How to back a winner in the cup today?
Last year’s Cup saw the first female Jockey win on the back of 100-1 ‘roughy’ Prince of Penzance blowing all modeling, form, statistics and ‘good oil’ out of the water. Does a ‘quant model’ actually help or are we better off picking bycolor or name or simply pulling a name at random in the office sweep?
In this morning’s report, we declared our loyalty to ‘Big Orange’, while on Sky Business I talked about ‘Who Shot The Barman’ as the value bet of the day at $18. Admittedly, there wasn’t much science to both calls but for some misguided reason, we, like the bulk of Australians have an over-inflated confidence in our ability to pick a winner today. The guys over at Macquarie who run the quant screen reckon it’s ~75% random, however, that won’t stop the majority of the nation spending the first day of November talking horses, discussing form and musing about the likely outcome – unless of course, we see a surprise cut by the RBA at 230pm.
So, here we go.
The Macquarie quant guys have had a lean few years so have decided to mix it up this year. They’ve included the ‘most undervalued horses’ along with those that you should back on the nose. For those looking for value, they rank 18. Assign at the top of the tree, which is paying around ~$30, followed by 3. Curren Mirotic on similar odds. Our ‘value play’ sits in 4th spot and is 7. Who Shot The Barman which is paying around ~$18
For those that don’t care about value, but want the best and are happy to pay up for it then here’s their top 5 that are most likely to win.
Over at Credit Suisse, they’ve looked at six factors that should ‘theoretically’ spit out today's winner!!
1. Age
2. Weight
3. Yield
4. Quality
5. Momentum
6. Form
A very similar approach that should be used when picking a stock. All of the above distilled down into a pretty clear model with the recent winner of the Caulfield Cup Jameka coming out trumps – by a reasonable distance, followed by Hartnell.
Summary
1. The result last year where a 100-1 roughly took the gong should see a lot more ‘donkeys’ backed today
2. For our money, we have BIG ORANGE on the nose and WHO SHOT THE BARMAN for a place
3. Around the office this morning, most talk is about HARTNELL, and ‘those in the know’ reckon it’s a sure thing – but then again, they would have backed the favorite last year!
Whatever the outcome, enjoy the Melbourne Cup today!
Nick, James & the Market Matters team
