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These Funds Survived and Thrived During the Pandemic with Factors (Webinar Review)

In April of 2020, EDS hosted a webinar alongside our partner MSCI Barra. A few of the topics discussed:

  • How are fundamental investors using factors TODAY, without compromising the investment process?
  • Learn how investors use factors to reduce risk, and find new ideas to match their investment philosophy.

For example, a question we hear often: 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.

Let's 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

Prioritize Your Funnel & Find New Ideas

  • Filter for new ideas based on unique opportunities and insights (ex. Small Size and High Leverage)
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