Yes, Virginia, there are Superstar Money Managers

30 Pages Posted: 14 Jul 2021

See all articles by Valentin Dimitrov

Valentin Dimitrov

Rutgers, The State University of New Jersey - Accounting & Information Systems

Prem C. Jain

Georgetown University

Date Written: July 12, 2021

Abstract

Berk and Green (2004) argue that, in equilibrium, mutual fund performance is not informative about the skill of the fund managers. Hence, instead of studying mutual fund performance, we study stock recommendations of prominent money managers made at the prestigious Barron’s Roundtable. The 3,472 buy recommendations, from 1968 to 2019 (52 years), on average, earn economically meaningful and statistically significant 4.1% excess returns over the 30 trading days immediately following the Roundtable meetings. To study the skill level across decades, we divide the 52-year-long time-series into four equal 13-year-long periods and find that excess returns are similar for each of the four periods and are statistically significant. Overall, we conclude that money managers are skillful, and that skill has not diminished over the decades.

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

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

Suggested Citation

Dimitrov, Valentin and Jain, Prem C., Yes, Virginia, there are Superstar Money Managers (July 12, 2021). Available at SSRN: https://ssrn.com/abstract=3885288 or http://dx.doi.org/10.2139/ssrn.3885288

Valentin Dimitrov (Contact Author)

Rutgers, The State University of New Jersey - Accounting & Information Systems ( email )

1 Washington Park
Newark, NJ 07102
United States

Prem C. Jain

Georgetown University ( email )

McDonough School of Business
Georgetown Univeristy
Washington, DC 20057
United States
202-697-9455 (Phone)

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