Epsilon is an asset management firm which pursues bottoms-up stock-selection alpha through a systematic investment process.
We use data science to establish rankings of domestic equity securities, akin to factor investing.
Unlike a value or momentum factor, our rankings are based upon the revealed skills of all active managers investing in domestic equities.
We access manager position-sets through public regulatory filings and test their portfolios for predictive signals.
We are quantitative in approach, but invest in low-turnover, fundamentally oriented securities.
Our team came from Novus Partners, an industry leader in position-level data analytics for active managers.
The Epsilon team has spent years working with large institutional investors to examine predictive signals in active managers. We have also spent nearly a decade focused on this data-set and the intricacies involved in optimally extracting its investment signal.
To read more on our philosophy, click here.
QUOTES WE LIKE
We are prone to overestimate how much we understand about the world and to underestimate the role of chance in events. – Daniel Kahneman
- Fundamental investment skill is alive and well, but investment managers have entered a new era of competition. Yesterday’s alphas are rapidly becoming today’s betas, and the need to construct calculated portfolios with a sober understanding of behavioral biases is more important than ever.
- The application of core quantitative investment principles to fundamental security analysis provides an opportunity for both managers and capital allocators to “have their cake and eat it too”; escaping the stranglehold of margin compression and heightened competition. This is achieved by circumventing aspects of the investment process which have traditionally been the high cost of doing business.
- The need for active managers to reduce the impact of randomness in outcomes is increasingly vital in a hyperactive world where the alternative is free, liquid, transparent passive exposure. Big data and statistical inference offer opportunities to produce portfolios with superior and repeatable outcomes.
Not only do we want to control for our own behavioral biases, we want to provide powerful incentives to allow our investors to break away from their own behavioral biases.
The Epsilon Flywheel
Using Regulatory filings as our source of security-selection allows us to circumvent the expensive and competitive input costs associated with fundamental underwriting of investment ideas.
Instead, we rigorously test the predictive value of all managers' filings, and create rules-based portfolios that distill the best of their collective research.
The savings we generate through a more efficient process are passed on to clients. Our process enables daily liquidity and full transparency, driving alignment.
This creates organizational scale which allows us to reinvest in our core competence and spin the flywheel.
Faryan Amir-Ghassemi is a founder of Epsilon Asset Management. Prior to Epsilon, Mr. Amir-Ghassemi was a Director of Analytics and Quantitative Investment Strategies at Novus Partners. In that capacity, he worked with clients ranging from endowments and multi-billion dollar family offices to fundamentally focused multi-manager hedge funds, creating solutions around portfolio optimization and investment strategies. Prior to joining Novus, he was a Hedge Fund Analyst at Cambridge Associates, focusing on hedge fund research for the firm's institutional investor clients. Mr. Amir-Ghassemi graduated from the University of Maryland with a B.A. in English Literature, earning an Honors Citation in his major and a Scholar's Citation in Business, Society and the Economy.
Michael Perlow is a founder of Epsilon Asset Management. Prior to Epsilon, Mr. Perlow was a Quantitative Developer at Novus Partners specializing in investment strategy creation, quantitative analysis, and software development. During this period, he created much of the infrastructure for testing quantitative investment strategies, including back testing engines. Additionally, Mr. Perlow was a technical consultant for Athanor Capital, a New York-based hedge fund manager. Before joining Novus, Mr. Perlow was at Ipreo where he predicted trends in active managers' holdings using brokerage flow data. Mr. Perlow graduated as a Scholar All-American with a Bachelor of Arts in Mathematics and Economics from Skidmore College.
William ClineSenior Advisor
William Cline is a Senior Advisor and seed investor in Epsilon. He is also a co-founder of Alcova Capital, a private debt manager based in New York. Prior to founding Alcova Capital in 2016, Bill founded Clovis Capital Management in 2002, a bottom-up, fundamental, concentrated long-short equity manager which at its peak had $2.8B under management. He served as Chief Executive Officer with responsibility for all non-investment activities at the firm. From 1995-2002 Bill was a Principal and Executive Vice President at Cramer Rosenthal McGlynn (CRM) where he served on both the Operating and Strategic Planning Committees. Bill earned a BA in Economics from Bucknell University, 1985. He is a Trustee and Board Member at The Evergreens Cemetery in Bushwick where he also serves on the Investment Committee.