From Pre-Launch to Liftoff: Dardanelles Capital Case Study

Launching a hedge fund is a struggle against the odds. Capital raising is challenging, performance pressure is constant, and the operational burden pulls a PM's focus away from investing to managing a business. In 2022, Dardanelles Capital launched into that reality but flipped the odds by focusing on the process.

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Our latest case study dives into the steps a founder took to launch and grow a fund in a challenging environment.

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Founded by Derek Brown, Dardanelles set out to build a durable long/short equity firm grounded in fundamental research, concentration on the long side, and disciplined position sizing. From day one, Brown embedded Alpha Theory into the fund’s core workflow as the operating system for portfolio decisions.

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The Challenge: Proving Process as a Startup

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The odds are never friendly to a startup. In 2022, new hedge fund launches were near decade lows, allocator skepticism was high, and most inflows favored large pod-style spinouts. Dardanelles faced four clear hurdles:

• Demonstrate institutional-grade process as a new fund
• Differentiate from other emerging managers
• Maintain independence from multi-manager platforms
• Deliver strong risk-adjusted performance with a lean team

With just one analyst, technology and repeatable process had to act as force multipliers.

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The Solution: Codifying Conviction

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Dardanelles used Alpha Theory pre-launch to translate research into explicit price targets, probabilities, and position sizes. Every idea carried quantified upside, downside, and likelihood, and was updated continuously. That discipline showed up in the data:

• ~99% of gross exposure covered by active price targets (well above peers)
• Price targets refreshed roughly every 30 days—placing the fund in the top decile for “research freshness”
• Position sizes driven by expected return and risk, not gut feel

As Brown put it, consistency mattered more than complexity. The framework took emotion out of decision making and made the investment process understandable to LPs.

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The Result

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