Hey HDVY'ers
Notice to Shareholders is on the HDC website
April 21, 2014
Dear Fellow Owners of Health Discovery Corporation,
On behalf of the Health Discovery Corporation team, I want to update you on an exciting development.
SVM Capital, LLC ("SVMC"), a joint venture 45% owned by Health Discovery Corporation ("HDC" or the "Company"), has been informed that it achieved a tie for first place in an investment contest for emerging quantitative funds. The contest organizer, BattleFin, announced that the capital sponsor, a major investment fund, is interested in pursuing the winning strategies and moving to due diligence by requesting additional information before a capital commitment is considered.
The contest lasted 11 weeks and there were 20 entrants in SVMC's category. BattleFin audited the daily results of all participants. In terms of return, SVMC placed third, with a return of 6.7% compared to 0.8% for the S&P 500, for an "alpha" of 5.9% for the period. However, after portfolio risk measurements were factored in, SVMC moved into first place. SVMC's lower volatility, zero leverage and proportion of up days (37) to down days (16) were important factors in the risk analysis by the organizer and capital sponsor. Other important factors included SVMC being fully invested every day, maintaining a long/short ratio of 80/20 and rebalancing the portfolio only once during the contest.
The central element in SVMC's performance was the investment algorithm created using the support vector machine technology ("SVM"), which was invented in collaboration between HDC's chief mathematician, Hong Zhang, Ph.D. and the investment domain expert, Mark Moore, Ph.D. The SVM is a supervised machine learning system, a branch of artificial intelligence, which has many applications where vast amounts of complex data must be analyzed. The key to creating the algorithm was adapting the SVM, customarily used in analyzing static data like genes, for use in a dynamic data environment, like stock prices. SVMC believes it may be feasible to construct comparable algorithms for foreign stock markets and other financial markets such as currencies and commodities because price movements in these markets are also subject to a great many complex variables.
SVMC and HDC believe this is an important step in the commercialization of HDC's proprietary technology in a field outside of medical diagnostics, specifically, financial markets. The Company will continue to provide updates regarding additional developments as they become available.
With kind regard on behalf of Health Discovery Corporation,
Kevin Kowbel
Interim Chief Executive Officer and Chairman
