Jacob Wackerhausen/iStock via Getty Images By Joshua Lisser and Geoff Tomlinson, CFA Big benchmark bets can backfire. Lower-risk strategies may better showcase real stock-picking skill. Chasing performance by deviating from a benchmark has long been the hallmark of active managers. But it may be time for a rethink. Our research suggests that investors allocating to core equities should consider re...
Jacob Wackerhausen/iStock via Getty Images By Joshua Lisser and Geoff Tomlinson, CFA Big benchmark bets can backfire. Lower-risk strategies may better showcase real stock-picking skill. Chasing performance by deviating from a benchmark has long been the hallmark of active managers. But it may be time for a rethink. Our research suggests that investors allocating to core equities should consider refreshing the criteria they use to identify portfolio managers that can consistently beat their benchmarks. Active equity managers continue to face scrutiny. In concentrated markets, it’s become increasingly difficult to outperform because portfolios that diverge too far from index weights in the US mega-caps pay a heavy performance penalty. The mathematics of benchmark risk have raised high hurdles for stockpickers to generate alpha, or risk-adjusted excess returns versus an index. Volatile style rotations have created additional obstacles to reliable returns. Shifting to passive is the popular solution. But despite the benefits of passive portfolios, we think active strategies still have a role to play in equity allocations. The challenge today is to identify managers that possess real active advantages and can help investors seeking more balanced return patterns through changing environments. High Tracking Error Is a Red Herring To do that, the first step is to take a critical look at classic measures of active investing. Tracking error (TE) is first up because it’s widely seen as a badge of active investing effort. After all, TE is perhaps the easiest way to gauge whether an active manager is really doing their job by working hard on behalf of clients to invest independent of a benchmark. Technically defined as the standard deviation of excess returns, TE measures a portfolio’s active return minus the return of its benchmark. In other words, it answers the question, “How closely does this fund follow its benchmark?” The answer to that question is important because asset ...
Hello and welcome to the newsletter, a grab bag of daily content from the Odd Lots universe. Sometimes it’s us, Joe Weisenthal and Tracy Alloway, bringing you our thoughts on the most recent developments in markets, finance and the economy. And sometimes it’s contributions from our network of expert guests and sources. Whatever it is, we promise it will always be interesting. If you like chatting ...
Hello and welcome to the newsletter, a grab bag of daily content from the Odd Lots universe. Sometimes it’s us, Joe Weisenthal and Tracy Alloway, bringing you our thoughts on the most recent developments in markets, finance and the economy. And sometimes it’s contributions from our network of expert guests and sources. Whatever it is, we promise it will always be interesting. If you like chatting with us, check out the Odd Lots Discord , where you can hang out and talk with us and with other listeners 24/7. Here’s what Tracy’s thinking about... Behold! Here is the Courtesy K, a bulk carrier currently hauling about 25,000 tons of granular urea produced by Saudi Arabia’s petrochemicals giant Sabic, as seen on Bloomberg’s always-fun MAPS function: Why is this notable? The ship loaded its cargo at Saudi’s Yanbu port and is reportedly on its way to drop it off in Bangladesh. That’s pretty unusual. Saudi fertilizer exports have historically moved out of Gulf-side ports. Loading out of Yanbu — literally on the opposite side of the country — hasn’t really been a thing before. But now, with the closure of the Strait of Hormuz pushing up commodity prices, previously-uneconomic routes are suddenly becoming viable. Getting the fertilizer from Sabic’s production hub in Jubail to Yanbu, reportedly required 1,250 truck trips, each carrying about 20 tons across the Saudi desert. That’s a new freight expense on top of already-elevated seaborne costs. As Bloomberg Intelligence Senior Analyst and recent Odd Lots guest Alexis Maxwell points out, the math of doing this would not have penciled out before the Iran War, when Middle East urea was trading below $400 per metric ton. Now, with urea trading closer to $800, it makes more sense. “If the freight expense is below $6.6 million (spoiler alert, it is), it’s economical for Sabic to make this move,” Alexis says. This is market adaption in action, with higher prices effectively pulling supply through new, more costly and complicated rout...
