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Portfolio Manager, APM and Deputy APM

The PM, APM and Deputy APM responsibilities consist of the following:

  1. Manage Portfolio Constraints
    • Cash Position Limit
    • Sector Position Limit
    • Single SecurityPosition Limit
    • Type of Securities Limit
    • Short Positions Limit
  2. Produce, Analyze, Distribute Portfolio Analytics Reports (BBAT)
    • Prior Week Peformance Report 
    • Month to Date Performance Report
    • Year to Date Performance Report
  3. Manage Portfolio & Trading
    • Review Trade Recommendations
    • Score Trade Recommendations
    • Record final disposition of Trade Recommendations
    • Enter Approved Trades
     
  
 A "fund" is typically governed by a document called an "Prospectus" which contains a detailed  description of fund including the manager(s), types of securities in which the fund will invest, risk limitations, and the like.  It is very important that the PM ensure the fund does not violate the Offering Memo by allowing its cash position to become negative, purchasing stocks that are not on the S&P 500, or face stiff fines from the "regulatory authorities" and/or redemtion of funds from your "investors" as specificied in the Portfolio Regulations section of this website.
 
All funds in this competition will have the following constraints:
  • Cash Position Limit - The PM will ensure that the fund maintains a positive cash balance.  In other words, the PM will ensure that the portfolio's cash account never falls below zero.  
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    To verify this, type in BBAT and hit enter to go to the BBAT Summary screen:
     
     
     
    Next, click on the "Detail" tab at the bottom of the screen and ensure that the Cash row is greater than zero under the "% Port" column.
     

  • Sector Position Limit - The PM will ensure that the fund does not invest more than 30% of its total assets in any single sector.  Using the same "Detail" tab within BBAT, you can also see the percentage of the portfolio invested in each sector by looking under the "% Port" column.  Ensure that no sector accounts for more than 30% of the portfolio.
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  • Single Security Position Limit - The fund will not invest more than 5% of its total assets into any single security.  To verify this, while still in BBAT simply click on the "Holdings" tab on the bottom of the screen to see all the positions in the portfolio, and veryify that the "Wgt" column is less than 5% for all securities.


    Type of Securities Limit - The fund will be limited to investing in the common stock of companies actively listed on the S&P 500 Index. 

     
    To verify that a company is listed on the S&P 500 Index, go to any open Blooomberg window and type in "S&P 500" or "SPX" and select the "S&P 500 Index" from the drop-down window. 
     
     
     Then type in "MEMB" to view the members of the S&P 500.
     
     
    Then scroll through the list of companies listed in alphabetical order ascending until you confirm (or not) that the recommended company is listed on the S&P 500 Index.  Over time you will become familiar with the companies on the S&P and only use this screen to check companies that are unfamilar to you or your analysts.
     
     
     
     
  • Short Position Limit - The PM will ensure the portfolio does not enter any "short" trades.   A short trade is selling shares the fund does not own.  The PM can prevent short trades by making sure the sales of shares in existing positions do not exceed the number of shares in the position.  For example, if the fund owns 100 shares of Gamestop, and they wish to close out this position, the PM needs to be careful to sell only 100 shares.  If for example the PM sold 110 shares of Gamestop, the fund would have a short position in gamestop consisting of 10 shares.  To verify this, while still in BBAT simply click on the "Holdings" tab on the bottom of the screen to see all the positions in the portfolio, and veryify that the "Pos" column is a positive number for all securities.


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 The PM will run the BBAT report, analyze the report as part of preparations for each weekly Fund Meeting, and distribute the report to all analysts by emailing it to the chapter listserve.
 
To produce the BBAT report by simply pull up the BBAT screen for your portfolio by typing in BBAT and hitting enter.   The home page for BBAT is the "Summary" tab at the bottom of the screen, and it shows a high level summary of the portfolio allocation on the left (in blue) and the amount of total portfolio return in each of the ten sectors on the right (in gold).  The average weighting of the total amount of cash across all ten sectors.
 
