Fledgling 141 Capital Prepares to Trade Client Accounts
HedgeWorld By Michael S. Fischer, Senior Financial Correspondent Tuesday, July 29, 2008 1:47:37 PM ET
CHICAGO (HedgeWorld.com)—141 Capital Inc., a new trading advisory firm, will start trading customer accounts during the third quarter.
141 Capital opened for business and listed on Pink Sheets (ticker: XXIS) in November. "We're the only or one of the very few stand-alone public [commodity trading adviser]s," said Chief Executive Errol Stone. "The shareholder should be able to benefit from the revenues produced from the CTA."
Initially, 141 Capital will trade grain futures and stock indexes, probably starting with the E-mini contract. The trading program will be fully systematic, Mr. Stone said. "We are going to be using some proprietary algorithmic trading systems."
According to previously released information, these systems include PS VWAP, a reactive system that works best when markets are trading sideways; a volatility momentum system, which combines pattern recognition features with volatility associated with directional momentum; and a reactive system that uses Bollinger Bands to take advantage of market pricing that diverges from fair value.
Mr. Stone said these systems were built using SpoozToolz, a product of Spooz Inc. Chicago-based Spooz Inc. is a substantial shareholder in 141 Capital, and its CEO and chairman, Paul Strickland, is Mr. Stone's partner in 141 Capital. Mr. Stone was a founder and served for six years at Spooz, most recently as executive vice president; he currently is a member of its board of directors.
Spooz Inc., a public company (Pink Sheets: SPZI), designs systems to simplify financial trading for hedgers and traders. The company's SpoozToolz and its modules add built-in trading capabilities to Microsoft Excel, combining a customizable interface, streaming quotes, charts, technical analysis, a comprehensive historical database and electronic trade execution into an Excel add-in.
Spooz will begin selling its products to institutions in about three weeks, according to Mr. Stone. The company also has a retail product in the pipeline, he said.
Mr. Stone said 141 Capital's use of SpoozToolz to build its systems "gives us extreme flexibility and speed, because whereas most institutions that build systems can sometimes take two to three months to hard code them, we can develop a system in a week."
He said that after hard testing on its three systems has been completed, the firm will use them to trade its own capital and "then once we feel that they work as well as we thought they would work, that's when we'll put our customer money into it."
Mr. Stone said he expected 141 Capital to start trading client accounts in late August or September. He said the program would cater to high-net-worth customers, with the minimum investment ranging from $50,000 to $100,000 depending on the system used.
He declined to elaborate on the differences among the systems or to discuss fee structure because he was still awaiting approval of the firm's Disclosure Document by National Futures Association, which he said he expected to receive later this week.
Before joining Spooz, Mr. Stone was a vice president of JumpStart Revenue Inc. Earlier in his career, he was a senior attorney at the Securities and Exchange Commission, practiced securities, corporate and real estate law and served as a senior counsel at Bank of America.
His partner, Mr. Strickland, has held seats on three commodity and securities exchanges as a floor trader, and during the 1980s developed modern index arbitrage techniques. He has also held trading, managerial and consultant positions with several firms, including Bear Stearns, G-Bar Partners, First Options Group, LIT McDonald, Petco/Peters and Transitions Group.
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