INVESTING STYLES

Investment Strategies and Investing Styles

There are two essential concepts in investments: investment strategy and investment style. An investment strategy involves deciding what to invest in and how to manage those investments over time. On the other hand, investment style refers to your approach or philosophy when selecting those investments.

Investment managers use different strategies to meet their portfolio objectives and play a crucial role in determining the future risks and returns associated with the portfolio. They may adjust their approach based on market conditions and use a combination of styles and strategies.

There are two main strategies commonly used for investing. Growth investing focuses on selecting companies expected to grow at a higher-than-average rate in the long term, even if their share prices appear high. Investing based on value involves taking advantage of market reactions to the news, which can lead to significant fluctuations in stock prices that may not necessarily reflect a company's long-term prospects.?

Value Investing

Value investing is an approach where investors focus on the intrinsic value of assets and stocks, seeking those undervalued in the market. By analysing fundamental data and company metrics, they identify assets whose market price is lower than their inherent value. This method is rooted in the idea that markets sometimes overreact to news, causing temporary price distortions. By purchasing assets at a 'discount', value investors aim to benefit when the market eventually corrects itself, and the true value of these assets emerges.

Portfolio Example:

1. Company A - A well-established company with a strong track record but whose stocks are currently undervalued due to recent negative press.
2. Company B - A firm with a solid asset base, good cash flow, and low debt but is overlooked by the market because of its non-flashy industry.
3. Company C - A company that recently faced regulatory challenges but has since resolved them, leading to a temporary drop in stock price.
4. Bonds of Company D - A bond from a reputable company yields a higher interest rate than its peers, primarily because of short-term market sentiment.

For this style, we'll focus on well-known companies that historically have shown value investing characteristics.

1.???? Apple Inc. (AAPL): Despite its massive size, it has been considered undervalued at various times.

2.???? Berkshire Hathaway (BRK.A): Warren Buffett's company is known for its value investing principles.

3.???? JPMorgan Chase & Co. (JPM): A leading global bank that can be undervalued during certain market conditions.

4.???? Johnson & Johnson (JNJ): A healthcare and consumer goods giant that sometimes trades below its intrinsic value.

5.???? Cisco Systems, Inc. (CSCO): A tech giant known for its networking hardware.

6.???? The Coca-Cola Company (KO): A global beverage leader.

7.???? Chevron Corporation (CVX): An energy company with global operations.

8.???? Pfizer Inc. (PFE): A leading pharmaceutical company.

9.???? Wells Fargo & Co. (WFC): A major bank that has faced challenges in recent years.

10.? Ford Motor Company (F): An automotive company historically considered undervalued.

Growth Investing

Growth investing is centred on capital appreciation, targeting assets or stocks with significant potential for future growth. The primary objective of this approach is wealth expansion over short or long durations. While aiming for higher returns, growth investors might not necessarily prioritize steady income. The decision-making process in this strategy is anchored in evaluating multiple facets, including an asset's current condition, the prospects of its industry, and its growth potential.

Portfolio Example:

1. Tech Company E - A technology sector startup innovating in artificial intelligence and has showcased rapid growth in its early stages.
2. Company F - A healthcare company developing groundbreaking treatments and has recently received regulatory approval for a new drug.
3. Company G - A renewable energy firm tapping into emerging markets and has secured substantial government contracts.
4. E-commerce Company H - An online retailer with a unique value proposition that has consistently grown in user base and revenue over the past few years.

Here is a diverse list of 10 securities across various sectors that have shown strong growth potential historically or are in industries expected to see substantial growth in the future:

