Cloning FAQs

What is a clone?

A clone is a portfolio of stocks created based on the stock ideas of one or more fund managers. We backtest all of our clones assuming that investment in those stock ideas is made at the time they are made public - thus giving our users the confidence to apply those stock ideas for themselves. This process is called "cloning".

Why is cloning valuable?

Cloning allows investors who might not otherwise qualify to benefit from the stock picking prowess of hedge fund managers. Numerous academic studies have demonstrated the effectiveness of cloning and its potential to consistently outperform. Cloning can also be a powerful way to validate an investor's own stock picks or find new ones.

How do I know which clones perform best?

Simple. Our research service allows you to instantly identify the top performing clones across several different time horizons up to ten years. You can view clones by investment theme (ie sector, value, activist, international), and sort by several performance metrics including: total return, annualized return, sharpe ratio, annualized volatility and alpha. Clone performance is updated daily.

What public filings are used to derive stock holdings?

The form we aggregate is the 13F-HR form that managers must file with the SEC no later than 45 days after quarter end. We automatically aggregate the public filings of nearly 300 institutional investment managers and hedge funds.

How are the managers/funds in your database chosen?

The funds in our database represent roughly 70% or more of the total market value disclosed by all funds that file 13F-HR forms. When creating our fund database, we generally chose the largest institutional funds and hedge funds as measured by the total market value disclosed on their filings. Most of the managers we track are fundamentals driven, value oriented investors. We tend to avoid funds that are owned/operated by prime brokers, those with large ETF businesses, and those with very high turnover.

What happens if a fund goes out of business?

If a fund is no longer making filings, clones of that fund will no longer be accessible going forward. However, the historical effect the manager had on clones it impacted remains unchanged and is not purged - this helps us avoid survivorship bias.

What is a clone strategy?

You can choose to follow different stock idea attributes from one or a group of managers. For example, following Warren Buffett's largest holdings each quarter is different than following his largest new holdings. AlphaClone currently allows members to clone:
  • Top Holdings (largest positions)
  • Best Ideas (largest new positions)
  • Popularity (largest number of holders - for groups only)
Each cloning strategy has its own set of buy and sell rules. View our glossary for more information.

Can I customize a clone?

Yes, research service members can customize clones across several attributes including:
  • Strategy (top holdings, best ideas, popularity)
  • Number of holdings
  • Long-only or hedged
  • Rebalance method (equal weighted or normalized)
Members can also generate clones based on a combination of up to 30 funds (a fund group) that they select. All clones (both user-generated and pre-generated) can be customized.

How often do you rebalance your clones?

We rebalance (add/delete holdings and reset investment weights) quarterly, 5 business days after the expiration of the SEC's deadline to file form 13F-HR (45 calendar days after each quarter end).

Can I employ a hedge in my clone strategy?

Yes, you can backtest the hedged performance of clone strategies by "shorting" the S&P 500 Total Return index. AlphaClone performs hedges on its clones assuming that 100% of the clone's invested principal is always in the clone's long positions. Research service subscribers can select from more than one hedging level. For example:
- $10,000 portfolio, hedged 25%:
  • $10,000 long
  • $2,500 short S&P 500
  • - $10,000 portfolio, hedged 50%:
  • $10,000 long
  • $5,000 short S&P 500
  • - $10,000 portfolio, hedged 75%:
  • $10,000 long
  • $7,500 short S&P 500
  • - $10,000 portfolio, hedged 100%:
  • $10,000 long
  • $10,000 short S&P 500
  • Hedging is meant for illustrative purposes only and results will vary depending on choice of brokerage and products used (ETFs, futures, options). Hedged clones do not adjust for short rebates.

    Do you account for survivorship bias?

    Yes, we account for survivorship bias in two ways. First, we include both active AND inactive securities in our backtest results. Second, we include funds that have gone out of business in our backtest results to preserve the historical effects that fund had on clone performance (see "What happens if a fund no longer files or goes out of business?")

    Do you provide insight into short positions?

    No. manager's who file 13F-HR currently are not required to disclose their short positions.

    What are the limitations of cloning?

    We have gone to great lengths to ensure the quality and timeliness of our data and simulations. However, our clones are restricted to common equity investments that trade on US markets, are publicly disclosed, and for which we have been able to obtain return data.

    Are you affiliated with the funds in your database?

    AlphaClone is in no way affiliated with the investment funds in our database and the service does not attempt to replicate a manager's specific investment approach or strategy.