Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Equity Bottom-Up

<ul><li>The trend towards greater corporate clarity, evident for a number of years now in Australia and globally, has continued in the past month.  NAB has divested its UK businesses, Woolworths has announced its intention to exit home improvement to focus on its struggling supermarket business and the new ANZ CEO has shied away from transforming the Australian bank into a pan-Asian financial conglomerate.</li><li>Management quality and governance structures are likely to be more important for firms with low corporate clarity and high agency costs.  Evidente has updated its systematic model of corporate clarity for Australian stocks based on eight factors.  MQG, ANZ, NAB and ANN rank amongst the top 20 stocks that have the lowest corporate clarity/highest agency costs.</li><li>The fact that conglomerates typically trade at a discount confirms that financial diversification has won over corporate diversification. Investors who wish to enjoy the benefits of diversification should therefore do it themselves rather than buying shares in companies that seek to do it for them.  The trend towards corporate clarity therefore points to the triumph of reason over hubris.</li></ul>

The trend towards greater corporate clarity, evident for a number of years now in Australia and globally, has continued in the past month.  NAB has divested its UK businesses, Woolworths has announced its intention to exit home improvement to focus on its struggling supermarket business and the new ANZ CEO has shied away from transforming the Australian bank into a pan-Asian financial conglomerate.Management quality and governance structures are likely to be more important for firms with low corporate clarity and high agency costs.  Evidente has updated its systematic model of corporate clarity for Australian stocks based on eight factors.  MQG, ANZ, NAB and ANN rank amongst the top 20 stocks that have the lowest corporate clarity/highest agency costs.The fact that conglomerates typically trade at a discount confirms that financial diversification has won over corporate diversification. Investors who wish to enjoy the benefits of diversification should therefore do it themselves rather than buying shares in companies that seek to do it for them.  The trend towards corporate clarity therefore points to the triumph of reason over hubris.

Corporate Clarity: The Triumph of Reason over Hubris

Macquarie Group

Corporate Clarity: The Triumph of Reason over Hubris