Typhon Capital Management typhon.altavra.com

Hydra is a multi-strategy program that allocates to multiple componentized, low correlated single sub-strategies to provide clients a diversified portfolio consisting of currency, fixed income, and grain exposure. The sub-strategies utilized by Hydra all target overnight margin-to-equity usage of 20% or less, and are currently allocated with 4.17x nominal leverage with a targeted peak margin-to-equity utilization of 32.5%. This use of leverage combined with the leverage inherent to futures results in Hydra potentially being highly volatile. Typhon Capital Management reserves the right to increase or decrease the margin usage and/or the amount of notional funding used by Hydra at any time. Hydra is appropriate only for Qualified Eligible Participants with moderate-to-aggressive risk profiles.

The sub-strategies in Hydra utilized and their respective relative nominal allocations are determined by James Koutoulas. The methodology employed for selection begins with a qualitative and quantitative screening and due diligence process. Selected strategies are then balanced according to principles of risk-matching, as determined by proprietary analytical software developed by Typhon Capital Management. Clients should be advised, however, that the risk-balancing software is limited in the granularity of its allocation sizes by the minimum unit sizes of each underlying sub-strategy. Typhon Capital Management and James Koutoulas reserve the right to replace or remove any of the strategies utilized by Hydra at any time and to alter their respective nominal allocations. As of the date of the last disclosure document, the nominal allocations used by Hydra, per $300,000 cash invested, were:

.: Amphora Oil Program: $250,000, 20%
.: Tauros Livestock Strategy: $250,000, 20%
.: Plutus Grain Strategy: $250,000, 20%
.: Treasury Inflection Program: $500,000, 40%
 

Hydra is a multi-strategy program that allocates to multiple componentized, low correlated single sub-strategies to provide clients a diversified portfolio consisting of currency, fixed income, and grain exposure. The sub-strategies utilized by Hydra all target margin-to-equity usage of 20% or less, with the portfolio currently allocated with 8.33x nominal leverage with a targeted average margin-to-equity ratio of 19% and a peak margin-to-equity utilization of 54%. This use of leverage combined with the leverage inherent to futures results in Hydra potentially being highly volatile. Hydra is appropriate only for Qualified Eligible Participants with aggressive risk profiles.

The sub-strategies in Hydra utilized and their respective relative nominal allocations are determined by Mr. Koutoulas. The methodology employed for selection begins with a qualitative and quantitative screening and due diligence process. Selected strategies are then balanced according to principles of riskmatching, as determined by proprietary analytical software developed by Typhon. Clients should be advised, however, that the risk-balancing software is limited in the granularity of its allocation sizes by the minimum unit sizes of each underlying sub-strategy. Typhon and Mr. Koutoulas reserve the right to replace or remove any of the strategies utilized by Hydra at any time and to alter their respective nominal allocations. As of the date of the last disclosure document, the nominal allocations used by Hydra, per $300,000 cash invested, were:

.: Hermes Currency Program: $1,000,000, 40%
.: Phix Contrarian Program: $250,000, 10%
.: Plutus Grain Strategy: $500,000, 20%
.: Tauros Livestock Strategy: $250,000, 10%
.: Treasury Inflection Program: $500,000, 20%

The Treasury Inflection Program is a systematic trading program comprised of technical analysis of the ten-year and thirty-year treasury futures. The system is a short-term trend following system designed to improve substantially on traditional trend following systems in two significant ways:

1. Using inflection points to predict the onset of micro-trends rather than to wait for the confirmation of trends.

2. Using mathematical probabilities to generate intra-day risk reduction trades to reduce the system’s exposure to the initial trade at points where the system predicts an intraday reversal of the trend.

The Treasury Inflection Program generally trades frequently. However, with relatively small numbers of contracts per unit, it executes an average of 300 round turn contracts per million dollars in exposure per month. The Treasury Inflection Program is expected to have relatively low volatility on a fully-funded basis, though, can be substantially volatile for notionally funded accounts. The low volatility of the overall program is achieved, in part, by utilizing lower costs of trading, identifying market inefficiencies, mitigating market directional risk and having low margin utilization. The short-term Treasury Inflection Program can perform well in most volatility environments. In summary, the Treasury Inflection Program identifies trends in treasury futures and establishes positions in such a way as to minimize outright risk while maximizing overall risk-adjusted returns. Past results are not necessarily indicative of future results.  The risk of loss in trading futures, options and off-exchange forex can be substantial. 