 
The PM will use the BBAT screen to distribute BBAT reports for the portfolio performance for the following periods after 3pm every Friday:
  • Prior Week  (PW) Performance
    • Set the "Time" field to "Custom"
    • Set the "Start Date" field to the date of Sunday (the first day) from the prior week
    • Set the "End Date" field to the date of Saturday (the last day) of the prior week
   
    Click on the red "Reports" button and then select the "New Report" option and the following window will pop up: 
     
    Click on the green "Next" button at the bottom of the page and the following window will pop up...then check the Excel radio button, uncheck the "All Sections" box, and check the "Attribution Detail" check box with "Securities Held, Including Buckets" radio button checked, and the "Allocations" checkbox, as shown in the screenshot below:
     
     
     
    Then click on the grey "Generate" button to produce the PW Performance report in Excel format.  When the report is completed, you will see the message in white font at the top of the screen "Report generation completed. Please run RPT<GO> to view" or "File download complete."  
     
     
     In a different open Bloomberg window, type in RPT and hit enter.  You will be taken to the Report Menu screen and will see the date and time of your completed PW report.
     
     
     Click on the link for your report and you will see this screen indicating that an Excel version of your report was created and is preparing for you to download and save.  Click the "Close" button.
     
     
     The Excel file will begin to open and the following message window will pop up asking if you want to open the file now, click "Yes"
      
     
     Your PW Performance report is now ready to be named and saved to your desktop.   
     
     
    Go to "File" then "Save As" set "Save as type" to "Excel Workbook", and set "File name:" to the file PW and the date of the report, e.g., "pw 4-30-11.xls"
     
     
     Then repeat the above steps to generate the MTD and YTD performance reports by simply changing the "Start" and "End" date fields in the BBAT screen accordingly. 
     
     
      
  • Month to Date  (MTD) Performance
    • Set the "Time" field to "Custom"
    • Set the "Start Date" field to the first day of the current month
    • Set the "End Date" field to the date of Saturday (the last day) of the prior week
   
    Click on the red "Reports" button and then select the "New Report" option and the following window will pop up: 
     
    Click on the green "Next" button at the bottom of the page and the following window will pop up...then check the Excel radio button, uncheck the "All Sections" box, and check the "Attribution Detail" check box with "Securities Held, Including Buckets" radio button checked, and the "Allocations" checkbox, as shown in the screenshot below: 
     
     
    Then click on the grey "Generate" button to produce the MTD Performance report in Excel format.  When the report is completed, you will see the message in white font at the top of the screen "Report generation completed." or "File download complete." 
     
     
     In a different open Bloomberg window, type in RPT and hit enter.  You will be taken to the Report Menu screen and will see the date and time of your completed MTD report.
     
     
     Click on the link for your report and you will see this screen indicating that an Excel version of your report was created and is preparing for you to download and save.  Click the "Close" button.
     
     
     The Excel file will begin to open and the following message window will pop up asking if you want to open the file now, click "Yes"
      
     
     Your MTD Performance report is now ready to be named and saved to your desktop.   
     
     
    Go to "File" and "Save As" set "Save as type" to "Excel Workbook", and set "File name:" to the file MTD and the date of the report, e.g., "mtd 4-30-11.xls"
     
     
     Then repeat the above steps to generate the YTD performance report by simply changing the "Start" and "End" date fields in the BBAT screen accordingly. 
     
      
  • Year to Date  (YTD) Performance
    • Set the "Time" field to "Custom"
    • Set the "Start Date" field to the first day of September for the current school year
    • Set the "End Date" field to the date of Saturday (the last day) of the prior week
   
    Click on the red "Reports" button and then select the "New Report" option and the following window will pop up: 
     
    Click on the green "Next" button at the bottom of the page and the following window will pop up...then check the Excel radio button, uncheck the "All Sections" box, and check the "Attribution Detail" check box with "Securities Held, Including Buckets" radio button checked, and the "Allocations" checkbox, as shown in the screenshot below: 
     
     
    Then click on the grey "Generate" button to produce the YTD Performance report in Excel format.  When the report is completed, you will see the message in white font at the top of the screen "Report generation completed." or "File download complete." 
     
     
     In a different open Bloomberg window, type in RPT and hit enter.  You will be taken to the Report Menu screen and will see the date and time of your completed YTD report.
     
     
     Click on the link for your report and you will see this screen indicating that an Excel version of your report was created and is preparing for you to download and save.  Click the "Close" button.
     
     
     The Excel file will begin to open and the following message window will pop up asking if you want to open the file now, click "Yes"
      
     
     Your YTD Performance report is now ready to be named and saved to your desktop.   
     
