The Striker Report - gold standard for objective trading research

Frank Pusateri

President, Adirondack Portfolio Management, Inc (NFA 292949)

Program(s) Developed: Managed futures consultant

Interviewed by John F. Gallwas - Founder of Striker Securities

Frank Pusateri has been a managed futures consultant and industry leader for over 30 years. He is the president of Adirondack Portfolio Management, a consulting firm that specializes in managed futures, as well as Executive Vice President of Fall River Capital a leading CTA and CPO firm.

Mr. Pusateri is also Founder of Chicago's "CTA Expo" held each November during the Futures Industry Association (FIA) Expo. At the CTA Expo hundreds of CTAs and money managers gather to network and share data. Thirty minute sessions by 1-2 speakers on Mass Marketing, Target Marketing, and Compliance. Past speakers include Sol Waksman of Barklay Trading Group, Bucky Isaacson, and Charlie Wright.

John Gallwas: Why in the 80's and 90's did you continue to specialize in managed futures when many in the alternative investment industry quickly became proponents of Hedge Funds?

Frank Pusateri: I always believed there was a place in a portfolio of investments for managed futures. The advantages of managed futures seem to have been lost in the rush to hedge funds and their published positive performance results.

John Gallwas: How would you describe the advantages of managed futures?

Frank Pusateri: The worldwide futures markets provide the Commodity Trading Advisor with the ability to trade futures contracts ranging from physical commodities like gold, soybeans and crude oil to financial futures like stock indices, foreign exchange and both long and short term interest rates. The futures exchanges provide daily price discovery and liquidity. It is just as easy and costs the same to go either long or short.

Commodity Trading Advisors are required to be registered and to provide certain information to prospective investors, including their background, track record and fees. They can expect to be audited by the National Futures Association very three years.

Many investors in managed futures open individual accounts and only give the Commodity Trading Advisor (CTA) authority to execute trades for their account. In other words the CTA has no authority over or access to the cash in the account. Individual accounts also offer daily liquidity and transparency.

John Gallwas: BarclayHedge, which provides alternative investment industry performance data, reports that Managed Futures were up 13.90% in 2008 and that Hedge Funds were down 21.44%. What is the structural difference between Managed Futures and Hedge Funds and why the performance difference?

Frank Pusateri: The term Hedge Fund covers a board variety of investment strategies, most of which do not trade hedged positions or try to hedge their positions. Hedge Funds trade everything from stocks and bonds to a wide range of illiquid securities and physical assets. An overall hedge fund industry performance number is aggregating the performance of totally unrelated trading strategies and should be used carefully. Some Global Macro Hedge Funds use very similar approaches to those used by Commodity Trading Advisors.

2008 saw declines in most of the world�s stock markets and in physical commodity prices. Hedge Funds which held only long positions in the stock market suffered substantial losses. Other funds holding illiquid assets found there was no market for what they owned. CTA's were able to capitalize on these moves through short positions.

John Gallwas: Given the 2008 record of up 13.90% in 2008, why have we seen the total money under management drop 15% to $198.7B in the first quarter of 2009?

Frank Pusateri: When portfolio managers looked around for liquidity in late 2008 and early 2009 the liquidity of managed futures became a disadvantage to the managed futures industry. Because of the easy access to funds in managed futures portfolio managers drew these funds to meet redemptions and finance other positions.

Because of Striker's experience with 3rd party system developers and our "no-conflict" structure, we are uniquely suited to offer emerging professional CTA services to customers. Investors seeking higher returns will often place funds with these up-and-coming advisors, recognizing the potential advantage of ground-floor entry. Please view our current list of CTA's that have been screened by Striker to add to your portfolio.

This interview is for informational purposes only and is not intended to be a solicitation of any kind. Trade only with risk capital. The risk of trading can be substantial and each investor and/or trader must consider whether trading systems are a suitable investment.