What Do You Call Fundamental Investors
Who Leverage Factors
WHAT ARE FACTORS
Factors are investment characteristics that help explain the risk and/orreturn behavior of a stock or any asset.
Factors represent some of the most intuitive, widely used and historically relevant investment concepts including factors, such as Value, Momentum, Quality and Volatility
Originally, factors were used to aggregate risk and attribute performance across dimensions through the Barra Risk Model, but today they are increasingly utilized in security selection across fundamental equity and fixed income portfolios
Factors can integrate directly into your investment process
and identify problems and opportunities
How much of the price return is based on factors (things) outside my control?
SHAK's Price Return for the YTD is -35.75%
But, exposure to multiple factors explains a stock that should be down -49.39%
That means Alpha of 13.64% was created. Congrats!
Other intelligence, such as Price Target, Position Size, Days to Report, etc. are configured by you
Dig Deeper. Which Characteristics are Helping or Hurting Us?
The Market only accounts for -20.93% of the losses
SHAK's exposure to the consumer sector adds another -21.46%
But, the fact that SHAK is a Small Cap Name has hurt the company by -6.20%
Size (meaning larger stocks) has outperformed over this period, contributing 3.53% to the performance of the world markets. This means that a large portion of SHAKs negative performance is attributable to being a small company.
Keep Digging. Putting Size into "Context"
"What is the Actionable Insight"
Large stocks haven't performed this well since the early 2000's
SHAK could have a tailwind if investors return to smaller names
Perhaps we can add to SHAK or look for other small names where fundamentals haven't changed
Ask More Questions:
What other characteristics have been singled out?(ex. High Leverage)
Prioritize Your Funnel & Find New Ideas
Filter for new ideas based on unique opportunities and insights (ex. Small Size and High Leverage)