Roubaix employs a fundamental long/short equity strategy focused on small and mid cap U.S. stocks. Less diversified small businesses are inherently more affected by the drivers that create or destroy equity value over the investment cycle, enabling an optimal environment for long/short equity investing.
We maintain a dynamic focus list of ~300 companies that we consider to be the best long and short investment stories in the marketplace in terms of the quality of the company's business model, financial structure and fiduciaries.
We periodically analyze fundamental factors to determine whether each story is also a compelling investment. This includes an assessment of the stock’s valuation versus history and peers, recent performance, the potential for catalysts, and investor sentiment.
Our objective is to preserve capital through disciplined security selection, sector diversification, exposure management, and adherence to risk guidelines.
In particular, structural inefficiencies in smaller stocks - greater dispersion of returns, lower sell side coverage, and limited buy side crowding - enable persistently higher alpha generation on both the long and short sides of the portfolio.
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Roubaix requires a minimum margin of safety on all new positions, a hurdle which rises commensurate to the risk of each individual position based on liquidity and volatility.
We generally maintain less than 50% net exposure, avoid leverage, invest across a broad set of industries, and remain disciplined with our price targets and stop-loss levels.
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