1. Tesla, Inc. (TSLA): A leading electric vehicle manufacturer experiencing rapid growth and expansion into energy storage and solar products.
2. Amazon.com , Inc. (AMZN) is an e-commerce giant that's also a leader in cloud computing with its AWS division.
3. NVIDIA Corporation (NVDA): A dominant force in the graphics processing unit (GPU) market, with growing influence in AI, deep learning, and autonomous vehicles.
4. Zoom Video Communications, Inc. (ZM) is a leading provider of video conferencing solutions that saw exponential growth due to the shift towards remote work and communication.
5. Square, Inc. (SQ): Financial technology company that provides payment processing solutions and has expanded into banking services.
6. Shopify Inc. (SHOP): A platform for e-commerce businesses that's seen a surge in demand as more retailers move online.
7. Moderna, Inc. (MRNA): A biotech company at the forefront of mRNA-based vaccines, especially known for its COVID-19 vaccine.
8. Roku, Inc. (ROKU) is a digital media player manufacturer that's capitalizing on the shift towards streaming content.
9. Adobe Inc. (ADBE): Software company with a strong suite of creative products and a successful shift to a subscription-based model.
10. The Trade Desk, Inc. (TTD): A technology company that empowers advertising buyers, demonstrating strong growth in the programmatic advertising space.

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Famous Investors and Their Favourite Investing Styles

Benjamin Graham / David Dodd - Value Investing Strategies

Benjamin Graham, frequently regarded as the "father of value investing," laid the groundwork for this strategy in the 1920s. His methodology primarily focused on identifying stocks trading below their intrinsic value. Teaming up with David Dodd, Graham co-penned the influential books "Securities Analysis" and "The Intelligent Investor." His Columbia University teachings and fund management practices significantly moulded Warren Buffett's investment journey.

Portfolio Example (Graham/Dodd Style):

1. Company I - A manufacturing company with a low price-to-book ratio and a strong balance sheet.
2. Company J - A retail firm with consistent earnings but currently undervalued due to cyclical market trends.
3. Company K - A utility company with stable dividends and a low price-to-earnings ratio.
4. Bonds of Company L - Corporate bonds with high yields relative to their risk profile, from a company with a strong track record.

Warren Buffett - Value Investing Strategies

Warren Buffett, often hailed as the "Oracle of Omaha," stands out as one of the most renowned investors globally. Under the mentorship of Benjamin Graham, Buffett honed his investment acumen, emphasizing quality companies available at reasonable prices. In 1965, Buffett transformed the textile company Berkshire Hathaway into a holding entity for his growing investment interests. Today, Berkshire Hathaway boasts significant stakes in various public companies across sectors, from insurance to energy. Its portfolio includes some of the world's most recognizable brands, and since 1965, it has generated an average annual return of 20%, outpacing the S&P 500 almost twofold.

Portfolio Example (Buffett Style):

1. Company M - A consumer goods company with a recognizable brand, consistent cash flow, and a competitive advantage in the market.
2. Company N - An insurance firm with a wide moat, strong management, and a history of prudent underwriting.
3. Company O - A food and beverage company known for its brand loyalty and its vast distribution network.
4. Company P - A technology company that is not necessarily at the forefront of innovation but has a solid customer base and consistent profitability.

Thomas Rowe Price Jr. - Growth Investing

Thomas Rowe Price Jr., often dubbed the "father of growth investing," championed the "Growth Stock Philosophy." This approach prioritizes investments in well-managed companies that show promise in their initial growth stages. Such firms are anticipated to outpace both the broader economy and inflation in terms of earnings and dividend growth. Price's investment style underscores the importance of comprehensive long-term research for effective stock selection, diversification, and risk mitigation. He conceptualized a company's life cycle theory, encompassing growth, maturity, and decline. Price advocated for sticking with growth-oriented companies and divesting them as they near maturity due to associated risks.

Portfolio Example (Price Style):

1. Company Q - A biotech company in its early stages, focusing on groundbreaking genetic therapies.
2. Company R - A fintech startup capitalizing on blockchain technology and has shown substantial user growth.
3. Company S - An e-learning platform experiencing rapid adoption in emerging markets.
4. Company T - A green tech firm specializing in sustainable packaging solutions, gaining traction in consumer goods.

Phillip Fisher - Growth Investing

Phillip Fisher is celebrated for his buy-and-hold philosophy, emphasizing long-term growth stocks rooted in deep fundamental analysis. Founder of Fisher & Co., Fisher pioneered gauging a stock's value based on its growth potential rather than just current price movements or sheer value. His methodology proposes building a concentrated portfolio of high-potential growth companies and maintaining them over extended durations. Fisher's mantra was that the optimal moment to sell a stock is "almost never." Instead, he targeted companies that continuously reinvested profits into lucrative ventures, ensuring steady and appealing earnings growth.