The Plutus Grain Strategy is a discretionary strategy based on a combination of supply/demand fundamentals and technical analysis which attempts to define trends and/or changes in trends in various agricultural commodity markets. Fundamental analysis incorporates factors such as production, domestic and foreign demand, storage cost and availability, governmental issues, and weather, both in the United States and around the world.

The Plutus Grain Strategy primarily trades agricultural futures spreads including but not limited to corn, soybeans, wheat, soybean meal, soy oil, oats, and rice with trade allocations between the commodities based on potential risk vs. reward. Positions taken are primarily spreads:

Intra-commodity spreads between calendar months (example: December corn vs. March corn),

Inter-commodity spreads between different commodities (example: December soy oil vs. December soybean meal),

Inter-market spreads between markets (example: Chicago December wheat vs. Kansas City December Wheat).

The Plutus Grain Strategy uses spreads as the primary source of position in an attempt to minimize the volatility of trading futures. Approximately 90% of the Plutus Grain Strategy positions utilize futures spreads. Additionally, the Plutus Grain Strategy may take positions in the futures and or options markets when market conditions meet our risk parameters. The Plutus Grain Strategy does not engage in selling options short.

The Amphora Oil Program is primarily a technical oil spread program, however, fundamentals are also taken into consideration when extreme market conditions are anticipated or encountered that could affect current or potential portfolio positions. The Amphora Oil Program uses custom proprietary statistical and analytical software that provides position entry and exit signals based upon custom technical algorithms, indicators, and formulas based on price action, volume, and market statistics combined with other industry standard technical analysis indicators and methodologies such as Standard and Exponential Moving Averages, Relative Strength, Stochastics, Average True Range, Directional Movement Index, Standard Deviations and others. The Amphora Oil Program utilizes several futures spreading strategies utilizing mainly intra-commodity calendar month futures contract spreads. These spreads include nearer month contracts in addition to spreads further back in the curve as the strategy dictates.

The Amphora Oil Program uses a pro-active management style of monitoring and managing investments in relation to risk, return, capital requirements, and market directions. Policies are in place to adjust positions as needed. Amphora uses conservative money management exposure guidelines. Amphora places strong emphasis on effective portfolio risk management to reduce exposure through effective management of leverage via appropriate margin-to-equity ratios. While the futures market incorporates highly leveraged products, the model only uses a small percentage of this leverage, typically 5-15%. This allows for positions to still capture profits while monitoring drawdowns and manage overall portfolio risk. Portfolios are managed with a proprietary margin to equity ratio methodology which provides a structural framework to manage portfolio exposure through continued position monitoring and scaling. In addition, portfolio risk exposure is mitigated at various times through position diversification, vertical spreading strategies, and inter and intra commodity positions as those opportunities present themselves. Multi-level portfolio risk management algorithms constantly monitor position drawdowns on a position by position basis.
 

The Tauros Livestock Strategy is primarily a livestock futures trading strategy with a small grain and treasury component. It also will employ energy, soft commodities, and options on occasion. Tauros mostly uses scalping strategies to exploit short-term market aberrations, in addition to some seasonal and momentum trades. Tauros averages 1000-2000 round turns per month per million USD, but can trade as low as 500 or as high as 3500.

The Tauros Livestock Strategy uses fundamental analysis for trade conceptualization coupled with technical analysis to determine entry and exit points. Exit levels are determined before the trade is entered. The Tauros Livestock Strategy Program aims to "hit and run," taking small chunks from the market many times, only when there are readily defined trading opportunities with high probability of profit.  Past results are not necessarily indicative of future results.  The risk of loss in trading futures, options and off-exchange forex can be substantial.

The holding period for seasonal spread strategies ranges from a few days to a few weeks with hold times in excess of a month being rare. Flat price trades are typically entered and exited intraday, with the occasional overnight hold usually lasting less than 4 days.