This article first appeared on GuruFocus. Microsoft (MSFT, Financials) and EY are putting more than $1 billion behind a new effort to help companies bring artificial intelligence into everyday business work. The investment will be spread over five years. The two companies plan to use teams made up of engineers and business consultants, giving customers both the technical help and the practical gui...
This article first appeared on GuruFocus. Microsoft (MSFT, Financials) and EY are putting more than $1 billion behind a new effort to help companies bring artificial intelligence into everyday business work. The investment will be spread over five years. The two companies plan to use teams made up of engineers and business consultants, giving customers both the technical help and the practical guidance needed to use AI inside their operations. That matters because many companies are interested in AI but still struggle with where to start. Some need help choosing the right tools. Others need support changing workflows, training employees or connecting AI systems to existing software. For Microsoft, the partnership could help drive more use of its cloud and AI products. For EY, it gives the consulting firm a larger role in helping clients turn AI plans into real projects. Investors will likely watch whether the initiative leads to stronger enterprise demand for Microsoft's AI and cloud services.
Palestinians drop bid for a senior U.N. role after U.S. pressure toggle caption Angelina Katsanis/FR172095 AP TEL AVIV — Following pressure from the U.S., the Palestinian Ambassador to the United Nations is withdrawing his bid for a vice president role at the U.N. General Assembly, and Lebanon's ambassador is taking his place, the U.N. said Thursday. The Palestinian U.N. delegation relayed, throug...
Palestinians drop bid for a senior U.N. role after U.S. pressure toggle caption Angelina Katsanis/FR172095 AP TEL AVIV — Following pressure from the U.S., the Palestinian Ambassador to the United Nations is withdrawing his bid for a vice president role at the U.N. General Assembly, and Lebanon's ambassador is taking his place, the U.N. said Thursday. The Palestinian U.N. delegation relayed, through an Arab country, that Ambassador Riyad Mansour would refrain from running for a vice president position for the coming two years, a person familiar with the matter told NPR on Thursday — a potential reference to the end of President Trump's term. The person spoke on condition of anonymity because the decision had not been announced publicly. Sponsor Message The spokesperson of the President of the U.N. General Assembly, La Neice Collins, confirmed the Palestinian delegation's withdrawal. The U.S. State Department did not immediately reply to a request for comment. The State Department on Tuesday issued a cable, obtained by NPR, instructing the U.S. Embassy in Jerusalem to pressure Palestinian officials to drop the leadership bid or face the potential revocation of their U.N. delegation's U.S. visas. The U.S. cable, marked sensitive but unclassified and first published by the Guardian, says Mansour "has a history of accusing Israel of genocide," and that his bid "fuels tension" and undermines President Trump's peace plan for Gaza. "A bully pulpit for Mansour would not improve the lives of Palestinians and would significantly damage U.S. relations with the PA [Palestinian Authority]. Congress will take it extremely seriously," the cable says. For decades, the U.S. under both Democratic and Republican administrations has opposed Palestinian attempts to gain full membership at the U.N. and international bodies, arguing they were unilateral moves that undermined peace efforts with Israel. Ahead of last year's U.N. General Assembly in New York, the Trump administration made the...
US government bonds snapped an earlier decline to notch gains as oil retreated on hopes that an agreement to end the US war in the Middle East will be reached soon. Treasury yields across maturities erased increases and were at or near session lows shortly before 3 p.m. New York time, down on the day by as much as three basis points. The 10-year note’s yield approached 4.55%, extending its decline...
US government bonds snapped an earlier decline to notch gains as oil retreated on hopes that an agreement to end the US war in the Middle East will be reached soon. Treasury yields across maturities erased increases and were at or near session lows shortly before 3 p.m. New York time, down on the day by as much as three basis points. The 10-year note’s yield approached 4.55%, extending its decline from more than 4.68% two days ago, the highest level since January 2025. “Bond yields have been yo-yo-ing this week led by on-again, off-again prospects for a deal with Iran,” said Subadra Rajappa , head of US research at Societe Generale Americas. US Secretary of State Marco Rubio said Thursday that progress has been made. The war that began when the US and Israel attacked Iran in late February unleashed a surge in oil prices that ignited inflation and wiped out expectations for Federal Reserve interest-rate cuts this year, triggering a bond market selloff. For much of that time, US yields have tracked the move in oil prices, as was the case Thursday. Yields tumbled as US benchmark West Texas Intermediate crude oil futures approached $96 a barrel, the lowest level in more than a week. Their earlier increase in the session also was oil-led. WTI crude jumped to reached session highs over $102 shortly before the US trading day began after Reuters reported Iran’s leader won’t comply with US demands to surrender its near-weapons-grade uranium. “The extent to which rates move higher will ultimately depend on how long the Iran conflict persists,” TD Securities head of US rates strategy Gennadiy Goldberg said in a report. For the 10-year Treasury, the 4.66%, 4.81% and 5% technical levels may act as speed bumps in a selloff driven by anticipation of Fed rate hikes, he said.
