Analysing Investment Skill, a podcast by Inalytics

Analysing Investment Skill is a discussion between two experts from very different worlds, but with one key thing in common; they work with the elite in their professions.

Rick Di Mascio is the CEO and Founder of Inalytics. He has over 30 years’ experience working with the best-of-the-best in the investment world.

Tim Harkness is renowned sports psychologist and data analyst who has worked with athletes at the very peak of their profession.

Together, Rick and Tim share their experiences of working with elite professionals, discussing topics such as motivation, data analysis, self-reflection and coping with pressure.

Research Paper 10: Track records luck or skill?

It is often thought that Napoleon said “Give me lucky generals” implying that he didn’t mind being lucky if it meant that he still won the battle.

In fact, Napoleon was almost certainly misquoted. It is more likely he was quoting Cardinal Mazarin, who noted that one must not ask of a general : “is he skilful?”, but rather “is he lucky?”

Clearly the consequences of relying on luck in finance are not as significant as in war, but nevertheless, it can be costly.

Download the full study to learn more about how we go about identifying investment skill or contact us to learn more about how we analyse portfolios and decision making to improve the investment process and help select skilful portfolio managers.

Press Coverage: Rick Di Mascio’s co-authored academic paper

Industrywide coverage of Selling Fast and Buying Slow

Inalytics’ CEO, Rick di Mascio, co-authored Selling Fast and Buying Slow: Heuristics and Trading Performance of Institutional Investors, an academic paper examining the buying and selling characteristics of institutional investors.

The paper uses anonymised data from the Inalytics Peer Group database and co-authored alongside three academics, Alex Imas from Carnegie Mellon University, Lawrence Schmidt from MIT Sloan School of Management and Klakow Akepanidtaworn from University of Chicago – Booth School of Business.

Within two weeks of its release, the paper was listed in the SSRN Top 10 downloaded papers of the week and has been viewed over 35,000 times since its publication on January 2, 2019. The paper has received critical acclaim and been presented at asset management and behavioural economics conferences around the globe. The analysis on fund manager decision making uses Inalytics Peer Group database as the basis for the study and has been highlighted in many industry articles and discussions.

Press coverage and articles:

Seeking Alpha: You Likely Stink At Selling

Financial Times: Why investors suck at selling stocks

Financial Times: How to pick a successful stockpicker

Institutional Investor: Portfolio Managers Are Good at Buying but Stink at Selling

Morningstar: When Rules of Thumb Fail

Morningstar: What Fund Managers Get Right

The Hans India: Do due diligence well before selling a stock

Roger Montgomery re-inventing the way you invest: Analysis in Selling could be just as important as Buying

UK Uncensored: The dumbest mistake professional investors make

Blog: The Big Picture by Barry Ritholtz: Stock-Pickers Don’t Know How to Sell

Booking:

To book Rick di Mascio to speak at your event, please email Anthony Grocott agrocott@inalytics.com.

For more information about Inalytics, our Peer Group database, and how we use it to identify investment skill, read more About Us.

Brunel uses Inalytics for Emerging Markets manager search

Inalytics is delighted to be working with Brunel Pension Partnership in selecting managers for its Emerging Markets Equities sub-fund. Inalytics will be working with the team at Brunel to identify best in class managers across emerging markets.

Rick Di Mascio, CEO and Founder of Inalytics, responded: “Inalytics is excited to be working with the team at Brunel to find best in class managers for these selection exercises, using our unique approach to assess the quality of fund managers’ decisions. In our twenty years of working with and observing elite managers, we know from our data how skilful managers add value, even in challenging times like these for emerging markets.”

To find out more about how Inalytics analyse decision making and portfolios to help you improve the investment process and select skilful portfolio managers, please contact us.

 

 

Brunel expands relationship with Inalytics

Inalytics is proud to be working with Brunel Pension Partnership (Brunel) on both their transition and manager selection exercises. In July 2018, Brunel celebrated the first anniversary of its launch and passing £6bn of assets under management.

Brunel brings together over £30bn of investments from 10 UK local government pension schemes. Inalytics is excited to expand the working relationship with Brunel, especially given Brunel’s belief in making long-term, sustainable investments supported by robust and transparent processes.

To find out more about how Inalytics analyse decision making and portfolios to help you improve the investment process and select skilful portfolio managers, please contact us.

Selling Fast and Buying Slow

Exploring the Behavioural Biases of Institutional Investors

Are elite fund managers subject to the same behavioural biases as retail investors? If so which decisions are most affected?

Selling Fast and Buying Slow: Heuristics and Trading Performance of Institutional Investors is an academic paper that explores these questions. The paper uses data from the Inalytics Peer Group, comprising 783 institutional portfolios and over 4.4 million trades from 2000 to 2016.

The paper is co-authored by Rick Di Mascio, CEO and Founder of Inalytics alongside three academics, Alex Imas from Carnegie Mellon University, Lawrence Schmidt from MIT Sloan School of Management and Klakow Akepanidtaworn from University of Chicago – Booth School of Business.

The research reveals that whilst investment managers have investment skill in buy decisions, selling decisions on the other hand underperform substantially. In the analysis, poor selling decisions cost managers nearly 100 basis points of alpha annually. In fact, the observed selling is so poor that adopting a random selling strategy would actually be beneficial to performance.

The authors discover that even institutional investors are subject to behavioural biases and would benefit from employing the same rigorous research methods when selling as they do when buying positions.

Download the full academic paper below or contact us to learn more about how we identify investment skill and analyse decision making to help improve the investment process and select skilful portfolio managers.

Research Paper 09: Does it pay to own companies that do the right thing?

Does the relationship between a company’s market capitalisation, its corporate governance and its share price return stand the test of time?

Our earlier paper tested this thesis looking at two years of data, here we conduct a more rigorous review with five years of data.

Download the full study to learn more about how we go about identifying investment skill or contact us to learn more about how we analyse portfolios and decision making to improve the investment process and help select skilful portfolio managers.

Hedge Fund Magazine features Inalytics in piece on behavioural analytics

In a piece on behavioural analytics, Hedge Fund Magazine, profiles hows Inalytics provides analytical feedback in order to improve decision making.

Di Mascio, who says his firm has analysed some 100 million investment decisions across more than 900 portfolios, says data shows there are common pitfalls many traders make.

“Instead of doing what they should do, which is run winners and cut losers, portfolio managers typically will cut their winners too early and hang on to losers too long,” he explains.

“The purpose is to provide the link between the decision that they take and the performance to see where the strengths and weaknesses are.”

To find out more about how we analyse decision making and portfolios to help you improve the investment process and select skilful portfolio managers, please contact us.

 

Rick Di Mascio contributes to CFA UK roundtable on Big Data

Inalytics’ CEO, Rick di Mascio, spoke on the challenges and opportunities of big data as part of a Professional Investor roundtable.

A copy of the discussion can be found here: Professional Investor – RDM – Big Data Roundtable

To find out more about how Inalytics analyse decision making and portfolios to help you improve the investment process and select skilful portfolio managers, please contact us.

Memory vs. Analytics

We came across some interesting research on the pitfalls of relying on memory to assess performance.

“We focus on the few striking events that happened rather than the countless events that failed to happen” – Daniel Kahneman Thinking, Fast and Slow

This examines the utility of human memory as an effective tool for improvement.

You can download the research article below: