Why We’re Trimming Our Gains in Teradyne Stock

In the age of Instagram influencers, authenticity has been increasing in value as an asset. Authenticity is about saying what you think and then seeing who happens to be attracted to it. In the finance world, that hasn’t traditionally been the norm. You’re always putting on dog-and-pony shows that attract new clients while convincing existing clients that they can’t live without whatever it is you’re peddling. Oftentimes, this involves cherry-picking a timeframe and showing how you managed to beat whatever benchmark makes you look best.

While trying to disguise poor performance is one problem you’ll frequently encounter in the finance industry, another is people claiming to have captured alpha that they weren’t intending to. For example, what happens when you pick a stock that does really well, but that performance has nothing to do with your original thesis? That’s where we’re sitting right now with our Teradyne (TER) position.

The Rapid Rise of Teradyne

When we say a stock has “done well,” we need to quantify that performance against a benchmark. In the case of Teradyne stock, it trades on the Nasdaq exchange, so that’s the benchmark we’ll use.

	1-Year	2-Year	5-Year
Teradyne	+69%	+275%	+467%
Nasdaq	+43%