This is the most down-to-earth approach, Dolphin Investment Portfolio has started running

Hello everyone, I am Dolphin Research!

Since launching the Dolphin investment research service for Bridge friends in 2021, our internal partners set a small goal for themselves: in addition to conducting research and continuous tracking to help everyone understand the long-term value of core assets, we want to present Dolphin's investment research judgments to our users in a more intuitive and clear manner.

Since the second half of last year, Dolphin has systematically presented the thoughts and judgments of the industries covered, such as US stock giants, Chinese internet, consumer goods, new energy, etc. (for related information, please add Dolphin Assistant WeChat ID "dolphinR123") through a series of macro, industry, and individual stock reviews.

Considering that many so-called "golden stock pools" are more similar to the stock lists we have already provided, in order to allow everyone to see my investment research system and judgment effects more clearly, Dolphin has officially released the selected virtual investment portfolio - "Alpha Dolphin" today, based on the viewpoint judgment of the Chinese internet overview after a period of internal testing.

Next, I will answer some questions about this virtual investment portfolio one by one.

1. What is the original intention of building a simulated investment portfolio?

As we all know, relying solely on verbal judgments about a company's value is useless; trading nodes and position weights are the most resonant viewpoints. Additionally, when we track too many contents, the value judgment content gets diluted, and some Dolphin fans feel that they see less of Dolphin's individual stock valuation judgments.

Currently, Dolphin has covered over 70 companies, with more than 60 under continuous tracking, which is sufficient to establish an investment portfolio pool to better present Dolphin's investment research judgments. Through adjustments and regular dynamic updates of the portfolio, we can more intuitively and timely understand the changes in Dolphin's viewpoints.

2. What is the configuration philosophy of the investment portfolio?

The configuration philosophy of this portfolio is based on Dolphin's coverage industry philosophy - spanning multiple markets in Hong Kong, the US, and A-shares, seeking long-term upward trends and thick snow on long slopes, discovering and continuously tracking core assets with long-term barriers in such tracks, and attempting to capture opportunities in the upward prosperity and turning points of these good assets.

Currently, the sectors we have covered include Chinese and American internet assets, such as retail, advertising, and pan-entertainment; consumer goods in the large consumption sector, including leading consumer products, new consumption, and commercial social services; new energy in the complete vehicle, battery supply chain, and photovoltaics; as well as semiconductors in chip design, manufacturing, foundry, and branding. In the future, we also plan to gradually add more long-term upward industries, such as industrial internet and biomedicine.

3. What is the source of the judgment for portfolio configuration?

In terms of configuring weights and building positions, we started from the April 11th release of the regulatory environment change overview of Chinese concept stocks “Is the deadline approaching? Discussing the turning point of the delisting risk of Chinese concept stocks”, and gradually built positions based on the subsequent viewpoint judgments of various companies in the overviewDolphin Research adjusted the recommendations in the original industry overview from "red five-star top configuration" and "green five-star top avoidance" to five levels: overweight, benchmark, underweight, watch, and avoid.

Among them, overweight, benchmark, and underweight are configurable categories, watch indicates opportunities that require continuous tracking and adjustments based on fundamental developments, while avoid refers to targets with short-term risks that should be avoided for long positions.

Taking the pure U.S. stocks we cover as an example, the screenshot below shows our recent views and adjustments. For the complete views on the targets we cover, please contact Dolphin Assistant (WeChat ID: "dolphinR123").

Dolphin Research allocates the companies with configurable recommendations in the covered industries according to a funding ratio of 4% for benchmark, 2% for underweight, and 6% for overweight.

In principle, this portfolio operates at a high position most of the time, with cash holdings maintained at around 0%-10% based on macro judgments.

Dolphin Research set an initial virtual capital of 100 million USD, keeping cash between 0%-10% based on market conditions. Unless the market is extreme, this portfolio will maintain a high position.

Since the original intention of this portfolio is to present Dolphin Research's views on equity assets in a more grounded manner, it does not involve shorting, options, or other complex derivatives, nor cross-asset class configurations.

IV. Which companies are currently in the portfolio?

As of yesterday, the Dolphin portfolio "Alpha Dolphin" consists of 34 targets, with a cash position of about 10% of the initial capital of 100 million USD, and future adjustments will primarily focus on rebalancing.