Portfolio Example (Fisher Style):

1. Company U - A software company with innovative solutions for remote work, showing the potential for global expansion.
2. Company V - A healthcare company specializing in telemedicine with a growing user base and partnerships.
3. Company W - An AI-driven marketing firm revolutionizing personalized advertising backed by substantial client testimonials.
4. Company X - A transportation company focusing on electric vehicles, with proprietary technology and a vision for a sustainable future.

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John (Jack) Bogle - Index Investing

Jack Bogle, the founder of Vanguard Group in 1975, revolutionized the investment landscape by introducing no-load mutual funds. These funds eliminated sales commissions, bypassing third-party brokerages. Bogle's groundbreaking creation, the Vanguard 500, became the inaugural low-cost index fund designed to mirror the performance of the S&P 500 while minimizing fees. With the advent of ETFs, Bogle's approach has gained widespread adoption, offering investors a pathway to capture market returns without the burden of hefty fees.

Portfolio Example (Bogle Style):

1. Vanguard 500 Index Fund - A fund tracking the S&P 500, offering broad exposure to large-cap U.S. equities.
2. Vanguard Total Bond Market Index Fund - A bond fund providing wide-ranging exposure to the U.S. investment-grade bond market.
3. Vanguard Total International Stock Index Fund - A fund capturing a broad spectrum of non-U.S. stocks from both developed and emerging markets.
4. Vanguard Real Estate Index Fund - An index fund concentrating on real estate investment trusts (REITs) and other real estate equities.

Cathie Wood - Exchange Traded Funds (ETF)

At the helm of ARK Invest as its CEO and chief investment officer, Cathie Wood specializes in managing a diverse ETF portfolio. By early 2022, ARK Invest boasted a substantial $24 billion in assets under management. One of ARK's standout ETFs, the ARK Innovation ETF (NYSE: ARKK), has outperformed many benchmarks, recording a remarkable 177% gain over five years, overshadowing the S&P 500's 106% return in the same timeframe. Despite tech stock volatility, Wood remains steadfast in her long-term investment vision, targeting an annualized return of 15% over five years, with aspirations for even higher returns as markets rebound.

Portfolio Example (Wood Style):

1. ARK Innovation ETF (ARKK) - An ETF targeting companies poised to benefit from disruptive innovation in areas like AI, energy storage, and biotech.
2. ARK Genomic Revolution ETF (ARKG) - Focused on companies likely to benefit from advancements in genomics and healthcare.
3. ARK Autonomous Technology & Robotics ETF (ARKQ) - Capturing firms at the forefront of autonomous transport, robotics, and AI.
4. ARK Fintech Innovation ETF (ARKF) - Concentrating on companies transforming the financial sector through tech-driven innovation.

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Peter Lynch - Stock Selection

Peter Lynch is celebrated for his stellar tenure managing the Fidelity Magellan Fund (NASDAQMUTFUND: FMAGX), a flagship mutual fund under Fidelity Investments. From 1977 to 1990, Lynch achieved an impressive growth trajectory, elevating the fund's assets from $20 million to a staggering $14 billion. Over this 13-year stint, Lynch's management saw the Fidelity Magellan Fund surpass the S&P 500 for 11 years, clocking an average annual return of 29%.

Portfolio Example (Lynch Style):

1. Consumer Brand Y - A well-known brand that Lynch might have encountered in his daily life and saw potential due to its popularity.
2. Retail Chain Z - A retail chain expanding its stores and showcasing consistent growth in same-store sales.
3. Tech Startup AA - A tech company providing solutions that Lynch believes could become ubiquitous in the future.
4. Healthcare Provider AB - A healthcare company with innovative treatments and a growing patient base.

The following 10 securities could potentially fit Peter Lynch's investment style:

1.???? Procter & Gamble (PG): A consumer goods stalwart that produces everyday essentials.?

2.???? PepsiCo (PEP): A beverage and snack company with a broad range of products familiar to consumers.

3.???? Walmart (WMT): The world's largest retailer, known for generating consistent revenues and profits.

