Robert Ramos – There Is More to a Good Stock Than Just Numbers

Jan 3, 2021

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Dr. Robert B. Ramos, CFA, CAIA, CIPM, completed his undergraduate degree from the Ateneo de Manila University. He finished one master’s degree in Business Management from the Asian Institute of Management and the second one in Business Economics from the University of Asia and the Pacific. And to top that off completed his doctoral degree from De La Salle University.

Robert has more than 20 years of banking and finance experience working for both Philippine and foreign institutions. He has experience in the fields of trust and asset management, product development, treasury trading, fund management, marketing, and relationship management.

He is currently the First Senior Vice-President and Group Head of RCBC Trust and Investments Group. Robert is a CFA Charterholder, a CAIA Charterholder, a CIPM Certificant, and the current President of the CFA Society of the Philippines.

“The thing that made you a star may not work in the next few years. So be ready to adapt, not only from a firm management standpoint but also from a people management standpoint.”

Robert Ramos

Worst investment ever

Around 2013 Robert was promoted to the head of investments and business development. He took pride in being able to select undervalued stocks. Robert would choose firms that had a good story and a massive upside. For the past seven years, this had worked very well to the point where many of the funds managed by the firm were in the upper tier.

In a continued effort to grow the fund

One of Robert’s best analysts brought a good stock in the power industry to his attention. The stock was undervalued and had fantastic growth potential. Robert looked at the numbers, and he was impressed. This firm was just the best. Not only did they have great numbers, but good management too.

Having a piece of the pie

Robert was satisfied that this was the best stock to buy. So the firm went ahead and decided to buy a 13% stake.

Watching the stock

The stock was performing well a few days after buying it. But after about three months, it started slowing down. In about six months, the stock started dipping. Initially, the decline in value of the stock was not so much that it would cause panic, but it was enough for Robert to notice.

However, he believed that the numbers he had seen when evaluating the stock would save it once people saw its value.

A downward spiral

In the eighth month, the stock started dipping more and more. Now everyone, including fund managers, was taking notice. In the ninth month, clients started calling because this fund that was doing so well for them suddenly was not doing well.

Now the tables had turned. The stock expected to outperform the rest was the one bringing the fund down. Eventually, Robert had to sell that position. That stock remains as Robert’s worst investment ever.

Lessons learned

Numbers are not the only thing that determines the value of a good stock

Numbers are great, but sometimes they will lie to you. Go beyond numbers when evaluating a good stock. Check out other factors too, including management, illiquidity, the number of analysts covering the stock, and the number of people looking at the stock daily.

Selling your underperforming position does not mean you are a failure

Understand that selling a poorly performing position does not make you a failure. You have to be able to separate yourself and your actions to be able to move accordingly. If you fall in love with your position, then you fall into the trap of throwing in good money into bad money and making a problem even worse than it is.

Andrew’s takeaways

Build a position slowly, over time

Building a position over time is an exceptional risk management tool because it removes the excitement of owning it all. You can put your emotions aside and observe how the position performs over time, and you can increase it when you deem it viable.

Consider having a stop loss

Sometimes you may have played your cards right and got the best stock, but you just bought it at the wrong time. In such a case, a stop loss can have some value. So consider using stop losses in a limited way.

Liquidity is a major risk factor when selecting the best stock to buy

Do not overlook liquidity when deciding which stocks are good investments. You want to invest in a company that is liquid and profitable.

Actionable advice

When evaluating a stock, look at its numbers, management, size, and liquidity. But the most important thing is being able to admit that you made a mistake and act fast.

No. 1 goal for the next 12 months

Robert’s number one goal for the next 12 months is to grow the business of his current asset management firm and serve the needs of his clients.

Parting words

“Keep learning and evolving. The world is evolving and if you don’t evolve with it you will die.”