Overview

The investment objective of 118 West Capital Management is to produce superior long-term returns by investing in a concentrated portfolio of publicly traded companies in the Cleantech sector, and managing overall asset allocation among equities, cash, equity options and index options. 

Long equity strategy

To achieve this objective the strategy will rely on a top down screen which is designed to identify strong companies with proven business models and durable competitive advantages. After eliminating companies with exceedingly high valuations that limit the potential for future returns, further analysis is conducted on remaining candidates using bottom-up fundamental analysis. 

Short equity strategy

In a process that is a mirror-image to the Long Equity Strategy, we start with a universe of companies in sectors which are experiencing structural decline, screen for poor operational and financial metrics, and then perform deeper fundamental research to identify the companies whose current prices reflect a material overstatement to our independent assessment of intrinsic value. 

Options strategy

We purchase put options on Cleantech-focused and total market indices to hedge the overall long exposure. 

We also sell put and call options on individual equities to generate income, enter/add to, or reduce/exit equity positions.

Risk management 

Asset Allocation—Our proprietary market cycle assessment tool, which performs regular “spot checks” on the economy and market sentiment, provides guidance for balancing the portfolio’s long exposure against cash reserves, short equity positions, and long put options. The approach helps us rebalance appropriately (i.e., sell high, buy low), increase overall exposure when the risk-reward trade off is favorable and vice-versa, and purchase put options when they are undervalued. 

Portfolio Management—Ongoing analysis of the business prospects of the portfolio companies via continuous monitoring of publicly available information and ongoing correspondence with management. The concentrated nature of the portfolio—holding only 10 – 15 positions at any given time—allows us to understand companies well.

Advantages of our strategy 

Strong Exposure to an Industry of the Future—Driven by the global transition away from fossil fuels, investing in Cleantech is investing with the wind at our back.

Active Management—Strategy seeks to generate superior alpha in a concentrated portfolio of stocks with better than average prospects for long-term compounding and via asset allocation driven by assessments of the market cycle.

ESG—The Cleantech sector focus is a natural fit for investors with ESG-related goals or requirements.