Find the hidden exposure across your holdings
Hidden portfolio exposure is risk that two or more holdings share through a connection no position report shows: a common supplier, customer, lender, input or region. You find it by tracing each holding through its business relationships and looking for the places where the paths meet.
Why sector weights miss it
Position and factor reports group holdings by what they are: sector, country, size, style. They rarely show who each company depends on. Two holdings in different sectors can buy from the same supplier, sell to the same customer or borrow from the same lender, so a portfolio can be more concentrated than its weights suggest.
The connection is usually spread across several documents. One filing names a major customer, another names a key supplier, a credit agreement names the lender. No single report puts them together.
How to find hidden exposure
The work is a chain of questions, each answered with evidence.
- Who does each holding depend on: suppliers, customers, lenders, landlords, regulators?
- Which of those connections appear under more than one holding?
- How large is each connection, from filings and disclosures?
- Does the shared connection reach further, one or two steps out?
- What event would hit that shared point, and how would it spread?
What to do with what you find
A shared dependency is not a reason to sell on its own. It is a question to put to the thesis behind each position: does the reason to hold still hold if that supplier, customer or lender comes under pressure? Writing the dependency down as an assumption means it is checked again when the evidence changes.
An example
A portfolio holds a medical device maker, a regional bank and an industrial distributor. The sector report shows three unrelated names. Tracing their relationships shows that the device maker and the distributor both rely on one contract manufacturer for a critical component, and that the regional bank is a lender to that manufacturer.
If the manufacturer has a production problem, the three holdings are hit at once: two through their supply, one through its loan book. The portfolio carries one concentrated exposure it did not know it had, and each position now has a new assumption to watch.
Illustrative example. The companies are not real, and nothing on this page is investment advice.
How Clargus finds hidden exposure
Clargus keeps a knowledge graph of the market: millions of companies, products, countries, people, regulators and events, and the connections between them, dated and sourced. It traces each holding through suppliers, customers and lenders, looks for the companies several holdings quietly share, and reports each exposure with the path and the documents behind it, so your team can check it.
A discovery run can repeat the search on a schedule, so a new shared dependency is found when it appears, not at the next quarterly review.
Used by: Risk managers, Portfolio managers, Family offices.