From Precy Dumlao, Opalesque Asia:

Chicago-based AM Capital Management which specializes in hedge fund investment strategies for qualified institutional and individual investors, started 2012 up +21.19% versus the DOW index + 3.36%, NASDAQ + 5.88%, and the S&P 500 index at + 4.25%. AM Capital President Aaron Miller, told Opalesque in an exclusive interview, that his firm took advantage of "deeply discounted prices in specific companies," to achieve the double digit return last month.

Since its inception in July 2009, AM Capital is up 36.73% and has outperformed the markets significantly except in August and September 2011.

Miller commented, "January 2012 performance was up 21.19% however 2011 performance was down 38.45%. Unfortunately in 2011, AM Capital under estimated the impact Europe had on the U.S. and global economy. As a result we underperformed, but it also allowed us to take advantage of deeply discounted prices in specific companies and that's why we believe 2012 will continue with a decent year of performance".

Looking ahead, Miller believes over 2012 there will be sectors that are still considerably undervalued. While he admits there are underlying risks, systemic risks seem to have subsided that offer fresh opportunities.

"AM Capital plans on continuing to do vigorous research that enhances the chances for performance. AM Capital Advisors views risk management as an inherent part of the firm’s culture. Our attention to risk management influences strategy allocation, manager selection and portfolio construction. Hedge fund investing has many inherent risks and our investment approach seeks to identify and understand the risk applicable to each individual hedge fund investment as well as to each hedge fund portfolio as a whole. Our investment professionals have significant experience in evaluating the broad range of investment strategies that hedge funds can pursue," Miller continued.

Background
Miller described AM Capital’s strategy as consisting of heavy research on public liquid companies. "After locating a catalyst on why we think a company is over or under valued we take a positions either long or short in that company. We don't use margin, but do use leverage for hedging purposes and to enhance performance."

He continued, "AM Capital will outperform indices significantly over time."

According to Miller, "Our hedge fund seeding strategy seeks to capture enhanced returns and minimize risks by:"

• Intensive research on wide ranges of stocks, and identify ones that are under or over value

• In the meantime, we keep track of stocks that are more volatile and have extra premium in the derivatives

• We execute derivatives early enough so we will maximize the premium

• For longer term positions, we identify quality stocks that are under valued with a higher dividend

• We refuse to create unnecessary risk with the end goal of outperforming as well as preserving capital.

He explained that AM Capital strategy fares well in a diverse type of market conditions. Since the firm uses leverage, AM Capital is careful not have too much exposure in the wrong situations.

This explains why the company relies heavily on research because if their research’s initial positions create value, it increases the chances of being rewarded more times than not, Miller added.