Carthage Capital is a hedge fund that employs an options trading strategy that aims to generate 30%+ net profit every year. Pulse 2.0 interviewed Carthage Capital founder and managing partner Stephen Wu to learn more about the firm.
Stephen Wu’s Background
Could you tell me more about your background? Wu said:
“I started my career as an engineer at Amazon and Microsoft, where I worked on building the Alexa music AI recommendation system. After about six years, I decided to pivot to finance because I had been trading options on the side for many years and saw a lot of potential in applying what I learned about data and modeling to investing. Over time, I developed a strategy that performed very well consistently, even in volatile markets, and partnered with friends in the finance industry to take it further. I studied Computer Science and Philosophy at Carnegie Mellon University, graduating with honors.”
Formation Of Carthage Capital
How did the idea for the company come together? Wu shared:
“The idea for Carthage Capital came from my personal experience trading options. Many friends wanted to invest, but I said no for many years. After four years of consistent returns, using a data-driven, methodical approach, and being +31% in 2022 when the Nasdaq was -33%. Eventually, I confirmed that what worked for me personally could be scaled to help other investors. So, I brought together people I trusted—friends and colleagues in finance—and officially launched the fund.”
“As the founder, my main responsibilities include managing the fund’s trading strategy, ensuring we stay disciplined, and adapting to market conditions.”
Favorite Memory
What has been Wu’s favorite memory working for the company so far? Wu reflected:
“One of the highlights for me was launching Carthage Capital and seeing the trust investors put in us from the beginning. Achieving 41% returns in 2023, our first full year, was also very rewarding. It felt like proof that all the years of work leading up to the launch were worth it.”
Core Services
What are the company’s core services? Wu explained:
“We focus on a very specific options trading strategy that doesn’t try to predict where the market is headed. Instead, we profit when stock prices stay within a carefully analyzed range. This approach allows us to make consistent weekly gains, regardless of market conditions. We aim to return 30% every year, regardless of market direction. One of the things our investors love is the flexibility—there’s no lock-up period, and they can track everything through a real-time dashboard.”
Challenges Faced
What challenges have Wu and the team faced in building the firm? Wu acknowledged:
“In late 2023, we encountered a particularly volatile period, including an extreme market event that we call a six-sigma short squeeze. Instead of risking further losses, we adjusted our strategy by extending the timeframes on some trades and focusing on safer positions. This allowed us to recover in a measured way while sticking to our principles.”
“Our strategy profits when stocks remain within a set range. In Q1 2024, the S&P 500 had its strongest quarter in 76 years, with stocks like Nvidia experiencing rapid and significant upward movements. During this period, our returns were flat, reflecting the strength of our risk management systems. Instead of taking undue risks, we adhered to our disciplined approach, prioritizing the preservation of capital and long-term stability over chasing gains.”
“We profit if stocks stay within a range. Q1 2024 was the best quarter for SPY in 76 years, with stocks like Nvidia going straight up. This quarter, we were flat in our returns because of our strict risk management systems.”
Evolution Of Carthage Capital’s Technology
How has the company’s technology evolved since launching? Wu noted:
“We’re always refining our process. Over time, we’ve integrated more data sources and improved our analysis to make sure our strategies stay ahead of market changes. It’s not about chasing the latest technology for us—it’s about staying consistent and disciplined.”
Significant Milestones
What have been some of the firm’s most significant milestones? Wu cited:
“Launching the fund with $15 million in assets was a big moment for us. Another milestone was delivering 41% net profit in 2023, which was our first operational year. Beyond that, the consistent weekly profits we’ve been able to achieve, regardless of market conditions, really validate our approach.”
Customer Success Stories
When asking Wu about customer success stories, he replied:
“We don’t share individual stories for privacy reasons, but I can say that many of our investors appreciate how transparent we are and how consistently we’ve been able to deliver returns. They tell us it’s refreshing compared to more traditional funds.”
AUM And Other Metrics
When asking Wu about the firm’s notable metrics, he revealed:
“Since we launched, we’ve grown from $15 million in assets under management, and we’ve consistently delivered annualized returns of over 30% per year. In 2023, we had 83% positive months and achieved a Sharpe ratio of 2.35, which speaks to both our performance and our approach to managing risk.”
Total Addressable Market
What total addressable market (TAM) size is the company pursuing? Wu assessed:
“We’re targeting the global hedge fund industry, which is worth about $4 trillion. Our focus is on institutional investors, family offices, and high-net-worth individuals who are looking for reliable returns in any market environment.”
Differentiation From The Competition
What differentiates the company from its competition? Wu affirmed:
“What makes us different is how we approach trading. Most hedge funds either rely heavily on algorithms or stock picking. We’ve found a way to combine the best of both by using a rules-based approach backed by thorough research. Rather than betting on whether a stock will go up or down, we profit if it stays within a range. It’s a safer, more consistent way to invest.”
Future Firm Goals
What are some of the firm’s future goals? Wu pointed out:
My goal is to grow Carthage Capital into one of the top-performing funds in the world. To get there, we’ll continue delivering consistent returns, expanding our investor base, and refining our strategies. In the long term, I want to manage even larger portfolios while keeping our core principles intact.
Additional Thoughts
Any other topics you would like to discuss? Wu concluded:
“I’m passionate about helping people understand their options when it comes to investing. A lot of people think they need to gamble on stocks to succeed, but that’s not true. Selling options, for example, is a more controlled and predictable way to generate returns. I’m also interested in how AI and other technologies are shaping the future of finance, and how we can use them responsibly.”