Elon Musk's SpaceX ( SPCX ) has filed for an IPO that may turn out to be the largest in market history. In addition to its flagship space transportation business, SpaceX also owns satellite internet provider Starlink ( STRLK ), social media platform X, and AI developer xAI ( X.AI ). While SpaceX's business mix is largely unique, it's not the only company working in those sectors. We asked Seeking ...
Elon Musk's SpaceX ( SPCX ) has filed for an IPO that may turn out to be the largest in market history. In addition to its flagship space transportation business, SpaceX also owns satellite internet provider Starlink ( STRLK ), social media platform X, and AI developer xAI ( X.AI ). While SpaceX's business mix is largely unique, it's not the only company working in those sectors. We asked Seeking Alpha analysts Deep Value Investing , Dhierin Bechai , and Gene Chan which publicly traded companies they thought might make for good alternative investments to SpaceX. Deep Value Investing : I see two interesting alternatives to buying SpaceX ( SPCX ) on its IPO day. One of them provides some exposure before its IPO. The first is the ERShares Private-Public Crossover ETF ( XOVR ), which disclosed $230M in SpaceX ( SPCX ) exposure, representing roughly 20% of AUM. That said, this ETF does not get its exposure through SpaceX common shares. Instead, the ETF has exposure through a special purpose vehicle that invests in private securities/private funds with exposure to SpaceX ( SPCX ). It’s risky, as the SPV exposure is illiquid, restricted, and Level 3, meaning it is valued using significant unobservable inputs. The other, slightly more interesting alternative is Planet Labs ( PL ), which I owned earlier this year when I rotated out of tech. Yes, it’s a grotesquely overvalued stock trading at 34x forward sales, but RPO is growing in the triple digits, and that’s before a $1.5T catalyst in 2027. I like the growth story of this stock, but unfortunately, I sold my position, as I moved back into tech (particularly, into AI hyperscaler beneficiaries) in early April. I still like this stock, and it has some limited exposure to AI through image analytics. Dhierin Bechai : Rocket Lab ( RKLB ) comes to mind as an alternative to SpaceX ( SPCX ) as the company provides launch services and, with its Flatellite satellite, could eventually also become an operator of large satellite constel...
JasonDoiy/iStock Unreleased via Getty Images I believe that Roblox Corporation ( RBLX ) is still an unattractive investment after nearly two years from my previous article. The gaming platform’s recent growth has exceeded my previous expectations, but the company faces massive uncertainties ahead – Roblox’s age-check roll out has weakened platform momentum, and underlying profitability remains thi...
JasonDoiy/iStock Unreleased via Getty Images I believe that Roblox Corporation ( RBLX ) is still an unattractive investment after nearly two years from my previous article. The gaming platform’s recent growth has exceeded my previous expectations, but the company faces massive uncertainties ahead – Roblox’s age-check roll out has weakened platform momentum, and underlying profitability remains thin and inconsistent. The valuation continues to rely on shaky assumptions. I maintained a Sell rating in my previous June 2024 article on the stock, titled “ Roblox: Lavish SBC And High Valuation Make The Stock Unattractive ”. The stock has had a wild ride since – Roblox more than quadrupled after the article at one point, but the stock has since plummeted back. In total, the stock has now returned 28% after my article, slightly underperforming the S&P 500’s 35% gain. My Rating History on RBLX (Seeking Alpha) Roblox’s Momentum Was Great Prior to Age-Check Pushback Revisiting Roblox, it becomes clear that recent growth has exceeded my previous expectations. Roblox has continued to maintain and grow cultural relevance among young people despite the game’s seemingly outdated graphics. New experiences such as Grow a Garden, Steal a Brainrot, and 99 Nights in the Forest drew a growing audience to Roblox’s platform during 2025. Overall, momentum across an increasing number of total experiences continues to garner a consistent player base. Instead of decelerating after 2023, revenue growth only accelerated in 2024-2025. The latest Q1 report continued to show very fast 39% revenue growth, and even slightly faster 43% growth in bookings. Revenues came in at yet another all-time high of $1.44 billion. Growth in Roblox’s topline has been accompanied by fantastic year-on-year growth in operating metrics. Daily active users grew by 35% to 132 million in Q1, and hours engaged increased by 43% to 31 billion. Author's Illustration Using TIKR Data Combining the grey and blue bars, the above ...