The Tauros Livestock Strategy sets entry and exit points with clearly defined risk before a trade is entered. Often, the program initially enters a trade with a partial position, then adds exposure as the trade progresses. Much of Tauros’s trading is intraday scalping, meaning that the program is not in the market for a long period of time. The risk/reward on these trades are usually not as high as those of longer-term trades, but Tauros executes only the highest probability trades to try and maximize the win rate. Tauros is also frequently flat ahead of major fundamental reports, and subsequently makes momentum trades following the reports. This greatly reduces the substantial risk of a unfavorable gap against the Program that could occur due to a surprise, adverse report. Tauros is never a net seller of options.

The Phix Contrarian Program is an equity index, long-short, quantitative trading program that is focused on extracting alpha through price patterns and human psychological patterns that repeat themselves. It is a short-term approach that trades mean reversion to the direction of the trend (long-term, intermediate-term, short-term) as defined by the Phix Contrarian Program’s proprietary algorithms. Phix trades the S&P 500, NASDAQ, and Russell 2000 index futures.

The Phix Contrarian Program’s trade duration is approximately 3 days on average, with the range being from 1 to 7 days. The program applies strict money management rules, disciplined entry and exit criteria and price stops / time-in-trade stops. 

The Phix Contrarian Program is best suited for a volatile environment, either on the downside or upside, and one where countertrends revert in typical fashion to the direction of the trend. Since markets generally sell off or correct more quickly than they rise, a bearish environment may produce faster profits than a bullish environment.

The Phix Contrarian Program incorporates risk management in every step of the portfolio construction process. Phix remains in a 100% cash position, about 50% of trading days. Risk is also controlled through position sizing, which is monitored daily, and is algorithmically linked to market volatility. The program incorporates a range of trading systems that are vetted individually and are also studied for cross-correlation. Systems within the portfolio have the goal of smoothing the program’s equity curve as well as generating absolute returns. Four trading systems are combined to create the strategy as a whole. Finally, the strategy endeavors to only take risk/positions in the direction of the trend, which has historically increased its win/loss ratio, and most importantly, looks to contain the risk of catastrophic loss.  Past results are not necessarily indicative of future results. The risk of loss in trading futures, options and off-exchange forex can be substantial. 

All trading systems have money management stops that are price-based, pattern-based or time-in-trade based. In addition to the trading platform, the program employs third-party risk management software to run a variety of risk reports which focus on measures like draw-downs, standard deviation, Sharpe ratio, and VaR. The systems have inherent risk limits built-in as stops in various forms; if the stops are hit, the positions are liquidated and the system goes back to cash.

The Hermes Currency Program trades major currencies only once a day at the open of the Asian session. The strategy trades the following currencies: USD, EUR, CHF, GBP, SEK, CAD, AUD and JPY. The system accesses the market once a day after the close of the US session and performs its calculations based on our proprietary methods and makes a decision on whether or not a trade should be executed and, if so, it determines the stop-loss, limit and holding period.

Generally, the majority of currency moves are condensed into a few days of the month. It is the Hermes Currency Program’s objective to be in the market for those few days and stay out of the market when it does not identify a strong trading signal. Because of this, trades are generally held between 3 to 7 days depending on the currency pair.

Once an execution order is received from the system the Hermes Currency Program performs a manual non-discretionary execution at the open of the Asian session. If multiple executions are received the notional account is divided pro rata and trades are executed equally so as not to exceed the notional size of the account. By using this execution size methodology, the Hermes Currency Program limits the risk to the average stop size which normally varies from 0.4% to 4% depending on the volatility of the currency pair.

The Hermes Currency Program elects to execute at the Asian opening in an attempt to divide the market to predictable and unpredictable variables. The Hermes Currency Program hypothesizes that, at this time, most unpredictable variables have been priced into the currency markets and the resulting technicals are at their “purest” form of that 24 hour trading day, with mostly predictable variables remaining. As designed, variables considered unpredictable by the Hermes Currency Program are forms of news such as Non-Farm Payroll, interest rate decisions, and other price affecting elements such as the daily FIX, option expiration and others.

