SPY. As many investors know, SPY was the first ETF listed in 1993 and continues to be the most traded and largest ETF by Market Cap at over $400 Billion. The S&P 500 Index was first created in 1957 and represents approximately 80% of the total U.S. Market. As of 2023, ETFs make up more than 12% of equity assets in the US and more than 30% of total trading volume on U.S. exchanges.

We first became clients of Vanguard at the beginning of 2008 primarily for investing in their low cost, best in class Money Market Funds and Tax-Exempt Bond Funds. However in 2013, Vanguard switched their domestic and international primary equity Fund/ETF index providers, excluding the S&P 500, to CRSP and FTSE Indexes for both quality and cost reasons. The Center for Research in Stock Prices (CRSP) was founded in 1960 and is an affiliate of the University of Chicago’s Booth School of Business. Financial Times Stock Exchange (FTSE) indexes are integrated with Russell indexes as FTSE Russell since 2015 and is a subsidiary of the London Stock Exchange Group. We began to selectively allocate to these CRSP & FTSE Index ETFs and a couple of S&P Index ETFs that track broad, geographic and smart beta (size, style & dividends) indexes. In 2021, our Alpha Blue Alternative Equity Strategy also began to strategically & tactically invest in Passive Equity ETFs as well. We and many other sophisticated investors & academics concur that CRSP, FTSE and S&P index tracking ETFs are among the very best broad, geographic and smart beta equity index ETFs.

Visit with Jack Bogle in his office at Vanguard Headquarters.

Visit with Jack Bogle in his office at Vanguard Headquarters.

In June, 2018, we had the fortunate honor to have a private one-on-one meeting with Jack Bogle, the founder of Vanguard in his office at Vanguard Headquarters in Malvern, Pennsylvania. As part of the conversation, we discussed the notion of combining good to excellent Active Equity Investing with Passive Equity Investing. True to his principles, Mr. Bogle was steadfast in his passive equity beliefs, not a fan of ETFs nor international investing and favored Traditional Index Funds, which he started in 1976 with the Vanguard 500 Fund. As a memento of our meeting, Mr. Bogle gave us a personalized signed copy of his book “The Little Book of Common Sense Investing” that he inscribed an abbreviated version of one of his famous quotes “Press On, Regardless”. Which, given the context of our disagreement on active equity investing, we have taken as “Press On” to continue investing in good to excellent active equity strategies integrated with selective strategic and tactical passive equity investing. As well as the straightforward meaning of his full quote, which in itself is a very good philosophy:

“The courage to press on regardless – regardless of whether we face calm seas or rough seas, and especially when the market storms howl around us – is the quintessential attribute of the successful investor.” ~J. Bogle / Vanguard Group

Our investment management equity strategies now have the flexibility to make selective strategic and/or tactical investments in Vanguard & other passive equity ETFs.