00:00 Speaker A
this meeting with a client a couple weeks ago and and they the point they made was that they’ve never had such an idiosyncratic portfolio. And what that means is that, you know, for these are hedge funds that are going long, buying companies and shorting companies at the same time. and they’re doing that in a way to really squeeze out all of the macro volatility in their portfolio and really try to eek out gains from the idiosyncratic or company specific differences between those that are that that they’re long and those that they’re short. From a quantitative perspective, we look at factors like earnings revisions. So, um, looking where the sell side is raising a company’s earnings estimates faster in in companies than their peers and looking for companies that have continued to have uh positive earning surprises. So from a top-down perspective, it’s trying to really get to specific fundamental factors and try to avoid all of this macro-driven volatility in the market that is that is causing, you know, daily rotations depending on where oil prices and interest rates are going.
00:53 Speaker B
Alphabet, AT&T, Expedia, Kenview, Colgate Palmolive, Target, like these things don’t have a lot in common except what you’re talking about.
01:10 Speaker A
And and that’s the point. You know, buying sectors can often lead to, yes, I’m buying, you know, let’s say I like tech. Let’s say I like tech in January and February of this year. Large cap tech did terrible. The Mac 7 did terrible. They were all down the first two months of the year. I think in video was flat.
01:32 Speaker A
Small cap tech was up 13, 15, even 20%. So, tech, you know, buying sectors is often uh a way of buying a very mixed set of companies. Instead, I think of, instead of grouping companies by what industry they’re in, I group companies by how strong their fundamentals are, how strong their balance sheets are, how strong, you know, how profitable they are. At the end of the day, that’s what companies, that’s what investors are trying to buy is companies that are performing well. Really doesn’t matter whether they make widgets or, you know, sell services.
