Last week we shared some insights into what the most active students on the platform have been trading. This week we would like to highlight a few of the students who have already set themselves apart with their performance.

To find these top performers, we looked at Profitability Z-scores. These are directly comparable to Sharpe Ratios and RAAs but are based on how many of each student’s trades were alpha positive and how many were alpha-negative – rather than what aggregate portfolio performance has been.

Here is the distribution we saw:

When one of these “outliers” takes a position, the probability of that position generating positive alpha is far higher than pure luck can explain.

To help you get a sense for how these students go about picking their investments, we would like to highlight two groups of stocks. The first is made up of the most actively traded names on the platform – which these students chose not to trade:

AAPL, BABA, GOOG, GPRO, NFLX

The second group consists of stocks which are not popular among average Challenge participants, but have been traded by multiple “outlier” students:

CVX, DRYS, GE, HD, XOM

You might notice that the first group consists of highly hyped stocks – and the second looks downright boring. This is an excellent illustration of why you should tune out the hype when deciding where to invest; as Buffett has said, failure to do so will more often than not cause you to “pay a heavy price for meaningless reassurance.”

Today marks the half-way point for the Fall Half of the 2014/2015 Fortress Global Macro University Challenge. We would like to take this opportunity share a few highlights from our analysis of everyone’s trading records.

In looking for general investing trends, we focused strictly on those students who have traded 10 or more names and have logged into the platform at least every couple of days. This sub-set of Challenge participants has taken on a combined total of 5,863 positions. We were pleasantly surprised to find that 40% of these most active students have traded some currencies and futures:

Some highlights:

• Equity themes: As always, AAPL is dominant – about a third of the people in this group having traded in it. Yet those who go look for less widely followed names seem to have no shortage of original ideas; the most popular 20 names combined were found to account for less than 15% of the total number of positions held.
• Currency themes: Among currencies, those driven largely by fiscal policy – EUR, GBP, and JPY – have been by far the most popular. The next most popular group consisted of commodity-driven currencies like the AUD, BRL, CAD, and RUB.
• Commodities: The most popular futures and ETFs have been those linked to oil and gold. Quite a few students have also traded VIX ETFs; we would advise against taking positions in the VIX as they are far more risky than most students realise – VIX ETFs’ Beta versus the S&P 500 is often greater than 10.