Convergence Investment Partners builds all of its investment solutions on the back of its proprietary research engine. The Convergence research engine calculates and tracks hundreds of metrics on thousands of companies on a daily basis. Our core research effort focuses on the integrity of the data, with special care to avoid statistical bias.
Convergence Long/Short Strategies Q1 2020 Commentary
In the first quarter of 2020, the Convergence Long/Short Strategies succeeded in outperforming the broader equity market indices net of fees during the tumultuous Coronavirus environment. The Convergence process favors specific characteristics which helped us to maintain a portfolio of companies that were additive to our relative results, particularly in February and March.
Convergence Factor Analysis Q1 2020 Commentary
We ranked all 15 factor composites by quintile spread return to show that what can work over the long term is not always true in the short term (see disclosures for a definition of quintile spread return).
Convergence Dividend Growth Commentary Q1 2020
In the first quarter of 2020, the Convergence Dividend Growth strategy succeeded in marginally outperforming the Russell 1000 Value, net of fees, during the tumultuous Coronavirus environment. The characteristics the Convergence process favors helped us to maintain a portfolio of companies that proved additive to our results, particularly in February and March.
Convergence Long/Short Strategies Q4 2019 Commentary
As we began the year of 2019, U.S. investor appetites, as well as anxiety levels, have made a complete turnaround. Fear of an impending global slowdown from the previous year was replaced by elation that the Fed had everyone’s back. This resulted in equity markets generating sizeable returns to close out the decade. Many investors now perceive the equity market as invincible, as we will discuss. Interest rates are low, following three rate cuts by the Fed, volatility is low, and the price momentum among specific names has been stunning. At the same time, quietly brewing under the surface, is stalled earnings growth.
Convergence Factor Analysis Q4 2019 Commentary
“…there is little to suggest that factor investing has structurally changed or that it has lost its appeal. While the returns have been disappointing of late, we would do well to keep on plowing the fields and wait for better harvests in the future.” Nicolas Rabener, author/columnist
Convergence Dividend Growth Commentary Q4 2019
The Convergence Dividend Growth strategy delivered strong results in 2019 by generating a total return of 25.53% for the year, net of fees. Companies with strong fundamental characteristics rewarded investors given the marked appreciation of those stocks within the equity markets.
Convergence Factor Analysis Q3 2019 Commentary
Is now a good time to look at hedged equity and/or market neutral?
Convergence Long/Short Strategies Q3 2019 Commentary
Investors in the Convergence Long/Short strategies were rewarded in the 3rd quarter with solid outperformance. The risk fueled run-up in Q1 gave way in Q2 to a more disciplined and rational environment for stock selection, and this rational environment persisted through the end of Q3.
Convergence Dividend Growth Commentary Q3 2019
The Convergence Dividend Growth outperformed the Russell 1000 Value by over 100 basis points in the third quarter of 2019, net of fees. It was a jumpy quarter where most indexes finished up with small single digit returns.
Convergence Long/Short Strategies Q2 2019 Commentary
Investors in the Convergence Long/Short strategies were rewarded in the 2nd quarter with solidly positive returns. The first quarter’s risk-fueled run-up gave way in Q2 to a more disciplined and rational environment for stock selection..
Convergence Dividend Growth Commentary Q2 2019
The Convergence Dividend Growth strategy delivered a very strong return in the first half of 2019, up 13.18%. As a value focused strategy with lower risk in terms of beta and volatility, we were pleased with the strong returns generated during the past six months given the powerful upward move in the broader markets.
Convergence Long/Short Strategies - Convergence Q1 2019 Commentary
The George Costanza Market.
Convergence Dividend Growth Commentary Q1 2019
The Convergence Dividend Growth strategy delivered a very strong total return in the first quarter of 2019, up 10.75%. We are pleased with the strong returns generated this quarter during this sharp upward move in the markets, especially since dividend and value focused strategies tend to be lower risk in terms of beta and volatility.
Convergence Dividend Growth Commentary Q4 2018
The Convergence Dividend Growth Strategy rewarded investors in 2018 by outperforming the Russell 1000 Value Index by 1.01% net of expenses. We are pleased that our disciplined process has been able to generate returns higher than our benchmark for five consecutive calendar years.
