At the end of 2016, I was playing bridge with Charlie Munger and our usual crew. CNBC was on in the background, talking about a famous bet that Warren Buffet had wagered that no active money manager could beat the basic market indexes, such as the S&P 500, over a five-year period. I turned to Charlie and said, “I can beat the market; if that’s all you want to do, I know how to do it.” He rolled his eyes, and said, “nobody can do it; if you can, you’ve got a home run.” That was an impetus for starting Anacapa Advisors.
After that conversation, I spent four months looking at historical data and my most successful trades from the past 25 years. We hired two PhDs and a computer scientist to back-test our strategy and maximize a system that would be most effective. We used one Ph.D. to help create a strategy and another to verify and check if there was anything we were missing. After running 13 years of historical data, we found that the results were extraordinary, almost too good to be true. So, I started a six-month paper trade account using the exact strategy with live trades. That strategy went equally well as the back-test, so in April 2018, we brought in an outstanding general partnership and launched Anacapa Alpha.
Anacapa Alpha is designed to be your one and only equity fund to manage all your U.S. equity exposure. Most investors would not choose to put all their investments with one manager, but it is built to do just that. In effect, we are buying 500 stocks through market ETFs. We then harvest short-term option income to augment returns and use the dividend income from the ETFs to buy hedges. Anacapa Alpha outperformed our highest expectations, so we launched Anacapa Quantum at the beginning of 2020, and its returns have been equally exceptional. Anacapa Advisors is proud to offer these with a low fee structure favorable for investors. My mom was our first investor; I’m invested, my family, friends, and business associates are invested, and I hope you consider it as well.