Part 1 of the project has already been done. And I am looking for who can continue to do part 2 of the stock project.

PART 2 (Active management strategy for the 10 stocks you have chosen for part 1, a total of 8 pages)

1. Active Management Strategy  (2 pts)

2. Economic Environment (3 pts)

3. Asset Allocation (3 pts)

4. Optimization exercise (10 pts)

5. Benchmarking (10 pts)

6. Back testing (10 pts)

7. Risk-Adjusted Performance (10 pts)

8. Conclusion    (2 pts)

I am attaching the part 1 file, so that you are able to continue for part 2. 

And also attaching one sample file, the sample file is what the assignment i.e part 2 should look like. (FYI it’s just a sample, what I am looking for in part 2)

Running Head: Stock Review of the investment plan for Newcastle Wood Recycling CIC

1

Stock Review of the investment plan for Newcastle Wood Recycling CIC 9

Stock Review of the investment plan for Newcastle Wood Recycling CIC

Table of Contents

Overview

3
Goal and Objectives 4

Constraints

6

Strategy

6

Feedback and Evaluation

8
Discussion 9

Overview

Background

This paper presents a critical review of the investment plan of Newcastle Wood Recycling corporation’s strategic formulation, strategic implementation, and strategic evaluation objectives constrain and risk tolerance level. This investment plan is to be applied to effective planning to ascertain the going concern concept. Increment in the total attributable profits is the fundamental goal of every organization and a driving factor to attract more investors. When the management of any business entity has a plan for expanding its day to daily business activities, several ways must be drafted to generate more capital based on the stock review. The capital increment is achieved through issuing bonds, stocks/equity, and taking out loans.

Purpose

It would be of great benefit for Newcastle wood recycling CIC Company to invest more capital in event organizing activities. This investment plan is doomed to be a package of public address system services, tent services provision, and open catering. Event organizing can simply be explained as project management, which entails creating small- or large-scale occasions such as festivals, conferences, weddings, ceremonies, or even formal parties. This project’s expected return is to double the organization’s profit earnings with a 20% favorable factor (Jury, 2012). The business operations on both short-run bases and long-run bases will hence be made sure of investing in this plan. Further, the investment plan is expected to incorporate $ 100,000, which is 5% of the allocated budgetary funds allocated for research and development. Conducting research and development will be an essential process that needs to be frequently done to ensure the sustainability of the entity in the market for a long-term duration; thus, keeping the truck’s organization with the current competitive measures applied by its competitors.

The accumulation phase of this respective project begins when the investors opt to undertake this investment risk based on long term projected returns. Adequate capital hence needs to be set aside to aid in ascertaining this respective aspect. This is achieved by the presumption of the holding period returns, which can be presented in the HPR stock Portfolio.

Holding period return is an accounting calculation for the total expected market returns for a given asset or investment plan with a specified duration of time. It is a guiding tool used by the management to determine which investment plan is worth investing in to enhance sustainable going concern. Going concerned is a financial concept used in giving insight into a business entity’s ability to take on its operation from a short-run and long-run perspective. HPR Portfolio provides a comprehensive financial performance of a specified assets or investment plan with which maximization of profit yield is enhanced through appreciation of the investment plan and distribution of dividend paid.

Goal and Objectives

This stock review’s primary goals for the investment plan on event organizing activity are to enhance profit maximization by utilizing the available resources in the market to ascertain the going concern concept.

Risk tolerance

The risk tolerance level based on the standard deviation is expected to be 0.0001 on long term bases. Standard deviation is basically used to measure the dispersion of set returns for shares from the mean returns. Accordingly, the standard deviation is also used to shed light on any given investment’s historical volatility. The standard deviation figure is more significant from the expected average return is represented. Therefore, it indicates a minimal price range of the output commodities translating to low risk.

This project’s entire risk is expected to incorporate a high level of risk tolerance based on the actual cost of the investment amounting to $100,000. As a result, this investment plan is set to target an additional risk level between 5-15%. The beta value of this project is expected to be 2.3345. Application of beta is basically applied in estimating volatility, or systematic risk, of a security or a portfolio, compared to the market as a whole. Beta is used in the capital asset evaluating model (CAPM), which measures an asset’s anticipated return based on its beta and expected market returns.