     
    Go to "File" and "Save As" set "Save as type" to "Excel Workbook", and set "File name:" to the file YTD and the date of the report, e.g., "ytd 4-30-11.xls"
     
     
     
     Having created the PW, MTD and YTD performance reports, the PM distributes the files to the chapter by simply attaching the three files to an email to the chapter listserve
     
     
     
     
 
 
To manage the portfolio, the PM will use the following framework as a guideline for the systematic review, ranking and selection of the securities in the portfolio. 
  • Review Trade Recommendations
  • Score Trade Recommendations
  • Rank Trade Recommendations
  • Discuss Trade Recommendations at Fund Meeting
  • Revise Trade Recommendations Rankings
  • Record final disposition of Trade Recommendations
  • Enter Approved Trades
 
  • Review Trade Recommendations - The PM will review all trades submitted to first ensure the trades are valid:
    • The trades are for companies listed on S&P 500 Index
    • The trades are for companies from within the analysts assigned coverage area
              The PM can verify the trades are valid by simply using the GICS function.  
 
    If for example your analyst who is assigned to cover the Consumer Discretionary Sector recommends a trade in Walt Disney, you would use <GICS> to check that Walt Disney is in the S&P 500 and that  it is in the Consumer Discretionary Sector.
    Set "Source" to "Index" and set "Name" to "SPX"
    Click on the Consumer Discretionary link to drill down and view the 78 companies that are "members" of the Consumer Discretionary Sector. 
     
     
    Click on "2) Members" to view the companies in this sector:
      Change the "Members" dropdown list from "Ticker" to "Name" to see the names of the companies in this sector.
        Notice on this page that Walt Disney Company is not listed but we see in the upper right corner that the member are spread over five pages.  To advance through the pages, click on the "Page 1/5" or use the page down button on your keyboard.  Check each page for Walt Disney Co.  You will see that Walt Disney is on Page 3, and confirms that the company is a member of both the S&P 500 Index and the Consumer Discretionary Sector.
         
         
       
          
      • Score Trade Recommendations - The PM should score all of the trade recommendations prior to the weekly portfolio meeting.  To score the trades the PM can use the AFA-HS PM Trade Ranking Sheet
      The AFA-HS PM Trade Ranking Sheet, is a spreadsheet in Google Docs that allows the Portfolio Manager to easily rank submitted trades and determine which trades are the best. The AFA-HS PM Trade Ranking Sheet allows the Portfolio Manager to compare all trades submitted and for each trade assign a score of 0 to 10, with 10 being the highest, indicating how strong a given recommendation is based on the Fundamental Metric used, Technical Metric used, and the recommending analyst's presentation and discussion during the weekly meeting.

      All valuation multiples (P/E, P/B, P/S, P/CF, etc.) are compatible with the sheet as are all technical metrics that give a projected profit potential (GP2)

      If the Technical Metric used by the analyst does not give a profit potential, the PM should instead assign the Technical Score on the basis of how strong the technical metric is and how strong of a signal it has produced. 

      The following steps show how to use the AFA-HS PM Trade Ranking Sheet

      1. Open the AFA-HS PM Trade Ranking Sheet
       

      2. Enter the information for the first trade recommendation into the row labeled Trade #1.

      Do not fill in any of the light blue shaded columns.  These columns calculate themselves.  

      Leave the "Fundamental Score" , "Technical Score", and "Portfolio Meeting Discussion Score" columns blank for now.




      3. Repeat Step 2 for all submitted trades


      4. Once you have all of the trades input, go to the Fundamental Score column


      5. For each trade assign a Fundamental Score, in the corresponding column, based on how undervalued the company is on a historical basis and versus its peers. 

      Scores should be from 0 to 10 with 0 being overvalued and 10 being very overvalued.

      For each trade the spreadsheet calculates the percent undervalued each recommendation is on a historical basis and compared with its peers

      If the company is not undervalued the spreadsheet will indicate that using that fundamental metric the company is overvalued

        6. Go to the Technical Score column


        7. For each trade assign a Technical Score, in the corresponding column, based on the profit potential of the technical indicator or based on the general strength of the technical indicator.  

        Scores should be from 0 to 10 with 0 being a trade for which the technical indicator is showing a sell signal or negative profit potential, and a 10 being a trade for which there is a very strong buy signal or very high profit potential.
      For each trade the spreadsheet calculates the profit potential (if one is input) as a percent of the stock price.  The profit potential of each trade must be shown as a percent of the stock price or else it is not possible to compare the profit potential of stocks with very different prices.


