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Individual Investor
GEARS
Founder, GEARS,Financial Services,Global Equity Analytics and Research Services LLC (GEARS)
- Education University of Saskatchewan
- Qualifications CFA
- Investment Experience 30 years
Luxury Liner
This model is fundamentally based and identifies unusually depressed companies using its proprietary learning-based electronic document interpretation software. The software allows for the quick and efficient processing of information.
Buys the shares of companies with improving fundamentals when the share price is unusually depressed and shorts the shares of companies with deteriorating fundamentals when the share price is unusually extended.
As the population of improving vs. deteriorating companies and the population of extended vs. depressed stocks changes, the model shifts long and short positions, thereby generating a high and stable equity return.
As the population of improving vs. deteriorating companies and the population of extended vs. depressed stocks changes, the model shifts long and short positions, thereby generating a high and stable equity return.
The process is critically dependent on the ability to accurately monitor fundamentals over time.
Nowhere is timely access to accurate information more important than in the investment management process. Using proprietary interpretation software, analyzes historical 10-K and 10-Q filings available on www.sec.gov of all line items values on the financial statements of the most liquid US companies.
Nowhere is timely access to accurate information more important than in the investment management process. Using proprietary interpretation software, analyzes historical 10-K and 10-Q filings available on www.sec.gov of all line items values on the financial statements of the most liquid US companies.
Allocation is determined over time as a function of the availability of depressed shares as eligible long positions and extended shares as eligible shorts. Macro overlays may be applied to insure that the model is not overexposed long or short to sector, style or volatility attributes. Positions enter the model equally weighted with a target model size of 100 long and 100 short.
Long positions are sold when fundamentals begin to deteriorate. Early signs of deterioration among leading fundamental indicators such as inventory turns, receivables/sales, sales growth etc. may provide opportunity to sell the share while the price is extended. Improving fundamentals at companies commonly last for three to five years so successful long positions may be held for the long term. Short positions are covered when fundamentals begin to improve or the share declines to the bottom of its measured historical volatility range whichever occurs first.
Short positions may be covered when the loss on the position exceeds 100%, At the point that the position becomes unusually large and the risks associated are unacceptably high. Short positions will also be covered when the gain exceeds 60%. The model is tax conscious with commonly both gains and losses among positions. Transactions may be made at year end to facilitate a particular tax implication. Long and short transactions may be generated in unusually volatile markets to keep the portfolio within 20% of market neutral.
- Approach Fundamental
- Asset class Equity
- Geography US
Model commentary
Fixed income securities are a huge value trap now
5 January 2012
Long treasury bonds in particular are lauded for their security. Although there is no risk to the coupon, higher inflation is a significant risk to long term purchasing power and higher interest …
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