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CTA Spotlight: M&R Capital, LLC

July 17, 2018

There’s always more to every person you meet and the same is true for our CTAs. In the spotlight this month is M&R Capital, LLC. We hope you enjoy getting to know more about their principal, trading program, and what they can offer your Managed Futures portfolio.

Trader Profile

Scott Shepard is the trading principal of M&R Capital, LLC. The CTA became registered in January of 2015. He had been managing client assets since May 2014. The focus of Scott Shepard’s CTA program is agricultural markets, specifically livestock. He trades Live Cattle, Feeder Cattle, and Lean Hogs.

M&R Capital Logo

Scott’s career started out like many others in the industry: on the floor of the Chicago Board of Trade. He began as a livestock analyst with Cargill, Inc. He eventually worked his way to full CME Member, floor manager, and senior livestock analyst for the firm. His passion and expertise for the livestock market continued to grow through the early portion of his career.

In 2005, he was recruited by JBS, a large commercial livestock firm, to handle direct hedging and risk management. Scott knew he had the skill and pedigree to handle the challenge. He moved his family to Colorado for the position. Scott controlled a dynamic portfolio for the firm comprised of futures and options. He gained considerable knowledge of risk management and asset trading during his time with JBS.

In 2014, he felt he had the ideal experience to begin his career as a CTA. Scott is a fundamental trader. His time in the cash markets, on the Board of Trade floor, and experience with meat packers and industry institutions have helped mold his market perspective and expertise. This unique knowledge base aides Scott in forecasting US and International meat and livestock supply and demand.

Program Strategy

The M&R Capital Discretionary Trading Program’s focus is to find opportunities in the futures and options markets based on fundamental analysis of the livestock cash markets. Scott studies production, cattle feeding capacity, input costs, and demand trends which ultimately generates his bias.

Photo by: Todd Klassy

Scott’s robust and intricate knowledge of his industry allows for him to trade either side of the market depending on data estimate and market analysis.

He trades futures, inter and intra commodity spreads, and options. The program’s goal is to achieve stable returns with controlled and quantifiable risk. Please keep in mind that there is risk involved with futures and options and may not be suitable for all investors. 

Risk Management

Scott is constantly monitoring trade flow and macro fund positioning in the markets. He studies and analyzes what makes up his market’s open interest. There have been times when he has cultivated a strong bias, but chose to limit the program’s exposure because larger players were positioned adversely to him.

In the last few years, Scott has instituted option strategies to better protect his portfolio’s exposure, though no program is without risk. This has allowed him to trade his bias, to a lesser degree, than with outright futures. His positions will be larger when his conviction is higher. There is risk regardless of who is managing your money and what strategy they employ. 

M&R Capital’s Edge

Livestock is a very niche sector as the volume is much smaller than other commodity markets. Because of this, it is critical for an asset manager to have a robust network of industry contacts at varying points of the pipeline. Scott’s network consists of colleagues, packers, producers, retailers, and other traders. They will report to Scott conditions which feed his fundamental analysis. Additionally, he provides consultancy to these industry players as his insights are greatly respected.

Performance Capsule Stats

M&R Capital Tearsheet June 2018

(May 2014 – June 2018)

  • Minimum Investment: $100,000
  • Notional Funding: Yes, 2 to 1
  • Margin: 5.92% (Avg. Last 12 Months)
  • 2018 YTD Return: 17.73%
  • Annualized Compounded ROR: 29.43%
  • Worst Peak to Valley Drawdown: -23.38% (8/15 – 1/16)

 

Performance from 05/14 to 01/15 represents accounts individually managed by Scott Shepard. Performance from 2/15 represents accounts traded by Mr. Shepard as the trader for M&R Capital, LLC.

 

On a Personal Note

Scott Shepard’s CTA is named after his two children Miller and Ruby. He resides in Colorado with his family and feeds his own cattle.

 

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