Invest
How investors can tell if a CEO is lying
Have you ever wondered if a CEO or a management team is hiding something when addressing the public? According to a local VP, there’s a certain giveaway that investors can spot.
How investors can tell if a CEO is lying
Have you ever wondered if a CEO or a management team is hiding something when addressing the public? According to a local VP, there’s a certain giveaway that investors can spot.
During a media briefing, Matthew Picone, VP, portfolio manager at Acadian, discussed how a “quant” or quantitative analysis can be used to pick up the tone of management and predict the governance of the corporation.
A quantitative analysis is a complex model that blends mathematics, finance and computer skills, giving financial firms, investment banks and hedge funds an estimated worth of a share.
“There are research processes out there that look at natural language around accessing the words and the tone management use when they are talking to the investment community,” Mr Picone explained.
Mr Picone explained that these models are becoming more sophisticated, and through machine learning, these quants are becoming more evolved and are going beyond just positive and negative words.
“Are managers speaking more strategic – longer term over shorter term?” Mr Picone said.
The portfolio manager also showed how a quant can analyse key points of governance, which is the most subjective of the ESG metrics.
“There’s longer and shorter-term governance factors. Whether you’re looking at the structure of the board, what’s the experience of the board, is there a lot of turnover in boards, is there excessive turnover,” Mr Picone said.
He highlights how governance metrics are non-linear in payoffs.
“If you score well on something, you don’t necessarily outperform. But if you perform poorly, it’s a sign of trouble,” Mr Picone said.
“Thinking about how these factors work and constructing them in a way you’re only targeting the negative side or the positive side is how you can get value out of them” Mr Picone concluded.
About the author
About the author
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Market volatility not a worry for Millennial investors
In spite of COVID-19-related volatility, Australian investors aged between 24 and 39 remain bullish about the current sharemarket. ...Read more
Stock market
Why investors will miss their mark for the next 5 years
Australian investors are urged to rethink their investment targets, with the COVID-19 recovery likely to have an impact on returns, new research has found. ...Read more
Stock market
Standing strong in a crisis, ethical investments are here to stay
Ethical investments are more than just a short-term fad, an investment manager has advised. ...Read more
Stock market
Sovereign wealth fund goes negative for the first time since the GFC
The Future Fund has posted a rare negative return for 2020 and warned that a “challenging and volatile” economic climate could hurt previously strong gains moving forward. ...Read more
Stock market
Don’t worry about dividends: Stocks still going strong
Dividends are still up for grabs for active investors willing to wade through the major headlines and an abundance of market negativity, an investment expert has flagged. ...Read more
Stock market
Why Afterpay and Zip investors should buy Tuesday and sell Friday
Investors in speculative stocks, including Afterpay and Zip, can theoretically purchase more shares at a reduced price on a Tuesday, before seeing the value increase on a Friday, new research has reve...Read more
Stock market
Where to find dividends in a low-rate environment
Australian investors who are income-focused are still able to find strong dividend-paying stocks, but the market is changing, an expert has said. ...Read more
Stock market
Did investors overreact to the COVID-19 pandemic?
The economic downturn has not hit many sectors of the economy as hard as first predicted, with the reporting season revealing that many sectors will recover quickly, an investment fund has revealed. ...Read more
Stock market
Market volatility not a worry for Millennial investors
In spite of COVID-19-related volatility, Australian investors aged between 24 and 39 remain bullish about the current sharemarket. ...Read more
Stock market
Why investors will miss their mark for the next 5 years
Australian investors are urged to rethink their investment targets, with the COVID-19 recovery likely to have an impact on returns, new research has found. ...Read more
Stock market
Standing strong in a crisis, ethical investments are here to stay
Ethical investments are more than just a short-term fad, an investment manager has advised. ...Read more
Stock market
Sovereign wealth fund goes negative for the first time since the GFC
The Future Fund has posted a rare negative return for 2020 and warned that a “challenging and volatile” economic climate could hurt previously strong gains moving forward. ...Read more
Stock market
Don’t worry about dividends: Stocks still going strong
Dividends are still up for grabs for active investors willing to wade through the major headlines and an abundance of market negativity, an investment expert has flagged. ...Read more
Stock market
Why Afterpay and Zip investors should buy Tuesday and sell Friday
Investors in speculative stocks, including Afterpay and Zip, can theoretically purchase more shares at a reduced price on a Tuesday, before seeing the value increase on a Friday, new research has reve...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
