Covenant Capital Management covenant.altavra.com

Covenant Capital Management takes positions based on a long-term, technical, trend following system created by Scot Billington and Brince Wilford. Discretion is used only in extremely rare cases to interpret the existing rules of the system. Technical analysis uses the theory that a study of the markets themselves will provide a means of anticipating price changes. The system attempts to participate in long-term market trends. It does not try to predict trends. The system does not try to predict when a trend will start, how long it will last, or how high or low it will move. After a trend has occurred, Covenant Capital Management does not seek to explain why a trend may have occurred or why it behaved as it did. The only prediction made is that trends will continue to exist as a phenomenon of the market place.

Covenant Capital Management can only recognize a trend after some, most or all of it has already occurred. The system identifies when a trend may be beginning and enters the market at that point. The same technical analysis indicates when the trend may be ending, and signals to exit the market at that point. The system is set up to minimize commissions and the number of trades per market when compared to other futures trading systems. Stop losses will be placed in the market as soon as entries are made, and they will be modified weekly. A stop may not necessarily be changed from week to week. The system does not allow more than one round turn trade a week in a given market. Initial risk will be limited to a fixed percentage of the core equity (core equity is the total equity in the account less the total amount at risk in other open positions) of the account. As profits accumulate in a position, a greater percentage of risk will be tolerated; however, at a constant pre-determined level, Covenant Capital Management may use options or may decrease the position size to reduce risk.

Exits are executed on trailing stops. Position size may be dramatically reduced to lower risk, but a position will not be exited until the market hits the pre-determined trailing stop level. Covenant Capital Management may use multiple triggers to enter and exit a position incrementally and at different times. Covenant Capital Management trades a diverse portfolio of markets and market sectors including but not limited to, metals, meats, grains, energies, softs, foreign currencies, domestic and foreign interest rates, and domestic and foreign stock indices. By broadly diversifying across a wide array of markets, Covenant Capital Management attempts to diminish the importance of any one position in the portfolio. The individual positions are designed to be relatively small and the stops are designed to be relatively wide to avoid multiple entries and exits that increase the commission burden on an account. Larger initial risks per contract minimize the effects of large gap moves through the stop levels as a percentage of the original risk. Clients should expect annual drawdown's of at least 10-15% in the Original Trading Program.

Covenant Capital Management conducts continuing research to improve its trading methodology and risk management parameters. Markets may be added to or subtracted from the portfolio. Covenant Capital Management may make changes to its investment strategies without notifying current investors.

The Original Trading Program began trading September 1, 1999 with both proprietary and client funds.

The Aggressive Trading Program will take the exact same trading signals as the Original Program; however, it will take roughly 1.75 times the position size than the same account would take in the Original Program.  This will result in considerably larger swings in account equity.   The Aggressive Trading Program has lower minimum account sizes.  Participants in this program must be prepared for larger drawdown's and nearly twice the volatility of the Original Trading Program.  The Aggressive Trading Program began trading in January 2004.

The Optimal Trading Program will take initial risks up to 5 times that of the Original Program. While the trades will be the same as the Original Program, the dramatic differences in position sizes and account volatility may result in much different results. Drawdown's in excess of 50% will be common in this program. Covenant Capital Management will utilize a money management overlay that will decrease the account sizes when certain return hurdles have been reached. The Optimal Trading Program began proprietary trading in August of 2006.

The Long Commodity Trading Program differs from the Original Program in trades taken, trade size, and portfolio composition. The Long Commodity Trading Program only trades commodities and does not trade any currency, stock index, or interest rates. This program takes only long signals and will take some long signals not taken by the other programs. The Long Commodity Trading Program began trading in March of 2009.

Scot Billington is the Chief Manager, the Head Trader, and a 45.05% equity holder of Covenant Capital Management. Scot Billington is registered with the Commodity Futures Trading Commission as a Principal and an Associated Person of Covenant Capital Management. Scot Billington developed the trading systems that will be used by Covenant Capital Management. He is actively involved in every aspect of Covenant Capital Management’s business and trading. Scot Billington worked as an assistant trader from for Bradford & Co., Incorporated, a Futures Commission Merchant and division of J. C. Bradford & Co July 1993 until May 1999 when he began forming Covenant Capital Management. At J.C. Bradford he was responsible for executing client orders, advising clients, and developing systems. Beginning in April of 2002, Scot Billington worked for Ronin Capital, an Option Trading Investment Company at the Chicago Board Options Exchange where his main function was making markets in the OEX 100 Index options market. Scot Billington was a member of the Chicago Board Options Exchange and a Market Maker at Ronin Capital in OEX 100 Index options until January 4, 2005. Scot Billington has been a Principal and Associated Person of Covenant Capital Management since its inception on July 30, 1999 and he became a branch office manager of Covenant Capital Management on July 13, 2005.

Brince Wilford is the Secretary and is a 45.05% equity holder of Covenant Capital Management. He is registered with the Commodity Futures Trading Commission as a Principal and Associated Person of Covenant Capital Management. Brince Wilford assists in the execution of trades as directed by Scot Billington. He is actively involved in every aspect of Covenant Capital Management’s business and trading. From August of 1999 to July of 2002 he served as Director of Business Development for Inphact, Inc. His primary responsibility was directing sales and national accounts. Inphact was a provider of radiology services over the Internet. Brince Wilford worked for Healthcare Realty Trust, Inc. in the Investments Department from August of 2002 through January of 2006 where his primary responsibilities included business development, financial modeling, consulting and acquisitions work. Healthcare Realty Trust is a publicly traded Real Estate Investment Trust (NYSE:HR). Brince Wilford resigned from Healthcare Realty in 2006 to focus full time on the advisory. He returned to part-time employment at Healthcare Realty in January of 2008 where he manages the Acquisitions Department. Presently, Brince Wilford provides investment consulting services to various firms in the healthcare, real estate, and entertainment industries. Brince Wilford has been registered as a principal and associated person of the advisor since July 30, 1999.

Scot Billington and Brince Wilford may both work in consulting roles for profit or non-profit organizations in the future. They also may undertake other business interests. They both expect to serve on the boards of various for profit and non- profit organizations in the future.

The descriptions above are from the manager’s disclosure document.

THE RISK OF LOSS IN TRADING FUTURES, OPTIONS AND OFF-EXCHANGE FOREX CAN BE SUBSTANTIAL.  PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.  PLEASE READ THE CTA'S RISK DISCLOSURE DOCUMENT CAREFULLY BEFORE INVESTING MONEY.