If it shows positive, it means that when the market increases, the share return will also increase. If it is negative, then one rise and the other falls. Besides, a beta of 2.3345 indicates that the security’s price moves with the market. However, when the beta value is less than 1, it implies that the security is theoretically less volatile than the market. Hence, having a beta value of 2.3345, which is greater than one, indicates that the security’s price is theoretically more volatile than the market returns.

Return Objectives

This investment project’s expected profit margin is expected to range between 20-30% over the respective financial period. This is expected to be 10% higher than the risk volatility range enhancing; therefore, the projected net expected returns will marginalize the risk of losses to be incurred (Jury, 2012).

Constraints

The time horizon for this project is expected to run between 5-8 years. Consequently, this fund’s holding period is relatively long based on the project life hence require minimal cash reserves not greater than 20% of the expected market returns. However, this investment plan is based on the liquidity ratio of shareholders ratio of capital contribution. This investment plan is formulated and expected to operate under the investment ACT 1940. The financial statements and other respective computation based on this investment project should be found on the generally accepted accounting principles (GAAP) and international accounting standards (IAS). Tax computation is a significant measure computed according to federal tax laws provided for this project’s effective and efficient long-term sustainability.

Strategy

Strategy formulation

This can be explained as the primary stage where a business assesses its daily operations by analyzing internal and external factors. Further, vivid scrutiny is also another critical fundamental step undertaken to ascertain the life span of the investment plan on a long run basis. This mechanism tends to provide insight into the internal and external forces that are important in developing the company’s strategic plan in the current competitive market. While these factors change with time, this company’s growth depends mostly on Newcastle Wood Recycling CIC’s capacity to capitalize on the competitive advantage associated with this investment plan to maximize the expected market returns (ADB, 2013) suggested.

Strategy implementation

After conducting the relevant research relating to this investment plan, the entity needs to differentiate between the short term and the long-term expectations. Further, allocations of budgetary funds need to be performed in agility relating to the different aspects of the investment plan. The argument based on skill is that the success of investing in events organizing programs will be centered on determining the firm’s ability to nurture both internal and external environments while creating a favorable working environment for employees. This stage will also be a significant step in managing Newcastle Wood Recycling CIC because other functional organization structures will be formulated, which are an aiding factor to maximizing profits returns.

Strategy evaluation

Newcastle Wood Recycling CIC’s continued success because success today doesn’t necessarily mean that the business enterprise will remain successful shortly. Therefore, it will be expedient for this entity to implement strategic evaluation for this investment plan to ensure the market returns’ continued maximization. In this stage, reviewing the internal and external factors that affect this project is profoundly analyzed and the appropriate measures (Simerson, 2011).

Feedback and Evaluation

Modified internal rate of return for this investment plan

Identification of this ratio to the management of Newcastle Wood Recycling CIC Company will be of great significance in projecting the expected amount of bond returns, which will be reinvested at the entity’s capital cost based on the initial outlay of the project. Specifically, calculation of this financial ratio will be of great significance in providing a comparative baseline in which the management of Newcastle Wood Recycling CIC Company will be able to compare projected financial earnings of other projects with other alternative projects.

Stock Evaluation

Evaluation of the stock review for this business entity will be based on capitalizing the available market opportunities to yield the expected returns.

Discussion

Company

Support for investment

North Atlanta wood

The wood company that is newly emerging in the market and been articulated to have an annual growth rate of 5.5091%. Its expected earnings per share have been represented to have marginally increased over the recent by a marginal rate of 2.5%. This entity’s forecasted financial statements indicate a positive growth rate; hence, this company will form one of the primary shareholder’s equities for Newcastle Wood Recycling Company.

Kurt Geiger limited

Kurt Geiger limited is a significant source of revenue for this business entity. It has been represented to have increased revenue earnings from 324.6 million for the financial year ending 2018 to 334.9 million for the financial year ending in 2019. The gross profit margin has also been depicted to have linearly increased from 53.7%, 54.48%, and 55.02%, respectively, for the financial year ending in 2017 to the financial year ending in 2019. This clearly illustrates that maximization of the available resources to yield the expected profits has been made profound forming; therefore, a significant source of revenue for this company.

Target Corporation

The other subsequent proposed shareholders for this entity are Target Corporation. Based on this company’s market analysis that indicates total debt to equity ratio of 118.09 in the financial year ending in 2019 is a clear indication that the entities going concern level is unavoidable. The total debt to capital ratio is another significant capital structure measure, which has been represented as 54.15. The debt to asset ratio has been represented to be 32.67, the long-term debt to equity ratio of 115.04, and a long-term debt to total capital ratio of 52.75.