Convergence Long/Short Strategies - Convergence Q4 2018 Commentary
As the year 2018 began, the equity market seemed invincible. Interest rates were low, volatility was low, and the Tax Cut Jobs Act had just passed, triggering enthusiasm for powerful earnings growth! However, little by little, optimism began to slip away as FED tightening seemed to move to autopilot, and concern over global growth turned into outright fear. By the beginning of the 4th quarter, the market had reached the tipping point.
Convergence Long/Short Strategies - Convergence Q3 2018 Commentary
The U.S. equity market indexes managed to record positive returns for the 3rd quarter in the midst of a confluence of macro, political, and economic events. The dichotomy of these events reminds us of the thrill of simultaneously holding down the brake and gas pedal of a car (not that we ever tried that), which in the end just creates a lot of noise and trembling. This analogy seems to hold for the recent uptick in volatility within the markets as participants attempt to figure out which pedal will win out.
Convergence Dividend Growth Commentary Q3 2018
The Convergence Dividend Growth strategy seeks to deliver superior risk-adjusted returns by focusing on long-term factors such as attractive relative valuations, strong cash flow generation, and robust earnings and sales growth. We place a high emphasis on companies with these characteristics, as well as other fundamental catalysts which are supportive of a disciplined investment process of sustainable and growing dividends.
Where are Risks Hiding? Can They be Avoided? October 2018
Hint: Fixed Income → Market Neutral.
Nile Capital Group Buys Majority Stake In Convergence Investment Partners October 2018
Nile Capital Group (“Nile”) LLC is pleased to announce a partnership with Convergence Investment Partners (“Convergence”) as a majority member and strategic advisory partner.
Convergence Long/Short Strategies - Convergence Q2 2018 Commentary
As we pass the halfway point in 2018, we find ourselves likening the extended duration of the current bull market to the remarkable expansion of our life expectancies over that past century.
Convergence Dividend Growth Commentary Q2 2018
The Convergence Dividend Growth strategy focuses on long-term factors that we believe drive superior risk-adjusted returns. The strategy aims to invest in high quality companies with attractive relative valuations, combined with strong cash flow, earnings, and sales. We place a high emphasis on companies with these characteristics, as well as other fundamental catalysts, which are supportive of a disciplined investment process of sustainable and growing dividends.
Convergence Long/Short Strategies - Convergence Q1 2018 Commentary
As we ended 2017, we foretold that the powerful bull market might slow as the countervailing forces of global central bank tightening and U.S. Corporate Tax relief collide.
Convergence Dividend Growth Commentary Q1 2018
The Convergence Dividend growth strategy outperformed its benchmark by 0.65% in the first quarter of 2018, net of fees. After a very strong January, the Russell 1000 Value Index retreated in the next two months ending the quarter down -2.83%. As a value strategy focused on companies that are growing their dividends, our goal is to provide competitive returns with a lower level of risk than the market.
Q&A With The Portfolio Managers On The Convergence Long/Short Strategies
Q&A with David Abitz, CFA & Justin Neuberg, CFA.
Convergence Long/Short Strategies - Convergence Q4 2017 Commentary
As we close the book on 2017 and look forward to 2018, at Convergence we foresee the global expansion continuing, however, we anticipate a few cracks in the strong foundation that supported the recent low volatility and ever increasing asset prices.
Convergence Long/Short Strategies - Convergence Q3 2017 Commentary
At Convergence, we have been successfully managing Long-Short equity products for over 12 years, and our firm’s founders have been managing and refining our systematic investment process, rooted in fundamentals, for over two decades. Our core tenets of providing competitive, long-term returns, by ranking companies within each industry group by their relevant fundamental characteristics have remained steadfast.
Absentminded Investing - Convergence Q2 2017 Commentary
The market dynamics that have ensued thus far in 2017 remind us of the game show, “Are You Smarter Than a 5th Grader?” The equity market is enjoying its 9th straight year of positive returns and the first 6 months of 2017 are no different. However, a disproportionate amount of the YTD move can be attributed to “popular” and pricey names with extremely high expectations for future growth.
