GCP is focused on our two primary competitive advantages:
(1) The Structure of the Partnership. We have 6 senior partners on the investment committee, each with an average of 20+ yrs of market experience, and each with a substantial equity stake in the firm. We feel that this combination of experience and ownership encourages partners to speak their mind and express views that run counter to consensus. Overall, we believe that this will help us adjust to changing market conditions and stay on the right side of trends more often than not.
(2) Option Structuring Expertise. Mr. Grant started his career as an options market-maker and then ran Goldman’s global currency options business, in addition to being one of their most profitable proprietary traders. Mr. Parker and Mr. Duneier both started their careers as options market-makers. Parker then ran Deutsche Bank’s currency options business in Europe, Duneier ran Bank of America’s currency options business. Both in addition to being profitable proprietary traders. Mr. Munday and Mr. Peters have both used options extensively in their respective careers as proprietary traders at Normura and Lehman Brothers respectively where they each generated substantial returns.
The firm structures an options portfolio that is long-only while using exotic options and various other strategies to create a profile that is at times long volatility and/or short volatility. The structure of the portfolio is intended to ensure that there is little or no decay in a typical year. Through the use of a long-only strategy, the firm caps the option portfolio’s downside at the amount of premium spent. The relative upside tends to be a multiple of the limited potential downside risk and thus the portfolio has an attractive pay-out characteristic. Such a portfolio has the potential to generate returns across a broad array of market environments.
The combination of the firm’s competitive advantages and the portfolio structuring process is unique and differentiates GCP from peers in a meaningful way.