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A popular Wendy's commercial in the 80s made famous the question: "Where's the beef?" Good one. And here's an even better one: "Where's the alpha?" You might want to whip this one out the next time you meet with your portfolio manager.
Alpha is the over-and-above-the-expected return. It is the "value added." Therefore, it makes sense that a positive alpha means an investment has outperformed its market-predicted return, while a negative alpha would mean just the opposite. The expected return is calculated by a formula that takes into account the investment's level of unavoidable risk (aka beta).
Ever stepped into an elevator and after the doors close you become aware of an almost-suffocating scent coming from the woman next to you who must have bathed in perfume? Well, as you know, once the doors close you can't escape the smell until the ride is over. This is similar to beta, which is risk that can't be reduced or diversified away. A measure of "systematic" or market related risk, beta is used as a measure relative to a certain index -- such as the S&P 500.
So, for example, let¿s say your portfolio is managed to compete against the S&P 500. If you generate a better return than the index while not taking on added risk (standard deviation of returns) then you get alpha. Low beta means the market-related risk is low and vice versa for high beta.
Another example, let's say a mutual fund or stock has a beta of 1.5 relative to the S&
P500 ¿ that means it is 1.5 times as risky. So, over time, if the S&P 500 goes up 1%, your portfolio should be up 1.5%
plus (one can hope) some percentage of alpha. If the S&P 500 is down 1%, your portfolio should be down 1.5%.
Alpha
and beta are based off of linear regression of a set of data. Warning: this may cause a high school fifth-period flashback,
but it will be over before you know it:
The equation for a line is Y = a + bX.
a = alpha (the Y intercept - the added
value)
b = Beta (the coefficient you multiply X by)
X = S&P 500 (in this case)
Y = your portfolio
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Monday, May 19, 2008
Darden Restaurants Announces 2008 William B. Darden Distinguished Supplier Award Winners
Comtex
ORLANDO, Fla., May 19, 2008 /PRNewswire-FirstCall via COMTEX/ ----Darden Restaurants, Inc. today announced the recipients of its annual William B. Darden Distinguished Supplier Awards. Named for the company's late founder, the awards recognize a select group of Darden's 1,500-plus suppliers from around the globe who go 'above and beyond' to contribute to the success of the company. Selected by Darden's culinary, purchasing, total quality and marketing teams, recipients are recognized at the annual National Restaurant Association's Restaurant & Hotel-Motel Show in Chicago.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050203/FLTH026LOGO )
"Serving more than 350 million meals annually in 1,700 restaurants across North America requires a tremendous amount of coordination and teamwork," said Barry Moullet, Senior Vice President of Supply Chain for Darden. "These companies have gone beyond the execution level and been true business partners by finding ways to contribute to Darden's success through innovation and collaboration. We are fortunate to have strategic partnerships with companies that are at the forefront of the food service industry."
This year, 10 companies were recognized: -- King & Prince Seafood - for its development of value-added seafood and shrimp products, which helped reduce cost and simplify operations. -- Kontos Foods, Inc. - for working with Seasons 52 to design the restaurant's pita wrap, which is used in more than half of all sandwiches, as well as a more cost-effective flatbread with a reduced calorie count. -- Libbey Inc. - for supporting Red Lobster in the design and rollout of new plateware and flatware to more than 600 restaurants with a shipment error rate of less than one percent and for helping to save operations time and energy with a simple automatic warranty policy for damaged products. -- Lotito Foods, Inc. - for creating an innovative new cheese product at a lower cost and sponsoring several trips to Italy - as well as bringing Italian chefs to America - allowing Olive Garden's culinary team to work with local chefs to develop new menu item ideas. -- Monin Gourmet Flavorings, Inc. - for helping Olive Garden by developing innovative flavors that were incorporated into Olive Garden's new beverage menu, including an improved Bellini Tea, Lime/Mint Fresco and Pomegranate Margarita Martini, as well as assisting Darden with research and development. -- Nestle Professional - for assisting Red Lobster and Olive Garden restaurants by developing a number of new sauces as well as providing support through research and consumer insight. -- Pilgrim's Pride - for its new product development work with Olive Garden, Bahama Breeze and Seasons 52 as well as other innovative contributions such as a new freight management program. -- Ragozzino Foods, Inc. - for helping develop Olive Garden's "Rollatini" lasagna product, the restaurant's most successful promotion of the year. -- Trinchero Family Estates - for helping Red Lobster with the creation of new sangria wine, research and development and ongoing training, all of which is expected to help grow Red Lobster's beverage sales. -- Tuna Temple, Inc. - for providing multiple Darden brands with top- quality, cost-effective tuna while ensuring the highest levels of food safety.
About Darden Restaurants
Darden Restaurants, Inc., (NYSE: DRI) headquartered in Orlando, Fla., is the world's largest full-service restaurant company with almost $6.7 billion in annual sales and approximately 180,000 employees. The company owns and operates more than 1,700 restaurants including Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze and Seasons 52. For more information, please visit www.darden.com.
SOURCE Darden Restaurants, Inc.
http://www.darden.com
Copyright (C) 2008 PR Newswire. All rights reserved ********************************************************************** As of Thursday, 05-15-2008 23:59, the latest Comtex SmarTrend� Alert, an automated pattern recognition system, indicated an UPTREND on 03-24-2008 for DRI @ $34.42. For more information on SmarTrend, contact your market data provider or go to www.mysmartrend.com SmarTrend is a registered trademark of Comtex News Network, Inc. Copyright � 2004-2008 Comtex News Network, Inc. All rights reserved.
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