2018 KWHS Investment Competition Global Finale-Oakridge Investment Enterprises

Summary

The team's investment strategy outperforms the S&P 500 by focusing on a holistic approach, combining quantitative and qualitative analysis with long-term discipline. They identify key quantitative metrics like P/E ratio and revenue growth, and qualitative factors such as company management and competitive strength. After extensive research, they select the US market for its resilience and innovation. Positioning in the mid-cycle economy, they invest heavily in industry leaders, achieving a portfolio that beats the S&P 500 on a risk-adjusted basis, demonstrating stability and high alpha amidst market volatility.

Takeaways

• 📈 The team's strategy outperformed the S&P 500 over the long term on a risk-adjusted basis.
• 🧩 The philosophy behind their success focused on four main components: a holistic approach, quantitative and qualitative analysis, a long-term focus, and discipline.
• 🔢 The quantitative data considered included p/e ratio, revenue growth, institutional ownership, long-term debt, expected growth, beta, and downside risk.
• 🔎 Qualitative attributes examined the strengths, weaknesses, opportunities, and threats of companies, as well as management track records and vision.
• 🌎 The decision to focus on the US market was based on its resilience, innovation, and economic indicators suggesting a mid-cycle stage.
• 💹 The US economy's growth was supported by factors like low unemployment, rising wages, and a stable housing market.
• 🏆 The final portfolio consisted of industry leaders identified through rigorous quantitative and qualitative analysis.
• 💼 The team invested 95% of their portfolio on the first day, demonstrating a high level of confidence in their strategy.
• 📊 Despite market volatility, the portfolio maintained a beta close to the market, high alpha, and minimal standard deviation, contributing to its success.
• 🏅 The team's strategy was proven successful, beating the S&P 500 and receiving recognition from judges.

Q & A

What is the long-term performance goal of the team mentioned in the script?

The team aims to outperform the S&P 500 on a risk-adjusted basis over the long term.

What is the notable philosophy that contributes to the team's success?

The notable philosophy contributing to the team's success includes a holistic approach, gathering quantitative and qualitative analysis, a long-term focus, and most importantly, discipline in following their strategy.

What are the three main components of the team's strategy?

The three main components of the team's strategy are a 50% focus on quantitative data, a 50% focus on qualitative data, and 100% discipline.

What quantitative attributes does the team look for in their investment strategy?

The team looks for an intersection of three quantitative components: fundamental research, economic data, and ensuring that each component complements the others, such as the p/e ratio, revenue growth, long-term debt, expected growth, beta, and the potential downside.

How does the team analyze qualitative attributes of potential investments?

The team analyzes the strengths, weaknesses, opportunities, and threats (SWOT) of all companies, looking at the robustness and competitiveness of the company and its potential for future success. They also consider the management's track record and vision.

Why did the team choose the US markets for their investment strategy?

The team chose the US markets due to the resilience of the US economy, the country's innovation and opportunity as seen through the number of patents issued, and the strong global standing with good GDP growth.

What economic indicators led the team to conclude that the US economy is in a midway stage cycle?

The team concluded that the US economy is in a midway stage cycle based on indicators such as higher interest rates, inflation, low unemployment, rising wages, and credit improvement.

What tailwinds does the team expect to boost the US economy in the late stage?

The team expects tailwinds such as improved capital expenditure, rising wages, a rising consumer base, synchronized global growth, low family debt, and a stable housing market to boost the US economy in the late stage.

How did the team select the companies for their final portfolio?

The team selected companies for their final portfolio by putting each company through a rigorous test of quantitative metrics and qualitative vendors, ultimately choosing industry leaders in their sectors.

What was the performance of the team's portfolio compared to the S&P 500?

The team's portfolio outperformed the S&P 500, achieving a 3.74% return compared to the S&P 500's return. They maintained a market beta, high alpha, and minimal standard deviation, which contributed to their success on a risk-adjusted basis.