Sector allocation ratio:

The weight behind this sector allocation is that the captain believes:

(1) The semiconductor sector currently needs adjustment due to the overall sluggishness in end-consumer electronics, and only SMIC is selected for now.

(2) The remaining high allocation of Chinese concept stocks has seen risks fully released after valuation cuts, performance cuts, and policy expectation cuts, indicating a higher potential for valuation recovery across the sector.

(3) In the new energy sector, there is optimism as there are no performance risks after valuation cuts, and the high certainty of leading businesses makes the cost-effectiveness more favorable after valuation reductions.

(4) Pure U.S. stocks still face performance risk in the next one or two quarters, but the prices of giants and high-barrier companies like Unity have already fully reflected pessimistic expectations, thus justifying a significant allocation2. Individual Stock Weighting:

The industries with more standard configurations are mainly new energy, with four targets—Geely, Enjie, Longi, and Sungrow. Next are three Chinese concept stocks—JD.com, Meituan, and Bilibili, followed by consumption—China Resources and Moutai, and semiconductors—SMIC.

The logic behind the individual stock proportions reflects our reasoning:

(1) In the collective market downturn, when valuations are relatively reasonable or cheap, the captain prefers the upward industry track of new energy, and then selects relatively stable individual stocks within new energy. Geely is mainly based on its low valuation, favorable policies, and the expectation of future sales release.

(2) In the context of soft recovery expectations for Chinese concept stocks, we expect that the certainty of the e-commerce sector in the short to medium term is higher than that of the general entertainment sector. We have allocated relatively higher barrier stocks Meituan and JD.com in e-commerce, while Bilibili in general entertainment is mainly based on valuation cost-effectiveness, along with the potential for financial report recovery similar to iQIYI.

(3) The consumption recovery expectation mainly involves allocating two high-certainty representatives in the beverage sector.

The timing of building positions in these 34 assets is mainly based on the publication time of the overview. Since the screenshot cannot display the link, friends who want to trace Dolphin Research's historical relevant views can add the Dolphin Assistant WeChat account "dolphinR123" to obtain it.

5. What are the principles for subsequent portfolio adjustments?

In principle, the Alpha Dolphin portfolio will not frequently adjust positions. Whether to adjust depends on whether the long-term logic of the company has changed, whether key valuation variables that determine the company's value have undergone significant changes, or if the stock price fluctuates too much in the short term, causing the valuation cost-effectiveness to no longer match the weight, leading to a change in our allocation judgment.

Typically, the adjustment points occur in Dolphin Research's quarterly industry overview, with a small portion possibly requiring immediate adjustment due to significant medium to long-term logical changes implied by financial reports or key events.

Additionally, from the perspective of weight risk balance, if the weight of a single stock rises more than 15%, we will reduce the holding proportion.

6. How has the performance been during the testing period?

Starting from the initial position, over the three months from establishment to now, the total return of the Alpha Dolphin portfolio is 16%, compared to a return of -9% for the CSI 300 Index and -6% for the S&P 500 during the same period.

Currently, the portfolio's Sharpe ratio (risk-return ratio, the higher the value, the higher the return for the same risk) is 4, Beta is 0.69, and Alpha is 90%.

The individual stocks contributing to excess returns are mainly Sungrow, Li Auto, Unity, Meituan, and Angelalign.

7. What are the problems and shortcomings of the portfolio?

It is particularly emphasized that the portfolio is more based on the current capability circle covered by Dolphin Research, while Dolphin Research basically lacks coverage of traditional cyclical industries, especially the energy and grain sectors that have surged since the beginning of the year.

The purpose of this simulated portfolio is to present some of Dolphin Research's investment research views more intuitively, without intending to provide investment advice.

8. What’s next?

After the official release, we will regularly update our portfolio dynamics weekly or bi-weekly, and we will also open up a one-click follow feature for everyone.

In addition, this content involves multiple Excel spreadsheets such as "Summary of Dolphin Research Coverage Pool Views" and "Initial Positioning View Links." Friends in need can contact the Dolphin Assistant (WeChat ID: “dolphinR123”) to join the Dolphin Investment Research group and obtain relevant materials.

Risk Disclosure and Disclaimer of this article: Dolphin Investment Research Disclaimer and General Disclosure