Summary
A+J+O uses quantitative stock picking engines based on statistical stock return anomalies. They use neither outside research nor soft dollars. They have a developed a relationship with brokers that fosters good execution quality of trades. Ted Aronson, the founder is wondering whether the firm should expand further the long-short investment strategy.
Teaching objectives
This case is about the most pressing strategic issues concerning the asset management industry: 1. The value added of stock picking. 2. The current disarray of actively managed, long-only funds. The proposal that these funds become long-short funds. 3. The way research used by the asset management industry is financed.
Keywords
- Long-short portfolio management
- Stock return anomalies
- Reporting of execution quality
- Soft dollar
- Active portfolio management
- Predictability of returns
- Stock picking
- Future of investment industry. AR2005
- AR0405
- RD0505