4.???? Microsoft (MSFT): Although tech might seem contrary to Lynch's style, Microsoft's established products and steady growth can fit the bill.

5.???? Home Depot (HD): A home improvement retailer with steady growth and a strong position in its industry.?

6.???? Visa (V): A leading global payments technology company with steady growth.?

7.???? 3M (MMM): A diversified technology company that produces everyday products like Post-its and Scotch tape.

8.???? Johnson & Johnson (JNJ): A healthcare company with various consumer, pharmaceutical, and medical products.

9.???? Costco (COST): A membership-based warehouse retailer with strong member loyalty and consistent growth.

10.? Caterpillar (CAT): A leading construction and mining equipment manufacturer, which can be considered a cyclical pick.

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Bill Ackman - Shareholder Value

Bill Ackman, at the helm of Pershing Square Capital Management, is renowned for generating remarkable returns. Spanning 18 years from 2003 to 2021, Ackman's management strategy yielded an annualized return of 17.1%, distinctly overshadowing the S&P 500's 10.2% annualized return. Despite the 2022 stock market turbulence affecting his performance, Ackman's fund resiliently outstripped the S&P 500 by around three percentage points in the year's opening quarter. A cornerstone of Ackman's success is his activist investing ethos. By securing significant stakes in public companies he deems undervalued, Ackman advocates for operational or structural reforms to unlock shareholder value. Once the target valuation is attained, he strategically divests his holdings.

Portfolio Example (Ackman Style):

1. Company AC - A company in the hospitality sector where Ackman sees potential for operational efficiency and growth.
2. Company AD - A pharmaceutical firm with a strong drug pipeline but undervalued due to temporary setbacks.
3. Real Estate Entity AE - A real estate company with valuable assets that can be better monetized through restructuring.
4. Retail Brand AF - A global brand that, with specific strategic shifts, can better cater to emerging market demands.

Carl Icahn - Management Takeover

Carl Icahn, similar in approach to Bill Ackman, is renowned for his active intervention in public companies to enact changes that augment shareholder value. In the late 1970s and early 1980s, Icahn earned the moniker of a "corporate raider," famed for orchestrating aggressive takeovers of companies, streamlining costs, and offloading assets to elevate share value. Icahn's brand of activism zeroes in on companies he perceives as undervalued, primarily due to management inefficiencies. He often advocates for pivotal changes, especially in leadership and governance structures.

Portfolio Example (Icahn Style):

1. Company AG - A manufacturing entity with a strong product line but lagging due to operational inefficiencies.
2. Company AH - A tech firm with innovative solutions but hampered by its current leadership.
3. Retail Chain AI - A national retail chain that can significantly boost its profitability with better supply chain management and store optimization.
4. Energy Company AJ - An energy company with valuable assets but requires a more strategic approach to market dynamics.

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Chamath Palihapitiya - Venture Capital

Chamath Palihapitiya, a distinguished venture capitalist and engineer, currently leads Social Capital as its CEO. His career trajectory includes a significant tenure as an early senior executive at Meta Platforms (formerly known as Facebook). Beyond his corporate roles, Palihapitiya has ventured into investment, founding a venture capital fund named The Social+Capital Partnership, which concentrates on tech-driven entities. Palihapitiya has popularized using special purpose acquisition companies (SPACs) as a unique vehicle to take companies public. His SPAC endeavours encompass high-profile mergers with entities like Virgin Galactic, Opendoor Technologies, SoFi, and Clover Health. Despite market fluctuations impacting some of these companies in 2021, Palihapitiya's stature as the "SPAC King" remains undiminished.

Portfolio Example (Palihapitiya Style):

1. SPAC 1 - A SPAC targeting innovative companies in the renewable energy sector.
2. SPAC 2 - Another SPAC focusing on groundbreaking medical technology startups.
3. Tech Startup AK - An AI-driven healthcare platform with the potential for global expansion.
4. E-commerce Venture AL - An online marketplace specializing in sustainable products, showing consistent growth and scalability.

Here are 10 notable investments and vehicles associated with Chamath Palihapitiya:

1.???? Social+Capital: ?Chamath's venture capital firm has invested in numerous startups across sectors. It started as a traditional venture capital firm but has evolved to focus on other investment vehicles like SPACs.

