Write case analysis for question 3 (Performance Benchmark for Long/Short Investing What should be the performance benchmark for a long/short portfolio? What does equalization mean for a long/short portfolio, and what should be the performance benchmark for an quizzed long/short portfolio?
Case Discussion: Numeric Investors Read the case Numeric Investors. Each team is required to submit a report to address the case questions. 1: Fee structures What is the typical fee structure for open-end mutual funds? Why does Numeric prefer to be compensated through performance fees? What’s the advantage? 2: Long/Short Investing What are the primary advantages of long/short investing, rather than long-only? What are the main risks associated with it? 3: Performance Benchmark for Long/Short Investing What should be the performance benchmark for a long/short portfolio? What does equalization mean for a long/short portfolio, and what should be the performance benchmark for an quizzed long/short portfolio? 4: Momentum investing What are the primary features of the momentum investment strategies pursued by Numeric? How is their momentum strategy different from a typical momentum strategy, e.g., buy past winners and sell past losers? 5: Under reaction by financial analysts Why do financial analysts exhibit delays in reacting to earnings news? Why does this lead to stock return predictability? Do you expect the under reaction by financial analysts to disappear through time? 6: Investing in fundamental values How does Numeric identify the fundamental value of firms and design strategies to trade to on it? Do you expect the signal from the approach of value investing to be different from that of momentum investing?