Kay Donnelly Enterprises

This bond can be articulated with a minimum optimal transfer of market mechanism. This phenomenon indicates that its market operations are based on optimal choice making for the revenant opportunity, which will maximize returns. The composition of this bond is 10% bank loan and 15% asset-backed.

Beth McDonough Corporation

This bond is centered on the low-quality provision to yield high market returns for long term sustainability. The bond composition is 39% corporate, 3% bank loans, and 22% in monetary terms. Over the recent past, this bond has articulated to have an estimated market return of 18.5% of the total amount initially invested.

Maple leaf Food Inc.

Maple leaf food Inc. is one of the most renowned consumer packaged meat company in Canada. The bond composition is based on 20% corporate, 33% bank loans, and 30% in monetary terms.

Just Eat PLC

Just Eat is a limited private organization in the British that operates food order and delivery entirely online. It is considered one of the significant financial sources for Newcastle wood recycling due to its enhanced operating income of £ 779.5 million in 2018 and a net income of £ 799.9 million. The composition of this bond is 25% cash-based and 17% bank loan.

Smithfield Company

Smithfield Company has been listed as the largest pork processer in the world. This company has been categorized amongst the best performing entities due to high-profit yields presented in its financial positions’ annual statements. It’s a significant source of bond having return on market shares of 33.38%

Tyson Corporation

Tyson Foods is an American food processing firm based in Springdale. Its daily operations entail processing chicken, beef, pork, and it is the second-largest processing entity according to its market shares. It is considered one of the significant sources of investment bonds for this company, having 12% corporate finance composition and 25% in monetary terms. Over the recent past, this bond has been articulated to have an estimated market return of 38% of the total amount initially invested.

Pine Street Capital

This type of bond can be described as a small hedge fund with approximately 32 million under management specializing in the technology sector. PSC was founded-founded in 1999 by three partners, each having an extensive background in the technology sector. This stock fund deploys a neutral market strategy, meaning that the fund aims to hedge out all market risk through short selling the market index.

Conclusion

In summary therefore, it is clearly evident that this investment plan is presumed to have a certain going concern. Going concern basically means the ability the investment plan to be able to operate in the near future smoothly by yielding maximum returns and minimizing the cost attributed to be incurred. The ability of this investment plan to be able to run smoothly in the near future is determined through presentation of true and fair value of information in the financial statement and accurate computation of other relevant measures to predetermine the long-term sustainability of the project. The need therefore of ensuring accurate presentation of values in the financial statement and financial ratios do exist so as to enhance a healthy decision making based on this investment plan. Further, depending on the on the intended business venture as indicated in the operational model, it is vividly clear that the profitable level of investing on event organizing program is certain and that the stock reviewing report indicates this investment plan to be worth undertaking (ADB,2013), acknowledges.

Reference

ADB, (2013). Stakeholder Engagement in Preparing Investment Plans for the Climate Investment Funds: Case Studies from Asia. Manila: ADB.

Jury, T. D. H. (2012). Cash flow analysis and forecasting: The definitive guide to understanding and using published cash flow data. West Sussex [England: John Wiley & Sons.

Simerson, B. K. (2011). Strategic planning – a practical guide to strategy formulation and execution.

Active Management Strategy:

The default asset allocation is 70% stocks, 10% bonds, and 10% as an ETF with the remainder in cash. The purpose of this allocation was to acquire a divestiture of securities from different sectors of the market and optimize them for growth. When constructing this fund, the goal was to create a majority passively managed fund that would still gain excess returns for our investors. I chose this strategy because of the negative correlation between increased trading activity of fund managers and realized returns. In part, this is due to miselection in securities by managers, but it also has to do with the transaction costs and capital gains tax realizations on the buying and selling of securities. That being said, there are some parameters that would warrant changes in the portfolio during the holding period. Such as sector rotation when specific sectors increase in value. A great example is the price of gas spiking during the summer months as more expensive summer-blend fuels are used.

Another example, the bond securities in the fund should be monitored closely by evaluating overall economic health (GDP Growth, S&P returns, Federal Reserve Economic sentiment). If interest rates are expected to rise, it may be within the manager’s discretion to reduce the number of bonds allocated into the fund or change the bond fund to a higher rated fund. The stocks in the fund were chosen because there is a belief according to my fundamental analysis that they are undervalued and have growth potential. However, if there was a major change in the industry or a company specific scenario that may potentially drive the price down or up (earnings reports, changes in market landscape, mergers and acquisitions, ect.) it is warranted to change the weights invested into each stock accordingly.

