A Schematic of Decision Making: Corporate Finance and Capital Markets
Matrix: n. 4. A grid-like array of elements; a lattice.
Template: n. 1. A pattern or gauge used as a guide in making something accurately.
<U/O> Matrix via Applied Indexation is an illustration of the horizontal segmentation and vertical integration within Clean Energy Subindustry Benchmark ETF PBW. Segments include Wind, Solar, Fuel Cells, Smart Grid, Water, LED, Biofuel, Automotive, Natural Gas, Storage and Aviation plus further classifications detailing select component member placement within respective grouping vertical structure (12 segments, 59 classifications, 76 single and multi-listed component members, 248 placements). Noting its diverse industry group composition, please reference the Tutorial tab for sample methodology in conjunction with <U/O> Matrix - Establishing Predictive Value exercise (ref: below and <U/O> Blogger).
4QTR21 <U/O> Matrix via Applied Indexation is currently available in multi-sheet format including portfolio management composites and supplemental summary data sets.
Combined Renewables/Diversified Industrials/Technology sector-themed overlay illustrates Alpha and Alpha-Beta screens utilizing publicly-sourced Clean Energy Subindustry Benchmark ETF PBW for index applications of peer group analytics and valuation. Product suite attributes lend analytical infrastructure for new use cases and relevant applications, serving as tactical and strategic complements for both equity and corporate credit portfolio strategies (Index, Thematic, Active, Passive, Active/Passive, Beta, Alpha-Beta and Alpha). Methodology is adaptable across economic sectors and asset classes.
4Q21 PBW -6.8%, CY21 -29.8%; 12-mos. performance dispersion: +145.5%/-87.7% (011422).
PBW Fwd (adj.) PE=34.4 Beta=1.4 versus 33.2/1.4, 34.1/1.4, 34.0/1.3 and 33.4/1.3 and sequentially. SPX 12-month Fwd PE=21.1 v. 20.5/Q3, 21.4/Q2, 21.8/Q1 (FactSet); CAPE 38.5 from 37.9/38.6/37.6, mean 16.9 (Shiller).
Spreadsheet access password for <U/O> Matrix via Applied Indexation at PM composites link provided by PayPal auto-reply after payment verification ($10,000 per unit/quarter/user).
Product licensing attached at time of purchase (10 basis points applied to assets under management), analytical support available upon request under separate agreement.
To advance analysis, needed is a reconciliation of specific business segment operations among representative component members apart from the general sector designations presented in standard fund reporting.
At Venn’s intersection, sets and subsets of competing interests endure. Proprietary research suggests its dynamic principle in relation to business segment operations is three-fold: 1) multinational and Large-cap companies function as benchmark sector/industry/subindustry proxies based on scale and business segment operations, 2) Small- and Mid-cap companies compete as peers and are delineated by business segment operations and 3) among subsets of 1) and 2) are vendors provisioning multiple economic sectors, asset classes and geographies. Successful trading strategies (systematic, momentum, thematic) isolate Value in Growth by not overlooking the prospective Alpha drivers directly associated with ecosystem and supply chain verticals or profiles of Small- and Mid-cap companies functioning as competitive peers and, hence, acquisition candidates.
From a portfolio management perspective, designing strategies based on business segment operations lends the advantage of iterative index applications by exploiting the inefficiencies in third party data nomenclature assignments which inevitability skew peer group analytics and valuation. While means and methods vary of course, a latticed framework—gleaned from competitive market information, built by segments/classifications, interpolated for integrity—exhibits the proportionality revealed by business segment operation considerations and distinguishes differentiated growth rates beyond simple revenue line aggregation. Additionally, a developed thesis for security selection in the Energy complex incorporates: 1) a barbell to CAPE as an extrapolation, 2) a barbell of Cleantech to Diversified Industrials as a foundation and 3) a barbell of Value to Growth implicit in corporate anatomy.
Common portfolio position weight allocations (0.5% < x < 4.0%) may be aligned consistent with long/short peak-to-trough cyclical/counter-cyclical exposures and emerging technologies among individual and multi-listed component members. Importantly, often discarded negative PE companies are included to capture points of inflection for cash flow growth and forward earnings momentum. In the end, a structure of analysis in the Energy complex is borne from the examination of business segment operations within diverse companies across economic sectors and asset classes plus, on a standalone basis, competitive peers—by definition, Alpha is singular.
<U/O> Matrix - Establishing Predictive Value exercise as of 121520, in three pop-ups or view in entirety at <U/O> Blogger:
Exhibited in the EPV series is 1) the importance of both standardized specific and descriptive nomenclature in fundamental benchmark index component member assignments, 2) period outperformance based on differentiated growth rates delineated by business segment operations within proprietary segment verticals (primary/secondary/tertiary classifications as determined), 3) capacity to profile M&A employing common business segment operations and 4) development of portfolio strategies including clinical applications for long/short active/passive managers.