PATHFINDER StatArb is a quantitatively complex, computationally heavy, proprietary strategy designed to exploit market inefficiencies. Since StatArb is beta-neutral, it is an alternative investment with low volatility and minimal correlation with the broad market. It is appropriate for sophisticated investors and financial advisors.
StatArb (Statistical Arbitrage), sometimes referred to as Pairs Trading, takes advantage of temporary misalignments in relative value between similar companies to generate trading opportunities. PATHFINDER StatArb identifies misaligned pairs and capitalizes on their statistical tendency towards realignment of relative value to generate returns.
Since long and short positions are taken simultaneously in equal dollar amounts, the strategy is beta neutral- meaning, that there is low overall market risk exposure. Market volatility can generate more trading opportunities and the benefit to recycle capital.
PATHFINDER StatArb is based on the tendency of the relative value between similar companies to remain approximately constant due to an efficient market. Market turbulence can create temporary misalignments in relative value, creating an unstable disequilibrium, which is eventually driven back to the stable state by mean reversion.
The diagram on the left illustrates relative stock movements between Coca-Cola Company (KO) and PepsiCo Inc. (PEP), two very similar companies which should have their valuations tightly correlated. When the pair's valuation ratio is stretched from a mean value, a trade can be opened by simultaneously shorting PEP and buying KO long. Upon mean reversal, the trade is exited by covering the short position in PEP and selling the long position in KO.
PATHFINDER is operated by Bhatt Innovation Capital LLC (BIC), a California registered investment adviser based in the San Francisco Bay Area. BIC was founded in 2015 by Vinit S. Bhatt and Hilarey Bhatt, MD.
As an alternative asset manager, PATHFINDER is well differentiated from its peers. The team manages all aspects of business, including investment strategies, portfolio management and trading.
Prior to PATHFINDER, this team successfully founded and operated a long/short equity hedge fund for 5 years called Bhatt Innovation Capital LP. That hedge fund's strategy laid the foundation for PATHFINDER StatArb.
The team started PATHFINDER to provide the benefits of separately managed accounts to investors and financial advisors, and to make alternative asset investing less exclusive and accessible to all investors.
Going forward, PATHFINDER will be introducing more StatArb strategies uncorrelated to the market, that unlike hedge funds, will provide transparency, accessibility and eliminate performance fee. We see our quantitatively complex strategy benefitting from research we are doing on AI-based approaches, such as machine learning.
Vinit S. Bhatt is a portfolio manager, founder and managing member of PATHFINDER StatArb. His deep knowledge in science and engineering coupled with 27 years of experience in investing affords him the potential for unique insights into both fundamental and quantitative strategies.
From 2015 to 2020, Vinit founded and operated Bhatt Innovation Capital LP, a long/short public equity hedge fund focused on technology, life sciences and industrial advancements. The fund outperformed the S&P 500 Total Return Index, the HFRX Fundamental Growth Index and the HFRX Equity Hedge Technology/Healthcare Index.
From 1998 to 2015, Vinit was a portfolio manager for Snyder Capital Management, an affiliate of Natixis Investment Managers, with over $2 billion AUM. At SCM, Vinit invested in high-quality, under-appreciated companies for superior returns, focusing on biopharma, technology, and process industry.
Vinit is a holder of an MBA in Finance from The University of Chicago – Booth School of Business, an MS in Chemical and Biochemical Engineering from the University of Virginia, and a BS in Chemical Engineering from the University of California-Berkeley. He is a graduate of Stuyvesant High School in New York.
PATHFINDER's custodian, Charles Schwab, is the industry leader and largest custodian of Registered Investment Advisor (RIA) assets, providing custodial, operational, practice management, and trading support to more than 7,500 independent RIA firms.
Charles Schwab provides PATHFINDER with a comprehensive digital platform for secure opening of accounts, access to real time information and processing customer transactions.
Charles Schwab has strict internal practices and standards designed for safe custody of assets while providing transparency to holdings, trades, and fees.
As a registered broker-dealer, Schwab is subject to the rules and regulations of the Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority, the Municipal Securities Rulemaking Board, and all other exchanges of which Schwab is a member
Call us to learn more about PATHFINDER StatArb.
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Saturday - Sunday: By appointment
