(Harvest) Contrary to popular wisdom, 2015 was a good year for stock picking. The problem is that few know who the good stock pickers are. Further, good stock pickers may be poor risk managers. In this article we use a robust risk model to track the top U.S. stock pickers and to distill their skill.
Since genuine investment skill persists, top U.S. stock pickers tend to generate persistently positive returns from security selection. Consequently, a hedged (market-neutral) portfolio of their net consensus longs (relative overweights) tends to generate positive returns, independent of the Market. Below we illustrate this portfolio’s performance and reveal its top positions.
