Strategy
Investing
US

US Value Strategy

2 Nov 2020
By
The US Value strategy uses fundamental criteria to select stocks from a pool of large capitalisation US stocks. The selection criteria involve two main fundamental concepts being 1. Earnings Sustainability and 2. Return on Capital Employed. These criteria are combined with the earnings yield of the company to produce a Rivkin Value rank.

Minimum Investment Amount and Period

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Period

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Stock codeStock nameSectorCurrent priceReturn 12mMom rank
NVDA
NVIDIA Corp
Information Technology
$549.46214.71%
1
AMD
Advanced Micro Devices Inc
Information Technology
$84.48199.75%
2
DXCM
DexCom Inc
Health Care
$374.89177.95%
3
ETSY
Etsy Inc
Consumer Discretionary
$134.56144.28%
4
AAPL
Apple Inc
Information Technology
$113.16113.35%
5
REGN
Regeneron Pharmaceuticals Inc
Health Care
$581.64107.25%
6
SWKS
Skyworks Solutions Inc
Information Technology
$147.27101.64%
7
WST
West Pharmaceutical Services I
Health Care
$290.33100.43%
8
NOW
ServiceNow Inc
Information Technology
$491.5499.52%
9
PYPL
PayPal Holdings Inc
Information Technology
$191.6697.47%
10
NFLX
Netflix Inc
Communication Services
$505.8796.81%
11
QRVO
Qorvo Inc
Information Technology
$131.0889.28%
12
AMZN
Amazon.com Inc
Consumer Discretionary
$3,099.9688.02%
13
ADBE
Adobe Inc
Information Technology
$478.9887.32%
14
CTLT
Catalent Inc
Health Care
$88.8583.45%
15

US Value Strategy

Our strategy selects stocks from the S&P 500 as well as the Nasdaq 100 indices. This produces a pool of approximately 500-600 stocks to choose a portfolio from (depending on the overlap between the two indices). The Value ranking process narrows this list down to just ten stocks which form the recommended portfolio for investors following this strategy.

As with Rivkin’s other strategies, not all of the trades will be a winner, but the statistics should be in the investors favour such that over the long term, we expect a market-beating return. According to the back-testing, we expect 59% of trades to be winners, and we expect an average profit per winning trade of 12.5%. On the other side, the losing trades have an average loss per trade of just 9.24%.

How To Follow This Strategy

Rivkin’s strategies are designed to be as easy as possible for investors to follow. To follow the US Value strategy, investors need to buy the stocks in the above table in equal weights. Weights can drift over time as stock prices move, but we only recommend re-balancing stock weights if they stray too far from the target weight (10% per stock). The stock volumes shown in this table are based on a $5,000 investment per stock which produces a $50,000 portfolio. Being a US strategy, this is priced in US dollars and therefore, to get the Australian dollar value, the current exchange rate should be applied.

Once per month, the list of stocks will be updated in what we call a ‘re-balance’. This means investors will need to look at the new list and sell any stocks that are no longer on the list. After these stocks are sold, the new stocks from the current table can be bought.

About The Strategy

The US Value strategy was developed by Rivkin during 2017 and was rolled out as a strategy to clients in February 2018. Extensive back-testing was done to create and refine the strategy, and it is this back-testing that we rely on to give us increased confidence about future expectations. Please click here to find out more about the strategy.

Important notice

Quantities and calculations mentioned in this post use the Rivkin Model and might differ from yours. This post does not constitute an invitation to buy or sell any securities. Before conducting any transaction, make sure you fully understand the terms of the product and the relevant risk factors involved. You can seek professional advice to determine the appropriateness and cost of any transaction from the broker you use.

SHOW COMMENTS / QUESTIONS (4)

4
Comments

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Peter W.

The BMY advice is unclear – are we selling the entire holding or just down to 10%? Also we are left with BRISTOL MYERS SQUIBB CO VALUE RT- CVR Rights – currently trading at $US 2.91 – should we also sell these

William O.

Hi Peter,
Sorry for this oversight, the advice has been corrected. We are selling the full BMY position.
Regards,
William

Peter W.

including the rights?

William O.

Hi Peter,
I have made a further update to the text. We will sell these rights from the model account but members can decide to keep them if they wish. It is a bit of a lottery ticket as to whether they will pay off in the future (depends on performance of certain CELG assets bought by BMY). If they do pay off, you will just be automatically paid some amount in the future for them. Otherwise, if you want the certainty of value today, just sell them on market.
Regards,
William

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