How Chris Camillo Made $ 42 Million In 15 Years
- Chris Camillo says he identifies stocks to invest in by looking at trends in everyday life.
- Timing is key, and buying before Wall Street is where he earns most of his money.
- He shared the three stocks he has invested heavily in and which he believes will have high returns.
Most investors will look to corporate earnings reports and Wall Street analysts to decide where to invest. For Chris Camillo, by the time the information arrives on Wall Street, it is too late.
His strategy is a little aberrant. He does not immerse himself in the finances of the company. He is also not really interested in trading stocks meme.
He uses an investment technique that he called social arbitration. This involves identifying investment opportunities by observing platforms like TikTok, Twitter, Facebook, and Instagram and buying early. It also includes learning to observe the everyday world.
His gains are also unusual, with an average compound annual return of 77% over his nearly 15-year history from 2006 to 2020, according to Jack D. Schwager, a trading expert who has audited and written about Camillo and others. in his book “Unknown Market Wizards: The Best Traders You’ve Never Heard Of.” The S&P 500 compounded at an average annual rate of 7.6% from 2006 to 2020.
Schwager said he reviewed Camillo’s monthly brokerage statements from August 2006, copies of which were also provided to Insider. Her starting balance was $ 84,000. As of May 2020, he was over $ 21 million, including the cumulative net profit he had withdrawn from the account. Schwager updated his audit for this article and found that Camillo doubled his cumulative profits, to $ 42 million, by May 2021.
The insider also looked at brokerage documents available on Form 1099 from 2014 to 2019 which showed earnings of approximately $ 5.6 million.
Camillo’s performance in context
Biljana Adebambo, academic director of the Master of Science in Finance program at the School of Business at the University of San Diego, reviewed Camillo’s brokerage account statements at Insider’s request and agreed with the assessment by Schwager.
“It’s an exceptional performance, but in addition to a great understanding, it probably required the use of riskier strategies such as options,” she said in an email.
She continued, “Through leverage, options increase the volatility of returns and can increase the frequency or severity of losses. Indeed, the volatility of the portfolio since inception was almost five times that of the portfolio. ‘an S&P 500 ETF over the same period. This level of risk may not be acceptable to many investors ex ante. “
Camillo’s performance is rare because beating the market is a difficult feat, even for professional fund managers. In the past 20 years to 2020, just over 86% of active U.S. equity fund managers have underperformed the S&P 1500, according to an analysis of an S&P SPIVA report.
He’s not a Wall Street veteran. He started his career in marketing and sales. In 2015, he co-founded TickerTags, software designed to spot early social media trends. It was eventually acquired by M Science, a subdivision of Jefferies Financial Group.
He’s now focused on teaching others about “social arbitrage,” he told Insider. He said he believes the best way to resolve the wealth gap is to put the world in the investor category. One way is to use his YouTube channel, Dumb Money Live, where two friends join him to share weekly watching and social investing tips. He also collaborates with a community of social-arb investors on Dumb Money’s Discord channel.
He shared with Insider the key aspects of his strategy and the investment opportunities he has in mind.
How he identifies opportunities
Camillo’s social arbitrage strategy does not follow all upward trends.
“I’m looking for those who I think have the potential to be really meaningful,” he said. “Not small trends, or not necessarily cutting edge trends, but trends and changes that impact the whole country or the whole world or a whole subset of people.”
Camillo said that once he identifies a trend that he thinks may be important, it’s as simple as doing a Google search to find out which publicly-traded companies are providing the product or service under them. spotlights.
For example, when the pandemic struck in the spring of 2020, many shopping malls, theaters, restaurants and gyms in the United States closed. Camillo said she noticed a huge amount of social media conversation and interest in anything outdoors, like riding a bike or buying a boat.
“I realized, wow, this might be the biggest thing that has ever happened to these companies. They are going to see an increase in demand like never before in the history of these companies,” Camillo said. “And of course, that’s exactly what happened in the summer of 2020.”
