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Seasonality & Momentum strategy | Equal weighting | Aiming to achieve the target 1.9 leverage ratio | CPRT is a seasonality stock with high historical profits in November and it has had some good momentum recently which we believe to continue.
Firms are allocated to the portfolio based on the momentum investment strategy: all firms are from the NASDAQ-100 Technology sector index which was sorted by YTD (year to date) price development. The fund decided to go long in all firms which had YTD returns of over 15% on 30th of October. $1,500,000 was divided with equal weights between the 47 stocks. Rank: 36
CPRT has emerged as a market leader with its all-digital auction platform that is highly regarded in the industry and contributes to auction liquidity – a characteristic that leads to an increasing number of bidders, yielding superior selling prices for its customers and ultimately driving up unit volumes and account wins for CPRT. Strong industry fundamentals support CPRT’s projected growth trajectory with long term trends pointing towards rising total loss frequency. Additionally, CPRT continues to pursue strategic acquisitions to expand into new geographies and new product markets (such as powersports vehicles) representing opportunities for both top line and bottom line growth. Therefore, we have a buy recommendation on the stock with an expected upside of ~23% over a one-year time horizon.
Following our momentum investment strategy this stock wasn’t anymore in the top 15 gainers of the S&P500 index in 3-month-period. Thus, we will close the position