Founded in 2021 by Eric Hickman, Lantern Capital LLC manages portfolios of U.S. sovereign interest rate futures (SOFR, US Treasury) for clients. It is based in Denver, Colorado.
Strategies focus on capturing the U.S. business-cycle with short-term interest rates. Mostly, this is generating return surrounding Federal Reserve cutting cycles, but earning return from raising cycles is envisioned too. Short-term interest rates have the greatest correlation to the economy versus other major U.S. asset classes (other parts of the U.S. Treasury yield curve, stocks, and commodities.) They also have a long 75-year history to study and a short 5-year average repeatable cycle. Broadly, Lantern aims to generate returns for clients by determining the direction of the business cycle which influences Federal Reserve policy and short-term interest rates for a few years at a time (average of 2.5.)
Another way to interpret what Lantern Capital does, is as a replacement for long-term Treasury bonds. Many buy these for capital appreciation. Lantern uses leverage (with futures) to give the short-end of the yield curve equivalent duration of longer-term Treasuries. This takes advantage of the typical pattern of yields in a rate cutting cycle, that the front-end of the curve moves more in yield than the long-end. It is also helpful that the front-end of the yield curve isn’t as subject to fiscal and credit concerns as the long-end is.
Because interest rates do not rise or fall in a straight line through each side of a business cycle, significant losses/drawdowns can occur with interim volatility. Timing the turn of the business cycle carries considerable risk and can cause losses as well. Volatility levels (and opportunity) are chosen with each client in relationship to their risk tolerance and investment goals.
Lantern Capital is registered as a Commodity Trading Advisor (CTA) with the National Futures Association (NFA): #0547300.
About Eric Hickman
Eric is a career-long specialist in interest rates with 24 years of U.S. sovereign interest rate experience in U.S. Treasury bonds, repurchase agreements, and interest rate futures. He served 21 years at Kessler Investment Advisors, Inc. (KIA) under U.S. Treasury maverick and pioneer, Robert Kessler. He was president of KIA from 2012 to 2021. Over many years surrounding the Great Financial Crisis, he worked with Goldman Sachs in Hong Kong to offer a profitable leveraged 2-year U.S. Treasury/repurchase-agreement strategy to institutional investors in Asia.
Eric has been quoted in Barron’s, on CNBC, and ZeroHedge with several articles published on Advisor Perspectives. In 2012, he wrote the whitepaper “Investment Performance in Comparison to Holding Period Length” which studied how long it takes to make a return in various asset-classes given a random entry-date.
Services
Lantern Capital LLC manages investment accounts for Qualified Eligible Persons (QEPs) only; with a net-worth and portfolio requirement. For natural U.S. persons this is a $1 million+ net-worth AND either $2 million in securities or a $200,000+ balance in a futures account (for the prior 6 months.) Non-US persons are automatically QEPs. QEP eligibility varies for other entity types.
Inquiries
Lantern Capital LLC
720 16th Street, #214
Denver, CO 80202
(303) 668-0502
eric.hickman@lanterncapital.com
@EricWHickman on X
Eric-W-Hickman on Linked-In