With the taper starting in January, the Fed has gone from being a tailwind to a headwind. After a fantastic year for U.S. stocks driven by ever-in-creasing multiples, correlations between stocks have been falling and a return to fundamentals has been causing divergence in companies’ performance – a great environment for stock picking and generating alpha over the markets. As periods of greater dispersion usually bode well for stock pickers, we expect 2014 to be a good year for fundamentally driven managers to outperform the general markets. We are beginning to see evidence of this phenomenon in Q4 2013 and the first weeks of 2014. The fourth quarter of 2013 provided fertile grounds for alpha generation for Hedge Fund managers. Hedge Fund long picks, especially those made with conviction, handily outperformed the markets. Managers continued to favor the consumer discretionary and technology sectors, while continuing the move up the market cap spectrum into larger capitalization companies. Our Conviction strategy did well again, helped by the surging share price of Valeant Pharmaceuticals, (+96% in 2013, +20% QTD 2014), that was on our top conviction list for four consecutive quarters. At the same time, Equinix and Amazon, both popular and sizable bets, hurt managers long the companies.