Economic Environment:

Looking at the United States economy over the next 3-5 years there are a variety of economic indicators that suggest a slowdown may begin after years of a bullish economy since President Trump took office in 2016. The United States is experiencing the lowest unemployment rate since 1969 at 3.8%, meaning more Americans are in the workforce producing capital, receiving income and flowing capital into the economy. Real GDP continues to grow at a healthy rate of 3.1% in 2018, supplemented by healthy difference in 1.9% inflation. According to the Federal Open Market Committee Real GDP forecasts predict a slowdown in the nation’s economic production over the following three years into 2020 at an average of -14.95% (using 3.1% as a basis) a year. The economy has very strong fundamental statistics, and the economy is still experiencing relatively low inflation, making a speculator question, when will the measures that compliment rapid economic expansion such as inflation heat up?

A dip in the market could be caused by a variety of external factors. One concern is the trade tensions with China, and their nation’s economic slowdown over the previous few business quarters. I believe their economy will continue to move forward despite the recent slowdowns through China’s governmental monetary and fiscal tools that they have not hesitated to deploy in the past. Measures such as large amounts of quantitative easing, devaluing of the yen and lowering of bank reserves as well as the rapidly expanding Asia-Pacific market will push China’s economy forward. However, trade tensions have continued to a subject of discussion and tariffs between the U.S. and China could cause market anomalies and negative investor sentiment within U.S. markets. Another is the Federal Reserve’s interest rate hikes as they attempt to reach interest rate normalization. As the economy continues to recover from the 2008-2009 recession and recover from the outlandish 0% interest rates and large quantitative easing measures, the Fed has taken a hawkish stance to try and keep pace with the growing economy. As a result of these future economic conditions, I have taken a bearish view of the current U.S. market within 3-5 years as GDP begins to slow down.

Asset Allocation

For this portfolio consideration was given to stocks, ETF’s, bonds, mutual funds and cash, of both international and domestic nature. According to the risk tolerance of the fund, 70% will be allocated in stocks, 10% in a high yield bond fund, 10% in an ETF and lastly 10% in cash for investor withdraws, additional trades and liquidity. On the topic of bonds, although the Federal Reserve has taken a hawkish stance and is speculated to increase interest, an important phenomena to observe is the recent inversion of the yield curve and bonds. When the yield curve inverts, it essentially means the bond market believes that there will be a recession in the near future. The yield curve has risen due to rate hikes by the federal reserve to match perceived U.S. economic growth, however when the yield curve inverts it means investors do not believe in the U.S. economy outperforming and believe rates will not continue to rise in the future because of a recession. From the bond investor’s perception this makes the long term bonds more preferable because of their duration and current high interest rates. Effectively meaning that the long term bonds now, will be trading at a premium within the next few years, and I believe there is evidence for this backed up by the Federal Reserve’s recent behavior of halting their hikes in interest rates.

Referring to the 70% stock allocation, the benchmarking and portfolio optimization mathematics were done with each stock being equally weighted at 10% in the portfolio. When starting the fund I believed this allocation was reasonable, as I had no particular sentiment on which stocks I truly felt would outperform my other choices. The weights however, are subject to change throughout the investment holding period at the discretion of the fund manager as specified in the Active Investment Strategy section of this document. The weights may be adjusted according to sector rotation, individual stock’s earnings reports, and mergers and acquisitions to maximize returns. Lastly, the portfolio holds on ETF that has a relatively high return and is indexed to the information technology sector. As a whole, I see this industry only growing in the time horizon of this portfolio as information technology has infiltrated practically all aspects of human life in the 21st century.

