Three distinct strategies — relative return, absolute return, and fully customizable mandates — all driven by 500,000+ Bayesian event-driven factors updated in real time.
A long-only equity strategy benchmarked to the Nasdaq 100 (QQQ). The 42 Signal Library identifies high-conviction opportunities within the QQQ universe, overweighting names where event-driven signals indicate persistent outperformance potential.
An objective-based equity hedge fund strategy benchmarked to a synthetic equity index. Quantamental first, discretionary focused — combining Bayesian RL on events and factors with state-of-the-art LLMs. Long/short with cross-asset signal coverage.
Any benchmark — synthetic or standard. Define your objective function (return target, time horizon, constraints) and the 42 Signal Library spins up a dedicated, live portfolio instance engineered to achieve it. No capacity constraints.
Client sets return target, time horizon, and constraints. "Beat SPY by 1% over 1 year, max 5% per position."
The 42 Signal Library calibrates patterns and signals relevant to the objective. Each portfolio sees the market through its own lens.
LLM + Signal Library work together. Positions are established where the system has high Degree of Belief in achieving the objective.
Bayesian feedback loops update beliefs in real time. The portfolio evolves as new events and data reshape the probability landscape.
Mathematically absolute uncorrelated alpha is a theoretical impossibility. Every return stream carries embedded exposure to systematic macro forces.
All practical outperformance is the result of a portfolio being successfully correlated to one of four drivers: the Benchmark, its Contextual Inverse, Real Rates, or Inflation — at the right time.
The increasing velocity of information is eroding traditional slow-moving style factors. A new paradigm centered on high-frequency, event-driven patterns and signals is emerging.
The benchmark you play against. Not a fixed index — whatever return stream you seek to outperform.
The natural hedge. For the S&P 500, it's the VIX. For bonds in rising rates, it's cash. This is where alpha lives.
The inflation-adjusted price of time. A pervasive force governing all Market/Inverse pairs by setting discount rates.
The universal tax on nominal returns. Sets the real hurdle rate for any strategy.
A five-stage pipeline that ingests millions of data points daily and distills them into high-conviction, belief-scored trading signals.
News, filings, earnings, order books, social feeds, CDS prices. The full universe of unstructured information.
Structured, validated market events. Statistically significant associations between information and price movements.
Recurring market behaviors clustered from events. Historical context is built for each repeatable cause-and-effect.
500K+ scored signals with belief values, time lags, magnitudes. The institutional memory of the system.
Triggered, ranked, context-aware. Only high-belief signals for the specific objective are activated.
The objective function is the +1 — the human-defined lens through which all data is interpreted.
10-Ks, 10-Qs, earnings transcripts, analyst estimates, balance sheets, income statements.
Order book depth, bid-ask spreads, L2 quotes, tick data. The microstructure of information becoming price.
Public news sources, Internet Archive, newswires, social media. The sentiment layer.
CDS price feeds and keywords in filings. Early warning system for financial stress.
PE, PEG, PS and 100+ ratios. RSI, momentum, Fibonacci. Bridging value and signal.
The human-designated goal. This is what separates 42 from every other system.
Every signal carries a score from -1 to +1. This Bayesian conviction metric represents accumulated experience with a pattern in a specific market context. The system maintains persistent beliefs while remaining open to paradigm shifts when evidence accumulates.
Traditional quants, factor funds, and passive products each solve a piece. 42's architecture addresses what they cannot.
Traditional academic factors have seen diminishing returns post-publication. As more capital chases the same signals, the edge erodes.
Returns compressed since publication. Subject to value traps and regime sensitivity.
Sensitive to crashes and reversals. Behavioral edge dissipates as capital exploits it.
Premium inconsistent across periods and geographies. Liquidity constraints limit use.
Factors triggered by specific experiences — FDA approvals, canal droughts, earnings surprises. Temporary dislocations, not permanent premia.
Every portfolio calibrated to a unique objective. Same library, different outputs for different mandates.
Relationships across asset classes — Panama Canal water levels predicting LPG shipping stocks.
Persistent beliefs that evolve. The system knows when a regime has shifted and adapts signal weights.
Real risk-free rate & inflation. The irreducible macro backdrop.
The benchmark game and its natural hedge.
Transient patterns from the 42 Signal Library. The source of outperformance.
A unified framework for asset returns. Why mathematically absolute uncorrelated alpha is non-existent, and what that means for every portfolio manager alive.
How 42 Capital reduces 100% of raw information to less than 1% high-conviction signals.
The factor zoo is collapsing. Data mining, crowding, and shrinking half-lives.
How an objective function becomes a live, bespoke financial organism.
How 42 Indices recalibrates bond exposure using VIX, CPI, and FOMC analysis.
For questions about 42 Capital Management, the signal library, or partnership opportunities.
info@42capital.com
Shaunak Khire
Founder & CIO
Former Managing Director / PM, Lazard Asset Management
Founder, EmmaAI & 42AI
42 Capital Management is not a registered investment advisor and does not manage outside capital at this time. This site is not an offer for solicitation of capital.
Q1 2026 — Expected Launch
Long-only relative return (QQQ) & absolute return (synthetic equity index)
Target: 25–45% annualized net, 2–3x Sharpe
Firm overview, signal library, investment process, strategies, performance.
Four Horsemen of Macro Risk and Event Factors: A Unified Framework.
Objective functions, alpha engine, customized portfolio construction.