This week, we speak with Adam Parker, who is the founder and CEO of Trivariate Research. Previously, he was Chief US Equity Strategist and director of Global Quantitative Research at Morgan Stanley, ranked as a top strategist and quantitative researcher multiple times by Institutional Investor magazine. Parker also co-authored a groundbreaking paper on gender diversity as a risk factor. He holds B.S./M.S. degrees in statistics and earned a Ph.D. in statistics from Boston University.
At Morgan Stanley, he analyzed 3,500 analyst observations over 7 years. (Half were overweight, half equal or underweight) The overweights beat the underweights by ~4%; He also ran a quant model, where the top quintile beat the bottom quintile by 9%; Finally, combining fundamental and quantitative models, if you only bought what both recommended and shorted what both disliked, it generated 13% in returns.
A year ago, Trivariate made an aggressive call going long energy due to the triple crown of quant: Upwards earnings revisions, positive price momentum, and cheap valuation versus history. Since he made the recommendation, Energy has beaten Tech by 50%. He does not foresee peak oil demand over the next 10 years.
Parker also doubts the Fed is going to tighten the economy into a recession and believes there are many long/short opportunities. We also discuss semiconductors and why it has taken so long to ramp up post-pandemic; things are beginning to normalize, but still has a few quarters to go.
A list of his current reading is here; A transcript of our conversation is available here after the holiday weekend.
You can stream and download our full conversation, including the podcast extras on iTunes, Spotify, Stitcher, Google, Bloomberg, and Acast. All of our earlier podcasts on your favorite pod hosts can be found here.
Be sure to check out our Masters in Business this week with Dan Chung, CEO and Chief Investment Officer at Alger Management, which manages $35.3 billion in client assets. After graduating Harvard Law Review, he served as law clerk for the Honorable Justice Anthony M. Kennedy, United States Supreme Court. The firm lost 35 people, including its CEO, on September 11th and donates profits from its Alger 35 ETF in their memories.
Adam Parker’s Current Reading
Lessons From The Edge: A Memoir by Marie Yovanovitch
All In: An Autobiography by Billie Jean King
Books Barry Mentioned
Open: An Autobiography by Andre Agassi
The Money Game by Adam Smith