The Convergence Perspective - Convergence Q1 2017 Commentary
The first quarter of 2017 was a strong quarter for equities in general. In terms of specific performance metrics within equities, it was a quarter of reversals, where previous winners became losers and vis versa. For example, this quarter saw companies with expensive valuations outperform inexpensive stocks on average.
Status quo gets a surprise! - Convergence Q4 2016 Commentary
The year of 2016 has closed its chapter in history and will go down as a year full of upheavals, surprises, and inflection points. From a market perspective, many predictions and expectations by the “professional thinkers” proved to be completely wrong or opposite the expected result.
Party like its 1999! - Convergence Q3 2016 Commentary
Let’s reimagine the equity market is a large block party, and certain parts of the crowd are becoming obnoxious and “out of hand.” At the same time, there are other partygoers who are behaving sensibly, but who are amused by the behavior of “that other crowd.”
The expert commentators have left the building - Convergence Q2 2016 Commentary
The second quarter of 2016 will certainly go down as the quarter that highlighted how nobody knows anything about anything when it comes to exogenous macro events.
It’s all about the Fundamentals - Convergence Q1 2016 Commentary
To everything turn, turn, turn. That opening line to the 1965 folk rock hit song by the Byrds seems appropriate in describing the two back-to-back sharp corrections followed by sharp market recoveries in the past 6 months.
Investors Refocus on Fundamentals - Convergence Q4 2015 Commentary
The market was little changed for the calendar year, with the Russell 3000 Index up less than one half of one percent. But as any bogie golfer will tell you, the score on the card rarely describes the game just played. The market underwent a series of major changes, each important in its own right.
When Turmoil Benefits - Convergence Q3 2015 Commentary
The sharp reversal in the market’s fortunes in the third quarter was only the most visible sign of change.
Convergence Q2 2015 Commentary
Convergence noticed an encouraging tidal shift during a quarter where the indexes delivered some sleepy returns.
October 2013 Convergence Core Plus Strategy: The Persistency of Preferences
The Convergence Core Plus Strategy is a sharp departure from the traditional quantitative approach. Nearly all quantitative models are based on extensive back testing into the efficacy of various combinations of factors or metrics. These models can be very simple, consisting of a handful of metrics, applied across the universe of securities and used systematically to rank the relative attractiveness of prospective investments on a regular schedule; or complex, involving mathematical formulas that weight metrics by industries and other sub groups, and set triggers for reevaluation.
October 2013 The Core Plus Trilogy
“Core Plus” often refers to the introduction of high yield and international fixed investments to an otherwise high quality domestic fixed income fund. Dissatisfied with low yields and meager total returns, investors expand their policy statements in an effort to capture alpha in a broader set of opportunities. This “broader mandate” recognizes the mathematical reality that the return potential in a narrowly defined universe is limited, and that active management is handcuffed in its attempt to capture alpha by a limited mandate.
October 2013 Convergence Core Plus Strategy: The Structural Impact on Alpha
After years of working with clients as both portfolio managers and as equity analysts, we concluded that the traditional model was simply not working. In 2005 we opened a small hedge fund and started managing long/short. This fund was where we tested our ideas. For 5 years we worked on the development of our long/short process, and our proprietary dynamic model. At the end of December 2009 we rolled out our Core Plus Strategy.
August 2012 A New Model for Improving Returns
In this paper, we examine the rise in correlations in the equity markets and its impact on traditional asset allocation models. We then explore a new model that seeks out areas in which correlations continue to be low, and, therefore, the opportunity to generate alpha remains. Finally, we examine a new approach to building the allocation that seeks to capture the alpha potential in equity markets.
June 2011 Commentary - Sourcing Alpha
From January 1st until the end of April, the Russell 3000 had risen 9.1%, and the Russell 2000 advanced 10.8%. Companies that reported solid earnings growth driven by top line sales growth were rewarded. Optimism abounded; then came May.
May 2011 Commentary - The Meaning of “Plus” in a Changing Market.
Since August of 2010, the stock market has been on a near uninterrupted advance. Large cap stocks as represented by the Russell 1000 are up 32.85% and small cap stocks are up 44.76% as represented by the Russell 2000 Index. In the past few days, however, new anxiety has returned. Economic growth shows signs of slowing, labor market statistics have reversed their previously tepid advance, and the stock market appears to have at least temporarily “rolled over.”