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Alpha Theory helps fundamental managers implement a repeatable investment process to optimally size positions and uncover uncaptured alpha, improving portfolio performance. Since 2006, it has helped investment managers transform intuition into alpha through disciplined processes, strategy, and technology. Alpha Theory is a leading platform that enables global investment teams to leverage their research and data to drive better performance.

Alpha Theory is a single platform that helps fund managers turn investor intuition and research into a repeatable process for capturing alpha. It streamlines investment workflows by centralizing data and providing real-time insights into position sizing, along with data-backed recommendations for optimization. The platform monitors portfolio positioning over time and offers on-demand insights through proprietary analytics, reporting, and visualizations.

Market data, alternative data, and other data types are available directly in Alpha Central. This includes technical data, market data, fundamental data, consensus estimates and multiples, earnings distortion scores, factors, risk data, and more — integrated so they can be viewed and manipulated alongside your assets.

Specific integrations include FactSet data for fundamentals, estimates, and factor risk. We have partnered with Omega Point for advanced risk analytics and factor exposure data and New Constructs for scores based on likelihood of beating or missing earnings.

Alpha Theory also integrates with fund administrators, custodians, prime brokers, order management and execution management systems, trading, research and accounting platforms, and technology providers.

There are several ways to input data into Alpha Central. These include inputting data directly into Alpha Theory’s application, using the integration with Microsoft Excel, called “Excel Connect”, which establishes a bi-directional sync between spreadsheets and the platform.

Excel Connect allows users to securely update inputs like price targets and conviction levels directly from Excel, streamlining research and position sizing by merging Alpha Theory data with existing Excel sources.

Another method is using flat files (e.g., CSVs) with API processes to push data to the platform. Alpha Theory's Client Experience team can help teams find the best method.

Alpha Central connects with internal systems and vendors, pulls data from Excel, and maintains direct relationships with a wide variety of market and alternative data providers. It aggregates data from various sources, including fundamental research, Excel models, estimates, pricing data, and data from prime brokers and custodians, and other internal and external data. This data is consolidated, and in some cases, calculations are performed to make the information more useful.

Alpha Central serves as your central data hub, aggregating research, position, risk, and third-party data in real time for efficient research management that drives informed decisions. It uses a vendor-neutral framework offering seamless integration with preferred partners and platforms like FactSet and prime broker data files.

Alpha Theory's flexible framework includes data feeds and established adapters with many prime brokers, custodians, fund administrators, and other data sources.

Yes, Alpha Central is designed to aggregate data from various sources, including internal research, company data, Excel files, custodians, fund administrators, alternative data, and market data providers, ensuring seamless integration with your internal systems.

The platform can connect disparate data sources to a single entity identifier, providing the framework necessary to integrate and manage your data. For new datasets and internal research, adapters seamlessly integrate data alongside third-party data in Alpha Central.

Alpha Theory offers out-of-the-box integrations and supports custom data sources using a flexible API.

Yes, Alpha Central becomes your historical data store. While Alpha Theory performs analytics, clients can also use the historical data to perform their own analysis.

Alpha Central offers a centralized research repository that equips teams with the tools to collaborate securely across locations.

• Shared views and streamlined workflows keep teams aligned, fostering collaboration.
• It provides investment teams with transparency and insight to streamline decision-making and communication across the organization.
• A transparent dashboard tracks each position with a clear owner and key details like probability-weighted return and optimal size, fostering accountability.
• Automatic syncing across internal and external data sources helps keep research fresh.

Alpha Central lets investment managers maintain control of their ideas in a secure environment. Detailed permission tools ensure the right team members have access to preserve internal research in instances of employee turnover. You can store, preserve, and protect internal research in a secure platform and control access through a detailed and easily configurable permissions engine.

Position sizing determines how much capital to allocate to each investment relative to others in the portfolio. Position sizing is a central component of a structured investment process and getting it right is critical for portfolio performance.

While extensive research exists on stock selection, position sizing often takes a backseat. However, our data shows that this often-overlooked driver of returns deserves the same level of rigor. The difference between a good idea and a great investment often comes down to how much you allocate. Alpha Theory helps managers follow a proven process that gets their portfolios closer to their optimal position sizing thereby increasing future returns.

Structured position sizing enhances portfolio returns by incorporating your investment research into your sizing decisions, continuously monitoring deviations from optimal position size (OPS), and encouraging frequent price target updates.

Our research shows that structure around portfolio construction drives performance and can be the central driver in long term returns. Managers who implemented data-driven frameworks and systematic rules consistently outperformed those who relied on intuition alone.

Structured position sizing not only improves portfolio construction; it enhances the entire investment process by promoting best practices and increasing transparency into the impact of sizing decisions.

Fundamental Optimization is Alpha Theory’s position sizing methodology. It transforms sizing into a structured, data-driven framework where research and investment characteristics are the inputs, and optimal position size is the output. The framework bridges qualitative insights, like fundamental research and conviction levels, and quantitative rigor, such as expected return modeling and risk constraints. Fundamental Optimization empowers managers to systematically align their best research ideas with portfolio outcomes.