Advanced Micro Devices (AMD) stock closed the May 20 trading session 8.1% up at $447.58, according to Yahoo Finance. It is currently trading 0.8% down at $444.0, according to Yahoo Finance at the time of writing, Thursday morning, May 21. ARM closed 15.05% higher at $256.73.Intel closed 7.36% ...
Advanced Micro Devices (AMD) stock closed the May 20 trading session 8.1% up at $447.58, according to Yahoo Finance. It is currently trading 0.8% down at $444.0, according to Yahoo Finance at the time of writing, Thursday morning, May 21. ARM closed 15.05% higher at $256.73.Intel closed 7.36% ...
Advanced Micro Devices (AMD) stock closed the May 20 trading session 8.1% up at $447.58, according to Yahoo Finance. Other semiconductor stocks also made gains on May 20: ARM closed 15.05% higher at $256.73. Intel closed 7.36% higher at $118.96. Marvell closed 5.97% higher at $186.80. Micron closed 4.76% higher at $731.99. Broadcom closed 1.63% higher at $417.76. Nvidia closed 1.3% higher at $223....
Advanced Micro Devices (AMD) stock closed the May 20 trading session 8.1% up at $447.58, according to Yahoo Finance. Other semiconductor stocks also made gains on May 20: ARM closed 15.05% higher at $256.73. Intel closed 7.36% higher at $118.96. Marvell closed 5.97% higher at $186.80. Micron closed 4.76% higher at $731.99. Broadcom closed 1.63% higher at $417.76. Nvidia closed 1.3% higher at $223.47. It seems that the semiconductor stock rally that started at the end of March and ran into a hiccup on May 14 has recovered its momentum. The volatility that often occurs when Nvidia (NVDA) earnings are near has been resolved, as the company beat and raised as expected. AMD might have timed the announcement of its latest $10 billion investment to intentionally use this continued momentum, adding to the positive factors that have been fueling AMD’s rally. Positive factors include: Hyperscalers increasing their capital expenditure plans Bank of America revising its server CPU sales forecasts Intel’s Q1 earnings boosting confidence in the semiconductor sector Bank of America raising its price target for AMD The rally faced a slight bump in the road on May 14. The likely cause was President Donald Trump’s meeting with Chinese leader Xi Jinping, which ended without major chip deals, as reported by the Wall Street Journal. Another factor may have been a strong warning from UBS analysts about semiconductor stocks and the Magnificent 7, reported Proactive. AMD invests more than $10 billion in the Taiwan manufacturing ecosystem AMD confirmed investments of more than $10 billion across the Taiwan ecosystem to expand strategic partnerships. To address the growing demand for AI infrastructure, AMD is advancing leading-edge silicon, packaging, and manufacturing technologies. These technologies will enable higher performance, greater efficiency, and faster deployment of AI systems. “As AI adoption accelerates, our global customers are rapidly scaling AI infrastructure to meet growing ...
Oselote/iStock via Getty Images This article updates my review of June 2024 in light of current holdings and recent performance. VBK strategy Vanguard Small-Cap Growth ETF ( VBK ) was launched on 01/26/2004 and tracks the CRSP US Small Cap Growth Index. VBK has a portfolio of 550 stocks, a 30-day SEC yield of 0.46%, and an expense ratio of 0.05%. The same strategy is also available as a mutual fun...