Once the Hermes Currency Program constructs the “pure chart,” it runs its models on it using rescaling methods to create additional, derivative charts, to which the Hermes Currency Program looks to identify instances of self-similarity. The Hermes Currency Program regards such instances as predictable variables, and they, in turn, are removed from the chart. The remaining “rescaled pure chart” is then compared to the market’s “pure chart” and the model looks to identify gaps between these two charts and pure indicators. This is done for every currency pair the Hermes Currency Program trades, but the model only issues one execution order per currency and may only issue an additional execution order for a currency if it is the currency with the USD as its pair. As an example, if the system has a EUR/GBP execution it will not issue any EUR or GBP executions unless it is EUR/USD or GBP/USD.

James L. Koutoulas, Esq., Chief Executive Officer and Investment Manager of Typhon Capital Management, began his career as a webmaster and computer programmer at Ursus Telecom, Corp., an international long-distance telephone carrier and Internet media company based in Sunrise, FL, where he worked from December 1995 through December 1998. While at Ursus, he also developed analytical software, initially as an employee and later as a consultant, for Salomon Smith Barney, a securities broker dealer, in Ft. Lauderdale, FL from June 1997 through August 1999.

James Koutoulas enrolled at the University of Florida in Gainesville, FL in August 1999, where he attended as a National Merit Scholar and AP National Scholar, and earned a Bachelors of Science in Finance in June 2003. While at the University of Florida, in July 2002, James Koutoulas founded Khaos Enterprises, Inc., an information technology and management consulting firm with operations in five major metropolitan markets. In September 2003, James Koutoulas enrolled at the Northwestern University School of Law in Chicago, IL, where he would graduate with a Juris Doctorate degree in June 2006. While at Northwestern, he continued to operate Khaos from Chicago, IL, and additionally served as the COO and head of software development at a risk analytics developer whose name is withheld under a non-disclosure agreement from January 2006 through October 2006 in Chicago, IL. In November 2006, he was inducted as a member of the Illinois Bar.

In March 2007, James Koutoulas accepted a position as the COO and CLO of St. Esprit Asset Management, a boutique fund of funds consulting firm, in Chicago, IL. In March 2008, he left St. Esprit to form Typhon Capital Management, a subsidiary of Khaos Enterprises based in Chicago, IL. Typhon Capital Management performs operational, legal, and business development functions for single-strategy and multi-strategy commodity and securities trading programs. He serves as the Investment Manager of the Treasury Inflection Program utilizing technology licensed from Acclivity, LLC. During his tenure at Typhon, James Koutoulas previously served as the CEO for two affiliated entities: Enki Capital Management, a discretionary fed funds CTA, in Lemont, IL, from April 2008 through November 2009, and Charon, Inc., a guaranteed introducer broker, in Chicago, IL, from September 2008 through February 2010.
 

Hadar Swersky, Co-Investment Manager of the Hermes Currency Program, graduated from the University of Westminster in London in 2000, where he graduated with an LL.B degree. He has been trading forex on a proprietary basis since 2002, from Tel Aviv, Israel. Hadar Swersky co-founded Tradelogic LTD, a proprietary forex trading firm, in Tel Aviv, Israel in January 2005 and began trading the Hermes Currency Program. Tradelogic expanded the strategy via Smart Box Capital LTD’s management of Smart Box Capital SPC. Smart Box Capital SPC is a Cayman Island Monetary Authority registered fund, which launched the program in fund format in March 2009. Smart Box Capital SPC’s back-office, compliance, and AML activity is managed by Trinity Fund Administration in Ireland. Smart Box Capital SPC’s auditor is KPMG LTD, Grand Cayman, and its legal counsel is Campbell’s Attorneys at Law, Grand Cayman.

Yehezkel Badur, Co-Investment Manager of the Hermes Currency Program, served as the Head of Long Term Savings at Avital Insurance, an insurance agency in Tel Aviv, Israel, from March 1999 through December 2004. In December 2004, he left to co-found Tradelogic, and also joined Smart Box in March 2009. For Tradelogic and Smart Box, Yehezkel Badur leads strategy development and is part of the execution team.