Alpha Engine utilizes your firm's research inputs, such as price targets and conviction levels, combined with customizable rules to generate optimal position sizes that align with your investment strategies. It also gives investors the ability to add their own custom inputs through a tool we call Checklists. The idea is linking the expected return for a security to its ultimate weight in the portfolio.
Expected returns are often thought of through the lens of price targets, which can take the form of a distribution of probable outcomes (bull/bear/base cases). By assigning probabilities to these outcomes, a probability-adjusted price target is derived. The platform calculates Probability-Weighted Returns (PWR) for assets, producing a true ranking of ideas so managers can size them accordingly. A customizable rules engine centralizes price targets, triggers update notifications, and calculates PWR.

It starts with building a central repository for key inputs on each position. This includes price targets, bull and bear case probabilities, qualitative factors like management quality, quantitative metrics such as risk scores, and other qualitative factors unique to your process like "conviction". Where possible, conviction should be quantified and captured. Analysts provide granular estimates and price target components that can be compared to Street consensus. The platform tracks each position in a transparent dashboard with a clear owner, probability weighted return, and optimal size. It also provides notifications of price target updates and anomalies.

Alpha Engine is designed to capture complexity and the nuances of your investment process. Investors can build fully customizable confidence checklists that account for factors outside of expected return in their sizing process. These checklists can include qualitative measures like management team strength, research stage, or economic moat, and quantitative measures like ESG score or historical ROIC.

Checklists ensure no critical component of the investment process is overlooked by providing a systematic way to incorporate subjective and non-modeled factors. This approach helps quantify, document, and make full use of a manager’s conviction. Checklists act as a flexible overlay to Alpha Theory’s standard quantitative inputs enabling managers to articulate and score additional qualitative factors that wouldn't otherwise factor directly into the sizing formula.

The checklist process allows managers to tailor their own, unique sizing process and weight factors according to their perceived impact. By incorporating fundamental, technical, statistical, risk, qualitative, and quantitative metrics, the checklist provides a comprehensive framework for evaluating investments.The inclusion of fundamental, technical, statistical, risk, qualitative, and quantitative metrics in the checklist aims to provide a comprehensive framework for evaluating investments.

Checklists help ensure important factors are not overlooked and directly connect this information to position sizing. By following a structured checklist, portfolio managers can reduce the influence of biases.

We believe in transparency. Unlike black box optimizers, Alpha Engine captures the complexities of how a fund invests with custom fund-level and tag-level parameters.
Tags are fully customizable and may include categories such as sectors, geographic regions, or thematic exposures. Fund managers can leverage constraints on position size, liquidity, gross and net exposure, return hurdles, and more for optimal position sizes customized to their rules.
Ultimately, managers can audit the process and assess how much each input influences the suggested optimal weight.

What's required is linking the expected return for a security to its ultimate weight in the portfolio. To do this, you must start with expected returns, typically thought of as price targets. It’s also essential to capture and store all relevant inputs for each investment in a central repository — including price targets, probabilities, qualitative factors, quantitative metrics, and conviction levels.

While the benefits are clear, many managers still resist adding structure to their established investment workflows because traditional approaches have long favored instinct over process. Another perceived hurdle is the effort required to put their research in one place, with some teams feeling they don't have the time to transfer their work into another system. While we acknowledge these objections, the data shows that the rewards are well worth the effort.

Alpha View delivers the data needed to make more informed decisions. It helps teams minimize mistakes by generating custom reports with real-time alerts — for example, when a position size is too large, an analyst needs to update targets, or an idea is worth adding to the portfolio.

Alpha View delivers daily recaps of position changes and sector movements directly to team members’ inboxes, helping geographically dispersed teams stay informed and aligned.

Yes, Alpha View offers fully customizable reporting and alerts that can be tailored to deliver timely and actionable portfolio insights, including intraday updates.

Alpha Insights delivers custom analyses based on the Alpha Theory All-Manager dataset. It provides original research relevant to investment management, helping managers refine their processes and capture more alpha.

Alpha Theory provides comprehensive onboarding and training resources, including tutorials, documentation, and personalized support to ensure effective platform use.

• The Client Experience team can assist with getting data into the platform.
  
• Additional resources include the Alpha Theory Help Center, a direct support line for current clients (+1 866 482 2177), and dedicated email contacts for sales and vendor partnerships.
• Alpha Theory also facilitates learning and networking opportunities, such as PM Dinners, which focus on investment themes like risk management, position sizing, and portfolio construction.

Alpha Theory employs robust security measures — including data encryption and regular security audits — to ensure the confidentiality and integrity of your data. Alpha Central also provides a secure environment to store, preserve, and protect internal research, with detailed permission tools to manage team member access.

Yes, Alpha Theory supports multiple user profiles with customizable access levels through a detailed and easily configurable permissions engine.

Alpha Theory is designed for modern desktop-class machines to deliver the best experience. While the platform’s comprehensive web application may take a moment to load initially, it is engineered to provide responsive performance across a variety of machines.

Performance can vary depending on the volume of Fund, Asset, Custom Field, Checklist, Notes, or Scenario data in your workspace. If you frequently work with very large datasets, a higher-specification computer will help ensure smooth interaction.

A new version of the platform is in development to further enhance performance and broaden support for mobile devices, tablets, and lightweight laptops.

If you’d like assistance verifying that your system meets recommended specifications, please contact Alpha Theory Support. Additionally, Excel Connect, API access, and reporting tools are available to help you work efficiently in a way that suits your workflow.