HOME      PHILOSOPHY      PRINCIPAL      SERVICES      RESEARCH      PROPRIETARY TECHNOLOGIES      FORTHCOMING BOOK      SITE MAP      CONTACT US

Proprietary Technologies

Alignment Capital Group has received patents on two primary analytical technologies:

1. Calculation of performance attribution, U.S. patent 7,058,583

Briefly put, ACG can use neutrally weighted portfolio IRR and zero time–based portfolio IRR in combination to calculate the base return of a private equity portfolio, the return resulting from selection skill and the return resulting from timing. The base return is an indicator of the quality of deal flow and the ability of the manager to select quality investments. The selection return is an indicator of the manager’s ability to weight the investments in the portfolio so as to maximize return—a repeatable skill. The timing return is associated with the fortunes of the particular market in which the investments were made—non-repeatable good (or bad) luck.

ACG’s performance attribution calculation also applies to a portfolio’s performance versus a public market index (see Long and Nickels 1996), to its risk/return profile and correlation with a public market index, and to almost any other imaginable portfolio return attribute.

Proprietary performance attribution analysis

2. Calculation of risk/return profile and correlation with the public market, U.S. patent 7,421,407

This analytical technique uses x,y pairs of private market returns and the opportunity cost return to the public market index (see Long and Nickels 1996) to determine the risk of the private equity portfolio’s investment outcomes and its correlation with the public market. ACG refers to this method as the opportunity cost outcome method (OCOM) plot.

proprietary OCOM plot analysis

ACG has also developed proprietary quantitative methods for asset allocation, sub-asset allocation and cash flow forecasting.