This document defines what Sonsu Research trades, why, and the hard rules that govern position sizing, risk, and review. Every trade memo will reference back to this document.
Objective
Build and document a value-oriented research and trading process focused on US and Asian AI infrastructure, energy, and macro markets. The capital invested is a learning vehicle intended to put some skin in the game. The true deliverable is the process, written work, and the development of good habits I want to bring into institutional roles.
The capital base is too small and the sample size will be too low to draw statistical inference about skill or meaningful track record. Sharpe ratios and similar metrics will be reported, but treated as descriptive, not predictive. Profit is not the primary success metric. Process quality, writeup quality, and what I learn from each cycle are what define success in this project.
Niche
The investable focus is concentrated and categorized as follows:
- AI infrastructure and energy (US and Asia), ~60-70% of book. Power generation and distribution, data center operators, cooling and electrical equipment, semiconductor supply chain names with direct exposure to AI CapEx. Both US-listed and APAC-listed via ADRs and ETFs where accessible.
- Global macro (US and Asia), ~20-30% of book. Asian equity market themes, currency-related expressions where retail-accessible, Asian-listed names with US ADRs, country and regional ETFs.
- Opportunistic, up to ~10% of book. I will allow myself the freedom to take a small allocation in compelling situations outside the niche, on the condition that the trade has a fully written pre-trade memo and an explicit acknowledgment of why it falls outside the mandate. Until such opportunities arise, a small portion of the portfolio will carry dry powder.
Investment Style
Sonsu Research was established to help me develop skills and aptitude in the financial markets that would be transferrable to trading and investing careers at an institutional level. However, there are real constraints associated with running a retail trading account that prevent adapting strategies used at institutional shops. The lack of capabilities such as flexible short-selling, prime brokerage, portfolio margin, OTC derivatives, and access to other operational, informational and technological infrastructure, rules out many alpha-seeking strategies like market-neutral and pair-trade strategies, dedicated short books, leveraged macro via futures, statistical arbitrage, event-driven strategies that require speed, and most systematic quant work that depends on alternative data or low-latency execution.
The downstream of the constraints leaves behind the investment strategy Sonsu Research employs: long-biased, fundamentally-driven, discretionary equity work in a concentrated book, with listed options used tactically for protection or specific bearish views, and macro themes expressed through ETFs as a crude approximation.
Holding periods range from one to twelve months. The portfolio is concentrated: typically three to five long equity positions plus any active hedges and macro positions. I prefer fewer, better-researched positions to a diversified book since concentration is the only way to express a real view with such a small capital base. This project is an experiment in whether disciplined research within the constraints can produce work worth taking seriously.
Position Sizing and Risk Limits
These are the hard rules of the portfolio, established to manage risk and prevent catastrophic losses. Violating any of them triggers a process review before further trading.
- Maximum single position size: 30% of capital at entry. Positions may grow beyond this through appreciation but I will not add to a position above 30%.
- Maximum sector concentration: 70% of capital. AI infrastructure and energy are treated as one sector for this purpose.
- Per-trade stop loss: -25% from entry OR explicit thesis invalidation, whichever comes first. Each pre-trade memo specifies the conditions that invalidates the thesis.
- Portfolio drawdown trigger: A peak-to-trough drawdown of -20% triggers a 30-day pause on new positions and a written review of what went wrong before resuming.
- Cash floor: A minimum of 5% in cash at all times as dry powder, except in transient periods immediately after closing a position.
- No trade without a written pre-trade memo. No exceptions. The memo can be short, but it must exist before the order goes in. This restriction is for me to develop discipline and establish researched conviction before committing capital.
Long-Biased Core with Tactical Hedges
The book is long-biased. Hedges are tactical and not structural. I hedge specific positions or thematic exposures when I have an articulable reason (an event risk, an asymmetric setup, a macro overhang).
Hedging instruments are limited to inverse and broad-market ETFs and equity put options on liquid underlyings.
Options Discipline
I treat options as a learning instrument first and a hedging instrument second. The math on small-account hedging is unforgiving so I have implemented the following constraints to manage risk while allowing educational opportunities for myself.
- Maximum capital allocated to options at any time: 10% of book. This is a deliberately small budget to develop intuition for Greeks, decay, and structuring without options dominating the PnL.
- Maximum simultaneous open option positions: two.
- Permitted strategies: long puts (for protection or directional bearish bets), long calls (for directional bullish bets when the underlying view is high-conviction but the cash equity is too capital-intensive), and cash-secured puts (only when I would be a willing buyer of the underlying at the strike).
- Prohibited strategies: naked calls, ratio spreads, short straddles or strangles, and any strategy with theoretically unbounded loss.
- Every option position requires a written memo that explicitly addresses (a) what the position is expressing that the cash equivalent could not, (b) the breakeven, (c) the maximum loss, and (d) the exit plan.
Universe Constraints
- US-listed equities, ADRs, and ETFs only. No directly-held foreign stocks, no foreign-listed instruments.
- No futures. No FX. No leveraged ETFs (other than for tactical short-side hedging within the limits above). No crypto. No private securities.
- No margin beyond what is required to enable the option strategies above. Cash account behavior preferred.
Review and Revision
The mandate is a living document. I update the mandate whenever I learn something material that should change how I trade. Every revision is announced in the next monthly journal entry. Hard rules (position sizing, drawdown trigger, options budget) are not changed mid-trade or in response to a single bad outcome.
Compliance Note
I comply with all applicable personal trading and outside-activity policies of my employers and educational institution. I will pause publication, restrict trading in covered securities, or remove content as required by those policies. See the full disclaimer.