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Individual Investor
A Paschalides
Founding Principal, Carina Funds,Financial Services
- Education University of Pennsylvania, The Wharton School
- Qualifications Magna cum laude from Wharton in Finance and Real Estate
- Investment Experience 5 years
Energy
Focusing solely in the energy sector, uses a top-down approach to qualitatively narrow down investment options. Then, applies quantitative analysis to identify specific opportunities. Focus on fossil fuels, as they represent the overwhelming majority of the sector, but open to alternative energy plays if valuation is attractive.
Analyzes global energy and commodities trends to gauge how these will influence the overall economy. Screens out, on a qualitative basis, which energy companies are poised to take advantage of changes within the industry. Then uses quantitative analysis determines if an attractive investment opportunity exists. Looks at the entire energy spectrum, but places an emphasis on fossil fuels, since they represent the overwhelming majority of the sector.
Research includes industry journals and newsletters, technical books, academic and institutional reports, etc. to discover overall energy trends. Quantitative analysis is focused on standard financial metrics, but also industry-specific, such as reserves, day rates, rig counts, etc. Outsized returns are generated by knowing something the general market doesn’t, so in-depth research is critical.
Seeks few positions and low portfolio turnover because commissions are costly given typical small account size. Seeks 25 to 35 positions in account, each comprising about 5% to 10% of the portfolio. Given low number of positions, seeks to spread out transactions over time. Nevertheless, will not do multiple trades on a single security, since transaction costs make that too costly for the typical investor’s small portfolio. Employs multiple stocks to take advantage of a trend, which allows for increased sophistication and hedging of certain risks.
Sells when a trend has played itself out or if valuation no longer reflects fundamentals. Does not have % exit targets in the up or down direction. Sells if foresees increased downside risk arising from demand retrenchments.
Invests in ETFs to capitalize on macro-level trends while eliminating company-specific risks. May go long or short companies in other industries affected by energy trends if the market has yet to realize the potential impact. For example, the model may short consumer discretionary companies when energy prices are high.
- Approach Fundamental , Sector Focus
- Asset class Equity
- Geography Global
- Sectors Energy
Model commentary
Netflix has consistently beat expectations (NFLX)
3 August 2011
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