Steven G. Sapourn is the portfolio manager for Phix. Steven Sapourn began his career in the alternative investment industry in 1996 when he founded Sapourn Financial Services, a single and multi‐strategy hedge fund manager based in Bethesda, Maryland. As Sapourn Financial Services Chief Investment Officer, he developed and implemented its quantitative trading strategies. At Dekker Capital Management, a CTA based in Incline Village, Nevada, he served in various roles including Compliance Officer and Chief of Operations through February 2007. At that point, Steven Sapourn founded Diamond Peak Capital, LLC, a CTA based in Incline Village, Nevada to develop the Phix Contrarian Program. Steve graduated from the University of Colorado, Boulder in 1992 with a Bachelor of Arts Degree in Political Science.

Christopher S. Jones is the head of operations and compliance for Phix. As a key executive with Sapourn Financial Services, Christopher Jones was instrumental in developing and implementing procedures for capital raising, operations, trading and compliance. He served as SFS’s director of business development and client relations upon its formation in 1996. Christopher Jones was a business development and operations executive with Dekker Capital Management, a CTA based in Incline Village, Nevada, from June 2004 to July 2007. Chris graduated from the University of Colorado, Boulder in 1993 with a Bachelor of Arts Degree in Philosophy and Comparative Religion.

Jerod Larry Leman, Investment Manager of the Plutus Grain Strategy, was born and raised in a small farm community in Northern Indiana. He became involved in the markets in July 1989, helping his family farm distribute their grain. He enrolled in Purdue University in Lafayette, Indiana in August 1999 and graduated in May 2003 with a degree in Agriculture Economics. Upon graduation, Jerod Larry Leman joined Overmeyer Commodities, a commodities brokerage firm in Lafayette, Indiana as an Account Executive. In September 2003, Mr. Leman transitioned to a larger firm, Wellington Commodities in Carmel, Indiana. There, he worked with farmers, commercial, and speculative clients, and co-developed Plutus with Gary Webster. Also, while at Wellington, Jerod Larry Leman helped operate a direct-ship cash grain business, Starke Indy Direct, in Carmel, Indiana, where he has traded cash grain for an elevator. Jerod Larry Leman brought Plutus to Typhon Capital Management in September 2010.

Gary L. Webster, Investment Manager, was raised on a small farm in Northern Indiana and graduated from Purdue University in Lafayette, Indiana in 1972 with a degree in Agriculture Education. Following graduation, Gary Webster embarked on a career in teaching vocational agriculture, teaching at Lakeland High school in LaGrange, Indiana from June 1972 through June 1973 and Bremen High School in Bremen, Indiana from June 1973 through June 1974. From June 1974 through August 1976 he worked as a loan officer for Marshall County Bank and Trust in Argos, Indiana. Then, from August 1976 through December 1981, he worked as a self-employed farmer in Tippecanoe, Indiana. In December 1981 he began applying his lifelong education in the grain industry to the financial and management sides of the business, by going to work as a branch manager for Kosciusko County Farm Bureau Cooperative in Warsaw, Indiana. There, he managed a grain, feed and fertilizer facility until June 1984, when he performed a similar role as a grain manager for the Elkhart County Farm Bureau Cooperative in Goshen, Indiana until August 1987. At that time, Gary Webster became an Account Executive for Paine Webber in South Bend, Indiana managing grain futures and options accounts until October 1989. At that point, he left to serve as the Elevator Division Manager for Countrymark Cooperative in Indianapolis, Indiana. At Countrymark, Gary was involved in facility management, origination strategies, hedging and fundamental grain strategies and managed 29 million bushels of storage capacity. He left Countrymark in September 1995 to serve as an independent grain management consultant throughout Indiana until January 1997 when he returned to cooperative management as the Grain Division Manager for Impact Cooperative in Frankfort, Indiana.

Then, in June 2004 he transitioned to the brokerage business as an Account Executive for Wellington Commodities in Carmel, Indiana. At Wellington, Gary Webster concentrated on helping producers use futures and options to manage price risk with spreads and options. While at Wellington, he developed the Plutus Grain Strategy in conjunction with Jerod Larry Leman and they decided to form Hunter to offer the Plutus Grain Strategy on a managed account basis in conjunction with Typhon Capital Management in July 2010.

