SWS Portfolio net worth: $24K active-money Portfolio

investment process

Investment Board members meet every week during the school year to discuss stocks pitched by Research Analysts. Based on Analysts’ memos and ensuing discussion, Investment Board members vote anonymously for each stock. Votes consist of a simple “yes”, “no”, or “hold”. If a majority votes “yes” for the stock, we ask each Investment Board member to write down the percentage weight they think the stock should hold within the overall portfolio. The percentage weight of any one stock is limited at 10 percent of the portfolio. The chief investment officer is responsible for collecting the percentages and using the average to make the agreed-upon transaction(s) within a week. If a stock receives a vote of “hold,” it is placed on a watch-list because Board feels more time or information is necessary to make an investment decision.

risk management

We seek to effectively manage risk—that is, to build safeguards that help control the risk of market uncertainties through diversifying and closely monitoring the portfolio. When making investments, we balance the weight of each industry that we invest in. Through investing in both cyclical and counter-cyclical businesses, we aim to minimize the volatility of our portfolio return.

We monitor portfolio risk through assigning each portfolio stock to an I-Board member for coverage. The member will keep track of news on stocks and analyze stock performances. Every two weeks during the I-Board meeting, the Chief Investment Officer will lead a discussion on portfolio stock updates and review stock performance. The I-Board sets 8% as a warning sign. If the stock price falls more than 8% within the two weeks, or falls 8% as compared to the original purchase price, the I-Board members will share views and aim to distinguish “market noise” from events that change our initial thesis points. Depending on the actual analysis, the I-Board may decide to add in more stocks if the majority of members believe that the stock is undervalued by the market, or may decide to sell a portion of stocks if the majority of members believe that the event is significant enough to change our initial investment thesis points.

exit strategies

For each portfolio stock, the I-Board members calculate a target price at time of investment through taking a weighted average of our own financial analysis and target prices provided by analysts from well-known institutions listed on Bloomberg. When the target price is reached, the I-Board will sell the stock and turn unrealized returns into realized returns.