Quant Strategies Are Not Magic

 The flow of funds into the quant investment strategies continues but, like most new ideas, this one doesn’t come without caveats, writes Validea CEO John Reese in a recent Forbes article.

Reese argues how quant strategies shouldn’t be considered a magic bullet, but rather a tool to thwart an emotional approach to investing. He underscores the advantage of the type of blended approach used by Validea, and identifies the following picks identified using his stock screening models:

  • Accenture PLC (ACN) provides management and technology consulting services. The company earns high marks for its predictable and stable earnings-per-share as well as free cash flow-per-share.
  • Credit Acceptance (CACC) offers financing programs for auto dealers, and is favored for higher-than-average return-on-equity and long-term growth in earnings-per-share.
  • Taiwan Semiconductor Mfg. Co. Ltd. (TSM) is engaged in the manufacturing, selling, packaging, testing and computer-aided design of integrated circuits and other semiconductor devices. The company has stable EPS and can pay off debt with earnings within two years.
  • Middleby (MIDD) is engaged in the design, manufacture and sale of commercial foodservice, food processing and residential kitchen equipment. Both predictable EPS as well as a favorable ratio of inventory to sales earn high marks for this company.
  • Allegiant Travel Co. (ALGT) is a leisure travel company with favorable return-on-equity and free cash flow-per-share.