To determine the bounds of my portfolio, I utilized the portfolio optimizer tool. I uploaded the monthly close values for each of my securities, the 8 stocks, 1 ETF and 1 bond fund and found the returns dating from April 1, 2014 to April 1 , 2019. After uploading the monthly returns in the optimizer I used a risk free rate of 2.42% and referenced the returns to find the minimum (-0.797%) and maximum (2.710%) potential returns based on the historical changes in the portfolio. Next I ran an optimization to find what allocation would have provided the portfolio with the maximum Sharpe ratio over the designated period. I chose the maximum Sharpe Ratio because it would signal what security provided the best returns with low volatility (standard deviations). According to the maximum Sharpe optimization, a 100% allocation into Lululemon Athletica would have yielded the most optimal allocation over the historical period. This largely has to do with Lulu’s positive stock price run over the past three years. If I had allocated 100% of the portfolio into Lulu in 2014, the portfolio would have averaged 32.52% a year. Next, I ran an optimization for the minimum risk allocation of the portfolio to find which securities had consistent returns and low standard deviations. The optimizer then recommended an 84% allocation into the SGYAX bond fund and a 16% allocation into Procter and Gamble. This confirmed my strategy of using bonds to offset stock market value risk, and the inclusion of a consumer defensives (particularly products classified as “staples”) to also hedge against a downturn in the market. Attached below are the original portfolio weights, with both instances of optimization to compare to it. Those figures outlined in blue are minimum risk, and red for maximum Sharpe ratio.

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A technical analysis was also run in the optimization showing that when the portfolio is maximized for the Sharpe ratio, the efficient frontier analysis reports an expected return increase of 1.5%. When adjusted for minimum risk the portfolio return decreases by 1%.

Security Selection:

The table below represents a log of securities bought for the fund.

Symbol:

Company Name:

# of shares:

Price:

Total Amount:

(LUV)

Southwest Airlines

193

$51.9

$10,016.7

(CMG)

Chipotle

14

$710.7

$9,949.8

(SGYAX)

SEI Institutional Investments High Yield Class A-Bond

1148

$8.7

$9,987.6

(LULU)

Lululemon Athletica

60

$167.5

$10,050

(MDLZ)

Mondelez International

201

$49.8

$10,009.8

(VGT)

Vanguard Informational Technology ETF

48

$208.4

$10,003.2

(JBHT)

J.B. Hunt Transport Services

97

$103

$9,991

(CMCSA)

Comcast

244

$41

$10,004

(APA)

Apache Corporation

287

$34.9

$10,016.3

(PG)

The Procter and Gamble Company

96

$104.7

$10,051.2

Benchmarking:

On the subject of benchmarking the portfolio I ran a regression analysis to determine the most correlated index to compare my portfolio to. In addition, I also ran a beta comparison analysis to find out what index had a similar beta to mine. I used the QQQ Power shares, SPY, VTI and DJI. To perform the beta analysis, I found the betas of each security and then found the summed average. With the betas equally weighted, the beta of the portfolio came out to be 1.013. Next, I compared the portfolio beta to each index and found that the Vanguard Total Market Index was most closely correlated at a value of 1.03.

After performing my beta analysis, I uploaded the monthly close prices from 2014-2019 of each security and index into an excel file and ran a statistical regression comparing the portfolio to individual indices and a weighted index that included all 4 indices. Attached below are the calculations for the portfolio and index returns.

Then once I had the average returns for the portfolio, I ran slope and correlation functions to find which index returns correlated most with my portfolio returns. The VTI came in with most correlation at 0.814, the SPY at 0.807, the QQQ at 0.783 and lastly the DIA at 0.7439. As a result, my portfolio’s beta and returns most correlated with the Vanguard Total Market Index (VTI). The results are attached below.

The second part of my benchmarking strategy was to take the statistical regression of the portfolio onto each index to observe which served as the best model.

As seen above, the VTI has the highest R-squared statistic meaning that 66.3% of the variation in the portfolio’s return values can explained by return values in the VTI. The VTI’s R-squared, beta, and correlation values suggest it the best fit as a model for benchmarking our portfolios returns against.

Back Testing:

To do backtesting for the portfolio to evaluate the performance, I chose to compare the portfolio to the three indices as benchmarks to compare the fund’s performance to. To back test the portfolio I decided to calculate the alpha, or excess return the portfolio generates in comparison to our model indices of the VTI, SPY and QQQ. To find alpha I had to utilize the monthly return data for the portfolio and index which had already been calculated to find correlation. I was able to determine that the return of portfolio was 35.29%, or 7.05% yearly as the data dates back to 2014. To find the expected return, I needed to calculate each indices, which came in at 8.45% (VTI), 8.78% (SPY), and `5% (QQQ) yearly. Then to find alpha I took the slope of the portfolio to each indice, and multiplied that value by the summed return of the the respective index the fund is being compared to. This gave the risk adjusted return. After finding that value I subtracted it from the portfolio’s summed return to find the excess, or alpha which came out to 3.22% (VTI), 1.89% (SPY), and -11.41% QQQ. This effectively compares the portfolio returns to each indices returns over previous 5 years. When referring to the fund’s mission to beat the market with low risk characteristics, this alpha value satisfies the fund’s objective for the two funds that are most closely correlated (VTI, SPY). While the QQQ has a higher alpha than the portfolio, it takes considerably more risk which is outlined below in the risk-adjusted performance. Attached below is a chart of the calculations. The order of indices is sort by column and correlation, meaning the VTI is most correlated and the QQQ is the least correlated.

