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Insight to All Things Currency and Treasury Management

In April of 2019, FiREapps CEO, Wolfgang Koester, teamed up with former NFL kicker, Nick Lowery, to partake in the CNBC 2018 Stock Draft Championship. Since then, the pair held the lead against seven other teams for the majority of the competition and were named the Stock Draft champions the day after the Super Bowl.

Back in April, the pair chose Amazon (AMZN), Goldman Sachs (GS) and AMD (AMD) as their three stock draft picks and in doing so knowingly picked some of the top performing companies. Taking the lead within three weeks of choosing their stocks, team Nick the Kick’s Pix remained in first place up until their win, while five of the eight competitors finished with negative portfolio returns.

Amazon and AMD carried the team to victory with AMD doubling since the start of the draft, but that wasn’t based on luck.
 

 

PICKING STOCK WINNERS

Koester and Lowery made the calculated decision to pick up Amazon and AMD – not because of company recognition, but because of how they manage currencies.

Prior to the draft, the team dug into publicly available data, looking at earnings calls, 10-Qs and 10-Ks of a variety of public companies. In doing so, they were looking for companies that understood and managed currency better than others. The theory? If the overall risk and capital management of a company are above average, the company itself is likely to report less negative impacts to earnings and perform better in the stock market.
 

WHAT INVESTORS SHOULD BE LOOKING FOR

There is still a material inefficiency in equities – make sure to look at the FX gain/loss line of the companies you are investing in. Looking to employ the same strategy as Koester and Lowery? Read item three of the organization’s quarterly report and item 7a of their annual report. All of the information you need is disclosed there, giving you the ability to make smarter, better stock picks.
 

WHAT COMPANIES CAN LEARN FROM THIS

Know that it’s not just analysts paying attention to your earnings and that the results could impact how you perform in the stock market. If your FX impact and/or FX risk is larger than $0.01 EPS, there is room to improve.

How can you do that? You begin by gaining accurate, complete and timely access to your currency data. For many multinational companies, access to this data is complex and requires automation. But this relatively small investment can provide returns much greater than the original investment.

Although FiREapps is not an investment advisor and does not invest in equities, we do have a history of helping companies of every size, in every industry mitigate risk.

Contact a FiREapps director of risk advisory to learn how you can better manage risk and enhance your overall performance.
 
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Want to learn more about the team’s progression throughout the competition?
 
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