      8.  Go to the Portfolio Meeting Discussion Score column



      9. For now leave the Portfolio Meeting Discussion Score blanks.  The Portfolio Manager only assigns a Portfolio Meeting Discussion Score after each analyst has presented their trade recommendations at the weekly portfolio meeting.


      10. Go to the Blended Score column.

      The combined scores is a tool to assist the Portfolio Manager when deciding which trades to execute and which to reject.  The combined score also assists the Portfolio Manager when deciding how much of the portfolio to invest in each trade. A portfolio manager can decide to invest only part of what an analyst recommends if they believe the recommendation is good but not strong enough to warrant a full investment.


      11. Before each meeting the Portfolio Manager should look at the Blended Score for all trades and rank them from best trade to worst trade.   The blended trade score is an average of the Fundamental, Technical and Portfolio Meeting Discussion scores for each trade.  The trade with the highest Blended score is the strongest based on all three metrics.  During the meeting the Portfolio Manager should let all analysts see how their trade recommendations compare the trade recommendations submitted by all the other analysts.

       Before the meeting all trades will have a fundamental and technical score but not a discussion score.


      12.  After each portfolio meeting the Portfolio Manager will assign a Portfolio Meeting Discussion Score, in the corresponding column.  This score should only be assigned after the weekly portfolio meeting, where the recommending analyst presented the trade.  The score should be assigned based on how well the analyst presented their trade recommendation and how convincing they were. 

      Scores should be between 0 to 10, with 0 assigned to trades for which the analyst did not present the trade or presented something irrelevant to the recommendation and 10 assigned to trades for which the analyst gave an excellent presentation, was very convincing and had lots of information to back up their trade recommendation.


      13. After all three scores have been assigned to all trade recommendations the Portfolio Manager should look at the Blended Score column and determine which trades to approve and which trades to reject.

      Remember: The blended trade score is an average of the Fundamental, Technical and Portfolio Meeting Discussion scores for each trade.  The trade with the highest Blended score is the strongest based on all three metrics.


       
           
      • Record Final Disposition of Trade Recommendations - After the Portfolio Manager has scored and ranked all of the trade recommendations they must record which trades they decided to accept and which they decided to reject.
      The Portfolio Manager records their final decision for all trades using the Trade Recommendation spreadsheet.  This spreadsheet contains all of the trade recommendation submitted using the Trade Recommendation form.
       
        To get to the spreadsheet containing all of the submitted trade recommendations, go to Documents at the top of the website.


        From the Documents menu select New Trade Recommendation Form


      You should now see a spreadsheet with all of the trades submitted by analysts from your chapter


      Scroll to the far right of the spreadsheet.  In these last 7 columns the Portfolio Manager will record whether the trade was accepted  or not and if so for how many shares


      In Column Z, record if the trade was accepted by typing "Accepted" or "Rejected"


      Only fill in columns AA through AE if the trade was accepted, if the trade was rejected, go directly to column AF

      In Column AA, record the number of shares that were bought or sold


      In Column AB, record the name of the company


      In Column AC, record whether the shares were "Bought" or "Sold"


      In Column AD, record the total amount of the trade (Equal to Number of shares times price per share)


      In Column AE,  if applicable, record the reasons for trading a different amount than the analyst recommended

      Only fill in Column AE if the trade was accepted but not for the number of shares recommended by the analyst


      In Column AF, if applicable, record the reason for not accepting the trade

      Only fill in Column AF, if the trade was rejected


      Repeat the following steps for all trade recommendations in the spreadsheet

      • Enter Approved Trades - After deciding what trades to execute the Portfolio Manager will go onto the Bloomberg terminal and execute all trades.

       To execute trades:

      1. Log on to Bloomberg


      2. Go to PLST and select  your schools portfolio


      Screen after selecting portfolio



      3. Enter the ticker of the company you want to execute a trade in


      4. Check that the desired company is in the gold bar at the top of the screen


      5. Type PTT and hit enter


      6.  Enter the number of shares you wish to buy or sell

      To sell shares make the number of shares a negative number


      7. After you have entered the number of shares press enter


      8.  Confirm that you have entered everything correct and press 1 then enter or click on "Enter 1 <GO> to Update" at the top of your screen


      9.  Repeat steps 3 thru 8 for all trades
       
       

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