2.???? Virgin Galactic (SPCE): Chamath was instrumental in taking this space tourism company public through a SPAC (special purpose acquisition company) and served as its Chairman for a period of time.

3.???? Opendoor (OPEN): ?This is an online platform for buying and selling homes. Chamath took this company public through another one of his SPACs.

4.???? Clover Health (CLOV): ?A health insurance startup, Clover Health also went public through a SPAC associated with Chamath.

5.???? SoFi (Social Finance, Inc.): ?A personal finance company that offers a range of lending and wealth management services. It went public through a merger with one of Chamath's SPACs.

6.???? Slack Technologies (WORK): Before Salesforce acquired Slack, Social Capital was an early investor in the team collaboration software platform.?

7.???? SPACs (Special Purpose Acquisition Companies): Chamath has been a big proponent of SPACs as a vehicle for taking companies public. He's sponsored several SPACs, often labelled as "IPOA", "IPOB", "IPOC", etc.

8.???? Bitcoin and Cryptocurrencies: ?Chamath has been a vocal proponent of Bitcoin and has mentioned owning a significant amount of the cryptocurrency. He believes in its value as a hedge against traditional financial systems.?

9.???? Athos: ?A wearable technology company that provides athletes with insights into their performance. Social Capital was an investor.

10.? Bustle Digital Group is a digital media company focusing on young women. Chamath has invested in it.

Sallie Krawcheck - Themed Investing

Sallie Krawcheck, as the CEO and co-founder of Ellevest, is trailblazing the financial world with a digital-first, mission-driven investment platform tailored for women. She also chairs the Pax Ellevate Global Women's Leadership Fund (PXWEX -0.04%), a mutual fund dedicated to investing in companies championing gender equality. Krawcheck's illustrious career has seen her at the helm of major Wall Street entities, including Merrill Lynch, Smith Barney, US Trust, Citi Private Bank, and Sanford C. Bernstein. Her overarching mission revolves around galvanizing women to realize their financial and professional goals, actively working towards bridging gender pay and wealth disparity.

Portfolio Example (Krawcheck Style):

1. Company AN - A consumer goods company with a majority female leadership team and a focus on sustainable products.
2. Tech Startup AO - A tech firm developing solutions to address challenges faced by women in the workplace.
3. Healthcare Company AP - A company focusing on women's health, with innovative products and a strong female leadership presence.
4. E-commerce Venture AQ - An online platform offering products and services specifically tailored for women, with a sustainable and ethical approach.

These are some companies led by women or focusing on products and services for women.

1.???? Estée Lauder Companies Inc. (EL): A leading cosmetics company.

2.???? General Motors Company (GM): Led by CEO Mary Barra.

3.???? Oracle Corporation (ORCL): Co-led by CEO Safra Catz.

4.???? Ross Stores, Inc. (ROST): A major off-price retailer led by CEO Barbara Rentler.

5.???? Ulta Beauty, Inc. (ULTA): A beauty store chain.

6.???? Anthem, Inc. (ANTM): A healthcare company led by CEO Gail Boudreaux.

7.???? Northrop Grumman Corporation (NOC): An aerospace and defence company led by CEO Kathy Warden.

8.???? Archer Daniels Midland Company (ADM): A food processing company led by CEO Juan Luciano.

9.???? Lockheed Martin Corporation (LMT): An aerospace, defence, and security company led by CEO Marillyn Hewson.

10.? Progressive Corporation (PGR): An insurance company led by CEO Tricia Griffith.

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George Soros - Hedge Fund

George Soros, the visionary behind Soros Funds Management (later rebranded as Quantum Fund), is a formidable hedge fund manager known for his audacious investment strategies. Soros consistently impresses with annual portfolio returns surpassing 30%, even achieving an astounding 100% growth in back-to-back years. His investment prowess manifests in his propensity for making significant, short-term investments across various assets, from currencies to securities like stocks and bonds.

