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

iShares MSCI Australia / Equity Bottom-Up

<ul><li>It is widespread practice for asset managers to tout their ability to identify and invest in quality stocks.&nbsp; But there is tremendous disagreement about what constitutes quality.&nbsp; The launch of Evidente's Dissecting Quality series is designed to shed light on the risk and return attributes of various quality attributes.&nbsp;</li><li>In the first instalment, Evidente examines the profitability of earnings revision strategies in Australia.&nbsp; Over the past three years, stocks subject to strong earnings upgrades have strongly outperformed.&nbsp; But I identify and discuss a number of risks and implementation issues with such strategies: they are associated with excessive active risk, large market impact, neglect shifts in implied discount rates and amount to picking up pennies in front of a stream-roller.&nbsp;&nbsp;</li><li>Investors can address these issues in their portfolio construction process to exploit the predictive content of analysts&rsquo; earnings revisions, and provide an updated list of long and short candidates.</li></ul>

It is widespread practice for asset managers to tout their ability to identify and invest in quality stocks.&nbsp; But there is tremendous disagreement about what constitutes quality.&nbsp; The launch of Evidente's Dissecting Quality series is designed to shed light on the risk and return attributes of various quality attributes.&nbsp;In the first instalment, Evidente examines the profitability of earnings revision strategies in Australia.&nbsp; Over the past three years, stocks subject to strong earnings upgrades have strongly outperformed.&nbsp; But I identify and discuss a number of risks and implementation issues with such strategies: they are associated with excessive active risk, large market impact, neglect shifts in implied discount rates and amount to picking up pennies in front of a stream-roller.&nbsp;&nbsp;Investors can address these issues in their portfolio construction process to exploit the predictive content of analysts&rsquo; earnings revisions, and provide an updated list of long and short candidates.

Dissecting Quality: Earnings Revision Strategies in Australia