Using actuarial science, data, and technology, we aim to mitigate human behavior risks in your portfolios.
New Age Alpha is an asset management firm delivering diverse investment strategies.
Many portfolio managers may overlook the impact of human behavior when selecting investments.
Known financials, such as earnings statements, are easily interpreted and generally impact a stock in an unbiased, appropriate way.
Humans interpret information that’s not clear or quantifiable in a systematically incorrect way, such as news or new product announcements. This irrational behavior can often lead to a stock being mispriced, causing an element of investment risk.
We use our h-factor The h-factor measures the probability a company will fail to meet market expectations caused by human behavior. The H-Factor, previously known as the Expectation Risk Factor or ERF methodology to identify and avoid these mispriced stocks.
The h-factor measures the probability a company will fail to meet market expectations caused by human behavior.
When the h-factor is high, indicating overpricing, we avoid the stock from investment; conversely, when it is low, indicating underpricing, we consider purchasing the stock.
Imagine the extra return you might have made by using New Age Alpha’s h-factor.
If you had applied New Age Alpha’s h-factor, and avoided of overpriced companies in S&P 500 your $1,000 investment would have been worth .
more than S&P 500 An additional return of
Important Disclosure
The snapshot is being provided for illustrative purposes only and should not be construed as providing investment advice or as a recommendation to buy or sell any particular security. This snapshot is taken at a particular point in time and any analysis or information contained in it is outdated and should not be relied upon. Past performance is not an indication or a guarantee of future results. For full disclosure click here.
The implied growth rate (IGR) is calculated using market participants' expectations and the current stock price.
Then, the implied growth is compared with historical growth rates from the past 12 quarters for each stock.
Finally, an h-factor is calculated by placing the stock's Implied Growth Rate on the distribution curve. The h-factor is the company's likelihood of failing to deliver the implied growth rate.
A low h-factor represents a low probability of failing to deliver the growth implied by the stock price. We believe the lower the h-factor, the higher the likelihood of delivering the implied growth.
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