We Started with a Clean Sheet of Paper
Little House provides a blueprint for capital management to offer our clients access to proprietary investment strategies and products. Our advanced portfolio management and trading platforms enable us to implement our best thinking across our entire account base within seconds. At Little House we provide the investment framework and solutions that we believe today’s investors deserve.
Traditional advisors still use outdated static investment models to manage your investments. – We believe this is the incorrect approach.
Implementing dynamic investment models requires sophisticated portfolio management accounting systems synchronized with each account to capture and update daily market pricing actions. Little House’s investment platforms capture nightly price actions to automatically update our investment models, providing uniformity, in and among, our clients’ accounts. An example of both the static and dynamic investment approach is highlighted by Investors X and Y below.
Static Example
Day 1, Investor X invests $1,000,000 and 50% is invested in stock A while the remaining 50% is invested in stock B. Overnight, stock A doubles, now representing 66.67% of the portfolio while stock B represents 33.33%.
Day 2, Investor Y invests $1,000,000 and 50% is invested in stock A while the remaining 50% is invested in Stock B (the static model). So now, Investor X and Y owns 66.67% and 50% of stock A, respectively. Consequently, the Portfolio Manager decides to modify the position in stock A to now represent 60% of the portfolio. The trades are executed for Investor X and Y; Investor X sells (6.67%) of stock A while Investor Y purchases 10% of stock A. The net result, both X and Y Investor now hold 60% of stock A.
Dynamic Example
Assume Day 1 from above, Overnight, Little House’s dynamic portfolio management systems automatically adjust the model(s) for stock A’s price action that now represents 66.67% of the portfolio.
Day 2, When Investor Y invests $1,000,000, 66.67% (not 50%) is invested in stock A while the remainder of 33.33% (not 50%) is invested in stock B (the dynamic model). Now, Investor X and Y both own the same percentage of stock A & B, or 66.67% and 33.33%, respectively.
Applying static models across thousands of accounts with the same investment objective will result over time in different percentages of stocks, bonds, etc. being owned in those accounts as well as variations in investment performance across those accounts. The lack of consistency makes research driven portfolio actions obsolete since the traders are buying and/or selling the same securities across the entire account base. How can a Portfolio Manager recommend trimming (selling) a stock when the stock is being purchased (bought) in other clients’ accounts?
Our order management and fixed custodial connection offers a proper end-to-end block trading solution for our clients. Aggregating transactions gives Little House’s traders the capacity to bid on large blocks of instruments at a reduced cost. These savings become shared equality among our investors. This eliminates the need for an advisor to manually trade one account at a time. With Little House’s block trading platform thousands of transactions are completed in seconds.
Little House strives to provide uniform and consistent results across our many strategies and products. One of Little House Capital’s distinct advantages is the use of Bloomberg’s Portfolio Analytics (PORT Function) to overlay the “performance control budget” against each client’s actual results. This process prevents the last-minute quarter-end trades, asset re-classifications, and inconsistent performance surprises typically experienced with other advisors.