We now have an analysis in place that runs the model to select efficient portfolios with a setting / parameter change that selects a lower risk portfolio. As a result, you receive a larger and more diversified portfolio that still has BETA exposure (so they go up when the market goes up), but lower variance.
For example, we ran a low risk portfolio on the February 28 weekend and we picked 21 stocks that should be held together with each company making up slightly below 5% of your investment capital.
If you are interested in a low risk portfolio that is still efficient, give us a call or send us a message / enter this information in the check-out fields when you purchase a run.
Watch this week's video here:
You would need to follow us in Twitter to see the play-by-play for SMLP, but today we reached a breakthrough in understanding.
Net-net: We read management's pre-announcement of the Q4/2020 results & the forecast of 2021. They intend to continue paying down debt with free cash flow, and to use Double E non-recourse debt to fund Double E. We believed this would impact the market valuation of the company. However, the stock price was flat for the past 2 weeks.
So, we recalculated our simple model for the total company valuation. Since the pre-announcement, the market valuation of debt went up $20M, the market valuation of equity (or stock) went up $2M. Total company is worth $22M more. OK, that made sense, the fact that the management will pay debt created a 10:1 debt:equity ratio of 'goodness' for the company.
I am expecting another more simplistic impact next week on Feb 26 when SMLP officially releases Q4/2020 earnings. The EPS will be high, and people will find the low price/earnings (P/E) ratio that a reason to buy the stock (even if nothing else changes between now and then).
All that spreadsheet work, and the associated tweets, are available here. You may need to look at the tweet replies, etc...
Strategic IT Management Consultant with a strong interest in Quantum Computing. Consulting for 29 years and this looks as interesting as cloud computing was in 2010.