Oselote/iStock via Getty Images This article updates my review of June 2024 in light of current holdings and recent performance. VBK strategy Vanguard Small-Cap Growth ETF ( VBK ) was launched on 01/26/2004 and tracks the CRSP US Small Cap Growth Index. VBK has a portfolio of 550 stocks, a 30-day SEC yield of 0.46%, and an expense ratio of 0.05%. The same strategy is also available as a mutual fund ( VSGAX ). VBK has changed underlying indexes twice: it was tracking the S&P SmallCap 600 Growth Index in 2004-2005, then the MSCI US Small Cap Growth Index from 2005 to 2013, and finally the current index since 4/17/2013. As described by CRSP, the underlying index “represents the Growth Style for companies covering 85% to 98% of cumulative capitalization of CRSP US Total Market.” It is rebalanced quarterly. The fund’s turnover rate was 24% in the most recent fiscal year. I will use as a benchmark the parent index CRSP US Small Cap Index, represented by Vanguard Small-Cap ETF ( VB ). VBK portfolio The portfolio has significant exposure in industrials (25.2% of asset value) and technology (20.9%). Compared to the parent index, VBK overweights mostly technology and healthcare, while it downplays financials, real estate, and utilities. VBK sector breakdown (Chart: author; data: Vanguard) The fund is very diversified and has low company-specific risk. The top 10 holdings, listed in the next table, represent 9.3% of asset value, and the heaviest position weighs 1.1%. Ticker Name Weight BE Bloom Energy Corp. 1.11% CIEN Ciena Corp. 1.10% FIX Comfort Systems USA Inc. 0.95% LITE Lumentum Holdings Inc. 0.95% CASY Casey's General Stores Inc. 0.90% FTI TechnipFMC plc 0.89% COHR Coherent Corp. 0.88% RVMD Revolution Medicines Inc. 0.84% CRDO Credo Technology Group Holding Ltd. 0.83% ALAB Astera Labs Inc. 0.83% Click to enlarge Fundamentals As reported in the next table, VBK is more expensive than the benchmark based on valuation ratios and has significantly higher growth rates, in acco...
Walter Cicchetti/iStock Editorial via Getty Images The market is preparing for Space Exploration Technologies Corp.’s ( SPCX ), commonly known as SpaceX, massive IPO. SpaceX filed its S-1 SEC filing on the 20 th of May ahead of the anticipated listing, revealing a massive amount of information about the company and its financials. The main prospectus spans over 277 pages, and the filing includes a...
Walter Cicchetti/iStock Editorial via Getty Images The market is preparing for Space Exploration Technologies Corp.’s ( SPCX ), commonly known as SpaceX, massive IPO. SpaceX filed its S-1 SEC filing on the 20 th of May ahead of the anticipated listing, revealing a massive amount of information about the company and its financials. The main prospectus spans over 277 pages, and the filing includes an additional 96 pages related to financial statements. The company's three reportable segments have wildly different financial profiles and future prospects and provide a very interesting view of the company. Currently, SpaceX's business is based on Starlink’s strong financial trajectory, but resources are primarily being put on AI. The IPO is expected to be completed by mid-June already, according to trading market odds . SpaceX's Financials Finally Got Revealed SpaceX revealed a lot in the recent S-1 filing. The filing included discussion about SpaceX’s strengths, industry projections, risk factors, planned use of IPO proceeds, and other aspects. In my opinion, the most important disclosed information was SpaceX’s financial performance from 2023 to Q1’2026. The company separates the business into three reportable segments—Space, Connectivity, and AI. The Space segment is responsible for what SpaceX is traditionally known for: designing, manufacturing, and launching reusable rockets, namely including the Falcon family. Connectivity includes the Starlink service, which provides high-speed internet service through satellites to governments, enterprises, and broadband & mobile consumers. The AI segment includes SpaceX’s data center infrastructure for AI training, namely COLOSSUS and COLOSSUS II, the proprietary Grok AI model, and the X social media platform. The filing revealed that SpaceX’s revenue is largely based on Connectivity, generating the majority of the total current topline. Total revenues over the past twelve months stand at $3.8 billion for Space, $12.2 billion f...