Yes, Virginia, there are Superstar Money Managers

Abstract

We investigate the stock-picking abilities of prominent money managers, utilizing a unique dataset of stock recommendations published in the prestigious Barron’s Roundtable spanning 1968 to 2019. Our analysis of 3,472 recommended stocks reveals a consistent pattern of outperformance, with an average excess return of 4.1% over the 30 trading days following the Roundtable meeting date. This outperformance is highly statistically significant and shows no long-term reversals, suggesting a permanent adjustment to value-relevant information rather than a temporary effect. Furthermore, our findings indicate that this skill has not diminished over time, despite significant changes in the investment environment. Our study provides compelling evidence of skill among money managers and underscores the value of exploring diverse datasets in financial research.

Keywords: mutual funds, management skill, alpha, Barron's Roundtable, returns

JEL Classification: G23, G20, G11, J31, J24