Manuel Schmedler, Hawk-Eye Index fund manager at Tareno AG, shares insights into the philosophy and tools behind this pattern-driven investment strategy. In this interview, he explains how market observation, disciplined risk management, and AI support help navigate opportunities and challenges.
Through years of observation. Over the course of my career I have seen at close hand what distinguishes successful fund managers and what psychological patterns dominate among the less successful. This has led me increasingly to the conviction that you must have a different mindset to the rest of the crowd. That’s why we don’t pursue a pure value or growth style. Why? Because such changes of style generally work to the detriment of performance. Instead, we take a flexible, active approach. History shows that certain patterns on the stock markets keep recurring. That is true both of sentiment and when you look at the charts. And that’s exactly where Hawk-Eye comes in. We defined five pieces of chart information and reviewed them against historical data. From these findings we programmed a tool that allows us to comb through the investment universe day after day looking for these patterns and potential entry opportunities.
The more emotion there is in the market, the better that is for our concept, because such phases offer a particularly large number of opportunities. To give an example, Hawk-Eye detects negative exaggerations, which we can then use as entry points if the conditions are right.
No. Those sorts of company don't make it into the selection universe in the first place. On top of that, the strategy only jumps in when the momentum of a share also works in favour of a purchase. In any case, we take a very disciplined approach and hedge all positions through stop prices. Our concept also exercises caution as soon as there is a threat of an upward exaggeration. We strive to capture at best 80 per cent of an upward movement, so strong positions are sold in good time. This can, of course, result in the index missing out on gains. However, these countercyclical exit rules protect the strategy from significant drawdowns. So far the Hawk-Eye Index has come through correction phases well. The portfolio was already relatively defensively oriented, for instance, when US president Donald Trump proclaimed “Liberation Day” at the start of April. As is well known, his threats of tariffs caused a minor earthquake on the markets.
We actually hold a relatively large number of healthcare stocks at the moment, which could very well be an indicator of a widespread reset. Forecasts are generally difficult, though, and of course we don’t know what tomorrow will bring. That’s why it’s all the more important that the Hawk-Eye strategy remains true to its principles and that we keep the market under systematic, countercyclical and, especially, disciplined observation.
As soon as we identify a buy signal, we run a multiple regression analysis with the aid of AI to verify whether holding this share would have paid off over the last five years under a range of market conditions. This analysis leads to a clear “yes” or “no”. As time goes on, the AI is fed more and more data and learns from it. The final decision, however, both now and in the future, rests with the portfolio management.
Mr Schmedler, thank you for that interesting discussion!
Disclaimer:This publication is not the result of a financial analysis. Neither Tareno AG nor its employees are liable for incorrect or incomplete information or for losses suffered or profits not realised as a result of the use of information or the consideration of opinions expressed. The statements and information provided do not establish either a solicitation or invitation or an offer or recommendation to buy or sell any investment instruments or to engage in any other transactions.Similarly, they do not constitute a specific investment proposal or other advice in relation to legal, tax or other issues. A positive return on an investment in the past does not constitute a guarantee of a positive return in the future.