Always Nice to Get a Lucky Bounce

Our team here at the Carnegie Mellon’s Tepper School of Business is thrilled to participate in the MBA Face-Off portion of CNBC’s Million Dollar Portfolio Challenge. Our approach to the contest will combine fundamental, macro, and quantitative strategies.

Right out of the gate, one of our large holdings, Jazz Pharmaceuticals ,announced a merger agreement with Azur Pharma. The market reaction has been overwhelmingly positive and the stock is up about 11% since we initiated our position. While we would like to take credit for conducting thorough fundamental analysis and anticipating this company’s potential next moves, we instead got lucky.

Jazz Pharmaceuticals came through one of our quantitative stock screens, and while we took a cursory look at the business, none of us had heard of the company nor did we learn much about it. It may appear that we are just blindly picking stocks with snappy ticker symbols. The quantitative model behind the screen is actually a great deal more complicated, but it was certainly not calibrated to predict corporate mergers and acquisitions. We are still a long way from those iPad2s, but we are confident in our team’s approach to this contest.