Risk-Adjusted Performance:

Alpha was calculated in the previous section showing an outperformance of the VTI and SPY, but an underperformance when compared to the QQQ. However, the secondary measure of performance is the Sharpe ratio of our portfolio. The Sharpe ratio is also known as the reward-to-volatility ratio and it shows how much average return a security produces when compared to its volatility (standard deviations) or the security’s risk. To calculate this statistic I pulled data from the above row labeled the Sharpe ratio, which divides the average by the standard deviation for each security. The Coefficient of Variation is also known as the Sharpe ratio and the values came to 0.111 (Portfolio), 0.2055 (VTI), 0.0001 (SPY), 0.300285 (QQQ). The lower the ratio, the better the risk/return trade off is. This shows the portfolio has a significantly better return for the portfolio’s risk when compared to each index.

Lastly, a value at risk estimation was calculated in the row labeled, “95%”. The value at risk formula is simply the average return of the security subtracted by two times the standard deviation. The equation represents the possible loss within two standard deviations of the average according to a 95% confidence interval. This essentially means that there is a 5% chance that the portfolio could experience a loss of 10.39% compared to 6.7% (VTI), 6.5% (SPY) and 8.15% (QQQ) historically based returns. This data means that our portfolio has a low risk compared to the fund’s return, but there is a wider range of potential loss than the general market (VTI, SPY, QQQ).

Rebalancing/Adjustments:

An outline of what policies and parameters allow rebalancing of the portfolio in the, “Active Management Strategy” section of this document. This fund has been constructed to perform adequately during market dips, and remain primarily a passive investment fund. However, the portfolio’s security weights may be adjusted in response to market conditions such as speculation on interest rates for the bond fund. This especially holds true if there is a loss predicted for a specific security due to market conditions such as earnings, technological advancement, and mergers and acquisitions. The active manipulation of the fund should not be to drastically increase returns or the composition of the portfolio, but to hedge against losses. This is primarily because the fund’s purpose is to provide an excess return to the market with a considerably lower risk, which can be observed in the fund’s Sharpe ratio.

Results:

When evaluating my construction of this portfolio, I believe I satisfied my goals of creating a risk-averse portfolio that still beats the market. One mistake I would correct however would be the inclusion of J.B. Hunt in the portfolio. After reviewing the security once again, it is apparent that is was temporarily overvalued by the market and has subsequently been taking a beating since mid-April. This was observable in the company’s high P/E ratio compared to its industry. However, I still find the company to have an extensive logistics network and the ability to continue being the one of the best companies in their business.

The other securities during the investment period have performed up to, or greater than expectations. Some of the best performing securities have been Lululemon Athletica, which has been riding a 20% rise in share price since March of 2019 and Comcast which has had 12.8% rise in share price since March as well. In addition, the Federal Reserve has take a dovish-neutral stance in recent press releases and interest rates have been flat as a result. SGYAX (bond fund) has been growing steadily in price at 6.94% since the start of the year with 7 more months to go.

Reflection on IPS:

Overall, I felt my Investment Policy Statement was produced without many issues or concerns. When choosing securities, I used fundamental analysis metrics that are readily available and public such as P/E ratios, EPS growth and revenue growth. Some other fundamental analysis tactics were employed during stock selection, primarily my speculation on the company’s products and the public perception of the company to conclude my intrinsic value evaluations that are not included in the IPS.

Conclusion:

When reviewing whom this fund is created for, the accumulation investor typically between 22-40 years of age, I find that the fund reaches the goals of these investors. Reviewing the process of constructing the portfolio and observing the results, I found that an investor can reach their investment goals (as long as they are realistically attainable) if research and data is interpreted and applied correctly, and beat the average market return while doing so. When reviewing what drives these successful selections, it is primarily valuation and a touch of intuition to find where the market is inefficient and how to most likely beat it.