Portfolio Example (Soros Style):

1. Currency Pair EUR/USD - A significant short-term position based on geopolitical developments affecting the Euro and the US Dollar.
2. Emerging Market Bonds - Bonds from a developing country poised for an economic turnaround.
3. Tech Company AM - A tech firm with groundbreaking innovations but currently facing regulatory challenges.
4. Gold - A hedge against potential market volatility, given global economic uncertainties.

The following investments could potentially be included in a George Soros portfolio:

1. Currencies: ETF: WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU) Currency Pair: EUR/USD (Euro/US Dollar)
2. Government Bonds: U.S.: U.S. Treasury Bonds Emerging Markets: iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB)
3. Commodities: Oil: United States Oil Fund (USO) Gold: SPDR Gold Trust (GLD)
4. Emerging Markets: Equities: iShares MSCI Emerging Markets ETF (EEM) Debt: VanEck Vectors J.P. Morgan EM Local Currency Bond ETF (EMLC)
5. Financial Derivatives: Options on S&P 500: SPY Options Futures: Gold futures, Oil futures
6. Real Estate: U.S. Real Estate ETF: Vanguard Real Estate ETF (VNQ) International Real Estate: iShares Global REIT ETF (REET)
7. Tech Stocks: U.S.: Apple Inc. (AAPL), Amazon.com Inc. (AMZN) International: Alibaba Group Holding Limited (BABA), Tencent Holdings Limited (TCEHY)
8. Short Positions: Consider shorting stocks that have significantly outperformed despite weak fundamentals.
9. Hedge Funds or Alternative Investments: Hedge Fund: Bridgewater Associates' Pure Alpha Fund Alternative: Blackstone Group (BX)
10. Special Situations: Companies like AT&T Inc. (T) which have had significant mergers or divestitures, or other companies undergoing corporate restructuring.

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John Templeton - Contrarian Investor

John Templeton is celebrated as a pioneer of contrarian investing, an approach that often goes against prevailing market sentiments. Amid the bleakness of the Great Depression, Templeton showcased his conviction by acquiring 100 shares of every company on the New York Stock Exchange trading for less than $1. This audacious move paid dividends, significantly amplifying his wealth. In 1954, Templeton launched the Templeton Growth Fund, delivering a stellar 15% annualized return over nearly four decades. He also ventured into international investing, crafting some of the most lucrative cross-border investment funds. Eventually, his enterprise, Templeton Funds, was acquired by the Franklin Group, now recognized as Franklin Resources (BEN).

Portfolio Example (Templeton Style):

1. Distressed Stock 1 - Shares of a company facing temporary challenges but with solid fundamentals.
2. Emerging Market Fund - A fund focused on budding markets that most investors overlook.
3. Undervalued Commodity - An investment in a commodity believed to be underpriced compared to its intrinsic value.
4. Out-of-favour Industry ETF - An ETF tracking an industry currently out of favour in the market but with potential long-term growth.

This style involves going against prevailing market sentiments. The portfolio may include the following investments:

1.???? GameStop Corp. (GME): Known for its significant volatility and being a contrarian bet.

2.???? AMC Entertainment Holdings, Inc. (AMC): Another stock that faced significant short interest.

3.???? Vanguard FTSE Emerging Markets ETF (VWO): An ETF focusing on emerging markets.

4.???? iShares MSCI South Africa ETF (EZA): Focusing on the South African market.

5.???? SPDR Gold Shares (GLD): An ETF tracking the price of gold.

6.???? United States Oil Fund (USO): An ETF tracking the price of West Texas Intermediate light, sweet crude oil.

7.???? SPDR S&P Retail ETF (XRT): An ETF tracking the retail sector.

8.???? VanEck Vectors Coal ETF (KOL): An ETF tracking the coal sector.

9.???? Argentine Government Bond: Historically, Argentina has faced various economic challenges.

10.? Ford Motor Credit Company 6.20% Notes due 2059: A corporate bond from Ford's financing division.

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Other Notable Investors

While many iconic investors have risen to prominence through the stock market, others have carved out their niches elsewhere. Real estate magnates like Sam Zell, Stephen Ross, and Donald Trump have amassed their fortunes through astute real estate ventures. On the other hand, Bill Gross, crowned the "King of Bonds," has predominantly favoured bond investments over equities.

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