David John Holmes, Chief Operating Officer, joined Typhon Capital Management in April, 2010 and performs the standard duties of a COO, relating to manager selection, due diligence, operations, and business development. His previous work experience is as follows for the period of February 1996 to present: David John Holmes began service in February 1996 as an Associate Director for CIBC/Oppenheimer, an Investment Bank, in Chicago, IL. He worked in the professional services group of CIBC/OPCO that focused on corporate bank clients, performing services in lending, cashless exercise of stock options, portfolio management, and alternative investment sales. David John Holmes also worked with a Taiwanese subsidiary to create investment strategy for OPCO’s private bank, creating $7.5 million in new revenue in first 9 months through the sale of portfolio and alternative investment products. David John Holmes additionally advised on portfolio construction for $250 million in assets, focusing on high net worth individuals.

In August 1998, David John Holmes left CIBC/OPCO to found Desdar Consulting, an alternative investment consulting firm based in Chicago, IL. A subset of the clients Desdar serviced are Boston Consulting Group, McKinsey, LaSalle Fund Services, Vanderbilt hedge fund, Spectrum Global Fund Administration, Trident Fund Administration, Kurzweil Hedge fund project, and others within the industry. With Desdar, David John Holmes has direct operational and management experience with fund administration firms, hedge funds, private equity funds, venture capital funds, and structured products and has worked on the development, operational structure and marketing of three hedge fund administration organizations focusing on the reporting, attribution, and risk assessment of various entities, and advised two others on operational matters, he also negotiated both vendor contracts and fund contracts for services, developed pricing and value models for profitability of funds based on structure, type of investment, extent of service outsourcing, domicile, and number of investors.

Steve Marino is the Co-Investment Manager of the Amphora Oil Program. He also is the founder of Marino & Associates Consulting Inc., a computer consulting and technical services firm established in September 1988 specializing in software development and information technology services. Steve Marino has held the position of President of Marino & Associates from September 1998 through the present. Steve Marino functions as a business analyst, IT consultant, systems engineer and developer of strategic customer software for Marino & Associates dealing with various Fortune 100 and 500 clients, broker dealers, hedge funds, and institutional trading clients in the areas of back office accounting, compliance, trading and order management, asset and portfolio management, as well as other areas in a technical and management capacity. Since 2003, Steve Marino has also been developing market analysis software, technical trading mathematical formulas and algorithms, quantitative analysis procedures and strategic trading models as the chief software engineer for Marino & Associates Consulting, Inc. In August 2008, Steve Marino formed Rockwell Global Futures, Inc., an Introducing Futures Brokerage and holds the position of President. In addition, Steve Marino has been registered as a Principal and Associated Person for Rockwell Global Futures, Inc since. November 2008. Rockwell Global specializes in corporate and institutional electronic black box trading programs and services in addition to other Introducing Brokerage services. Steve Marino has a Bachelor of Science degree in Computer Science and Mathematics from Hofstra University completed in June 1986. Steve Marino currently holds a Series 3 license.
 

Tariq Zahir is the Co-Investment Manager of the Amphora Oil Program. In March 2001, Tariq Zahir became a registered securities representative with DC Capital, LLC a registered Broker Dealer located in Syosset NY. At DC Capital, Tariq Zahir helped the firm grow from inception to 900M in assets and helped structure trade for Millennium Partners, Platinum Partners, and Feis Trading until he left the firm in July of 2004.

From July of 2004 through the present Tariq Zahir has traded independently and conducts research of stocks, options, futures, and derivatives. It is through his independent research, analysis and trading that Tariq Zahir partnered with Steve Marino to begin Tyche Capital Advisors, LLC and develop the Amphora Oil Program. From April 2008 until January 2009, Tariq Zahir was a registered representative with Ameriprise Financial Services, located in Hauppauge, New York which is a registered broker dealer. He obtained his series 66 license and Life and Health license and held the title of financial advisor. While affiliated with Ameriprise, Tariq Zahir conducted sales of securities for the firm until he decided to devote all of his time to Tyche Capital Advisors.

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.