Spotlight on Dr Harrison Hong, Academic Advisor, LSV Asset Management
Global Thought Leader Spotlight
Dr Harrison Hong, Academic Advisor, LSV Asset Management
In my role as an Academic Advisor at LSV Asset Management, I work closely with Josef Lakonishok (CEO, CIO and Founding Partner of LSV Asset Management) and the research team to develop signals for LSV’s quantitative stock selection model.
My focus is on developing innovative signals using alternative datasets and novel statistical techniques. These projects include identifying firms with overpaid executives, finding innovative firms by using patent filings, and constructing efficient consensus earnings forecasts with machine learning.
Beyond these immediate efforts, I also leverage my knowledge of developments in academic research to support the considerable number of ongoing research projects at LSV.
Given that my current academic research interest is in climate finance, I also help with LSV’s ESG initiatives.
The net-zero transition brings both risks and opportunities to the global equities/value space. On the risk end, value portfolios tilt toward carbon-intensive firms and hence are subject to transition risks associated with rising carbon prices. Some of these risks are being priced, as institutional investors have been actively tilting their portfolios toward green firms over the last decade. However, the knock-on effects associated with climate policies, which also affect low-carbon sectors as well, are not yet priced. Hence, the net-zero transition is also going to generate opportunities in global equities.
To address these risks and opportunities, institutional investors should structure their portfolios using the latest rigorous research on both direct and knock-on effects of climate policies.
This research suggests that a portfolio tilt toward green firms is unlikely to insulate sufficiently against net-zero transition risks. There also needs to be a within sector-by-country selection process that accounts for firm adaptability to demand and supply shocks due to climate policies. Moreover, tactical allocations across sectors and countries should also consider the particulars of existing country-level climate policies.
Harrison will be presenting at Global Investment Institute’s upcoming Equities Investment Forum, taking place on Wednesday, 6 September 2023 at the Westin Melbourne, Victoria.
To register your interest in attending, click here or for more information email zlatan.kapetanovic@globalii.com.au.
Dr Harrison Hong, Academic Advisor, LSV Asset Management
Harrison joined LSV Asset Management as an Academic Advisor in 2018 and is currently the John R. Eckel Jr. Professor of Financial Economics at Columbia University where he has been since 2016.
He was awarded the 2009 Fischer Black Prize by the American Finance Association, given biennially to a financial economics scholar under the age of 40 for significant original research that is relevant to finance practice. He received his B.A. in economics and statistics with highest distinction from the University of California, Berkeley in 1992 and his Ph.D. in economics from the Massachusetts Institute of Technology in 1997. He was previously a Professor of Economics and Finance at Princeton University and an Associate Professor of Finance at Stanford University, Graduate School of Business.
Harrison will enhance LSV’s research effort on a project basis. He has contributed to a number of areas in financial economics, including stock market efficiency, behavioural finance, and climate finance. His recent work focuses on the role of the financial system in addressing climate change. He is a co-author on the upcoming Fifth National Climate Assessment for the US Congress and an advisor on several climate risk assessments by the International Monetary Fund.
If you have enjoyed reading this article, please subscribe to GII Insights, delivered monthly, direct to your inbox and it is FREE!
Disclaimer
The views expressed in this publication are solely those of the individual and do not reflect those of their employer organisation. These views should not be relied on as research or investment advice regarding any stock and are subject to change. There is no guarantee that any forecasts made will come to pass. Forecasts are subject to numerous assumptions, risks, and uncertainties, which change over time, and the individual undertakes no duty to update any such forecasts. International investing may involve risk of capital loss from unfavourable fluctuations in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations.
All information contained within this publication is general advice only, as the knowledge levels and needs of all individual and corporate investors vary greatly this publication should not be used solely as a decision-making tool, further opinions and information should be sought before making an investment decision. It is the recommendation of Global Investment Institute (GII) that you seek the opinions of a fee-for-service, independent investment adviser before making any investment decision.
The authors, directors or guest writers may have a financial interest as investors, trustees or directors in investments discussed or recommended in this document. It has been assessed by the editors that these financial interests have not had an impact on the material contained here within.
All material appearing in GII’s Global Investment Insights is copyright, reproduction in whole or part is not permitted without written permission from the Publisher, GII.