Final Portfolio Presentation: Passive-Active Strategy Fund Project

This project presents a student's final portfolio presentation, focusing on a passive-active strategy fund. The fund, starting with $20 million, invested in stocks with a passive approach, incorporating active elements through weekly reallocations based on performance against the Dow Jones Industrial Average. The portfolio included holdings in technology, REITs, and various stocks, with adjustments made weekly. The student analyzed news and earnings expectations to guide investment decisions, learning about market efficiency and the impact of information on stock prices. The portfolio outperformed the benchmark, increasing to $20.6 million. The project highlights the importance of constant market analysis and the influence of both fundamental and news-driven factors on investment outcomes. The student identifies the lack of specialized tools and the reliance on news-based selection as areas for potential improvement, while the project's objective of value creation was successfully met.

Portfolio
FINAL PRESENTATION ON 7 WEEK PORTFOLIO- PASSIVE-ACTIVE
STRATEGY FUND

Name of the Fund
 The portfolio name has been given the Passive-Active Strategy
Fund.
 The Fund invests in stocks with a Passive Style of investment.
 The active style is incorporated in the portfolio when it is weekly
reinvested with new stocks.
 The stocks which have provided a return which is greater than
the benchmark index in a week are kept on hold.
 The stocks which perform less than the benchmark are sold.
 New stocks are incorporated in the fund in place of the stock
sold.
 Hence the portfolio is called Passive-Active Fund.

Holdings in the portfolio-weekly
 In week 1 the stocks which are selected for the portfolio is Apple,
Google, Amazon, Facebook. The American tower is the Reit selected
for the portfolio and the cash is kept in the Bank of America and TIPS.
 Thus the portfolio is concentrated in week 1 in technological and SAS
stocks.
 TIPS and Reit have been selected to provide slight diversification
benefit.
 In week 2, the stocks of Amazon, American Tower and TIPS have been
sold. This is because the return have been less than the return of the
Dow Jones Index.
 The portfolio is then reallocated with the stocks of A O Smith
Corporation and A 10 Networks Inc.

Holdings in the portfolio-weekly
 The money from the TIPS have been added to cash to maintain
liquidity in the portfolio.
 In Week 3, the stock of Aarons INC is taken in place of the A O
Smith.
 The company is related to providing goods on lease and even
acts as a retailer on many circumstances.
 The Fundamentals of the company appear to be good by
analysing the annual report of the company for the last three
years.
 The company seems to add diversification since it is not as much
risky as other companies while providing good returns.

Holdings in the portfolio-weekly
 In week 4, the stocks of apple, Aarons Inc and A10 are sold as they
have performed less than the benchmark.
 The stock of Barnes group has been included in the portfolio, as
the company is expected to pay dividends.
 The results for the company is expected to be positive hence
included in the portfolio.
 The stock of Berkshire Hathaway is included in the portfolio as the
most awaited newsletter provided by Warren Buffet provides
valuable insights regards to future company prospects.
 The stock of Beazer homes has beat the earnings expectations,
hence upward trend in the stock is expected which would create
value for the portfolio.

Holdings in the portfolio-weekly
 In week 5, the shares of Barnes Group and Google are kept on
hold as appreciation in the stock of the two companies is
expected.
 The remaining holdings are sold, while new holding of Rio Tinto,
Arch Coal And Arrow electronics is included in the portfolio.
 The company Arch Coal is included in the portfolio as the
company is to announce its earnings for the last quarter, which
are expected to be positive by analyst.
 The stock of Rio Tinto is included as news of a new project
concerning the company is circulating in the market. Thus, this
might lead to the creation of value of the portfolio.

Holdings in the portfolio-weekly
 Arrow electronic is a new age technology company, which can
create value in the portfolio.
 Thus all the stocks which constituted the portfolio in week 5 are
kept on hold in week 6. Thus the week 6 portfolio is the same as
week 5, as expectations of appreciation in value is expected.
 In week 7, three new holdings are included which are Arconic,
Boeing and Aero-jet.
 Thus in week 7 airline industry is selected as the hope of creation
in the value of the portfolio is expected in week 7.

Performance Review Weekly.
 In the first week the portfolio became of the value $20438429.78
from the initial value of $20000000.
 In the second week the portfolio became $20386283, while
considering the value of $20438429 as the base.
 In the third week portfolio value was $19918233.
 In the fourth week the portfolio value was $ 20216360.
 $20857581 is the value of the portfolio in the week 5.
 The value of the portfolio in the second last week is $20431521.
 Thus the value of the portfolio at the end of the trading period is
$20587999.

Portfolio VS
Benchmark
The portfolio is bench-marked to
the Dow Jones Industrial Average
Index
Thus the portfolio has
outperformed the benchmark in
almost all the 7 weeks.
The correlation among the portfolio
and the benchmark is almost
positive.
The portfolio is falling when
benchmark is falling while portfolio
is rising when benchmark is rising.
1 2 3 4 5 6 7
$18,500,000.00
$19,000,000.00
$19,500,000.00
$20,000,000.00
$20,500,000.00
$21,000,000.00
Portfolio VS Benchmark ($)
Portfolio Benchmark

Learning Outcomes
 The construction of the portfolio has provided learning towards the
importance of various news which can affect the stock price.
 The expectations of earnings leads to the creation of liquidity and
volatility in the stock price before the announcement of earnings.
 A positive expectation leads to rise in value a negative expectations leads
to fall in value.
 If the actual meet the estimates or beat the actual it can lead to creation
of value for the investor.
 The dividends once paid lead to a fall in the price of the share once the
dividend is paid.
 The insights of qualified investors as of Mr Warren Buffet can lead to
volatility in stock price, not only of Berkshire Hathaway but other
companies also in their portfolio.

Learning Outcomes
 The fact about this project which was liked is it requires constant
attention to details.
 The details in regards to a company, how miniscule it is can lead to a
successful investment.
 Thus active participation in the analysis of markets create interest
and provides knowledge of future market trends.
 This project enabled the analysis of various companies and led to
creation of knowledge about various company.
 The thing which was disliked as the lack of specialized tools which
are used by big fund houses.
 The selection of stock was primarily based on news and expectations
of earnings.

Learning Outcomes
 A better analysis could had been conducted if some insights
about the models which are used by bigger fund houses was
provided.
 The could had been more interesting if fundamental analysis and
technical analysis using the DCF could had been done to
calculate the intrinsic value of the stock price.