One title he focused on was Dorel Industries, the parent company of major bicycle makers including Schwinn and Cannondale. He bought shares on April 24, 2020, at $ 1.56, according to screenshots of his TD Ameritrade account viewed by Insider.
As the information he traded on became widely known, he gradually sold his shares and took profits in June, when the stock was close to $ 4.46. He told Insider he left his position completely in November, when the price climbed to $ 11.38, a 629% increase.
Camillo recommended doing your research to make sure there aren’t other factors that might be more important than the information you’re trading on – for example, if the company has divisions that aren’t functioning as well. good.
Timing is the key to his strategy
Camillo told Insider he takes advantage of what he calls an information imbalance, or the time that elapses between noticing the potential for increased sales and when that information hit Wall Street.
“Once information becomes universally known, it is fully reflected in that company’s stock price,” Camillo said.
“It’s about being ahead,” he added. “This whole game of being an effective observational retail investor is about seeing things and acting faster than others.”
One of her favorite tools is Google Trends because it helps her identify what people are looking for at an early stage. Since Google Trends defaults to a 12-month chart, Camillo suggested expanding to see the five-year chart to exclude annual trends and act as a sort of seasonal adjustment.
Camillo said his exit strategy is generally not all or nothing; he sells his positions as more and more people read the information.
“A lot of times, I haven’t completely gotten out of a transaction until I see this information fully reflected in the company’s revenue and profits and as disclosed by the company itself. so quit an investment over a period of a few weeks or sometimes over a period of months. I will maybe quit 10% or 20% at a time until I’m completely out, “he told Insider.
Not all exchanges are winners. Camillo told Insider that one of his biggest losses was $ 750,000 in 2019, when he bought shares in fast food chain operator Restaurant Brands International. He was betting on launching two products, Burger King’s Impossible Whopper and Popeyes’ Chicken Sandwich. But Tim Hortons, which he also owned, had one of the worst quarters in its history.
“It was an oversight not to understand how badly the third element of the brand was doing, namely Tim Hortons. And the rationale was due to the fact that it was a Canadian company with social data. or limited consumer perception, ”Camillo said. .
He bought shares in April and again in August 2019, according to screenshots seen by Insider. The price peaked at $ 78.45 in August to collapse 59% in March 2020.
He said the lesson was to know what you don’t know. He had a high degree of confidence in product launches, but he didn’t appreciate the fact that he didn’t have enough insight into the third company.
What he’s watching
Camillo believes the market underestimates the degree to which people want to get to the beach. And over the past few months, he’s seen on social media an almost unprecedented influx of people looking for resorts, bikinis or anything else to do with beach travel, he said.
Camillo said the rise he saw in beach-related search terms in Google Trends wasn’t just a reflection of the season, as it peaked in five years.
“I have a thesis that we are probably going to see the biggest increase in resort and beach related travel that we have ever seen in our lifetime in the next 18-24 months,” he said. declared. “So I started looking for publicly traded companies related to resorts or beach trips.”
As a result, Camillo said, he has invested heavily in a company called Playa Hotels & Resorts, which has beachfront resorts in Mexico, the Dominican Republic and Jamaica.
“It took me a few hours to sift through all the publicly traded securities
and a hotel company to find one that is a pure game on the seaside resorts, ”he said.
The Playa share price has gained around 32% this year through August 15.
Camillo said he also invested in Crocs because he believes it’s a misunderstood company that has mastered the celebrity mentions game. He added that his new line of double-strap sandals was a major upgrade to his traditional clogs that were appealing to new customers.
“The stock has tripled in the past year and I continue to increase my position,” Camillo told Insider.
Most recently, he initiated a $ 3.1 million position in Tapestry, the parent company of Coach, Kate Spade and Stuart Weitzman, after identifying an increase in positive social interest in Coach bags. Insider saw screenshots of these positions that were in two different accounts.
He believes the company is being revived by millennials and millennials, who are calling it Coach’s return on social media – a TikTok video examining handbag styles has seen around 650,000 views.
Camillo acknowledged that the trade carries many risks related to supply chain issues, freight costs and the potential for closures in China due to new variants of the coronavirus.