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Performance of the Valuentum Buying Index

publication date: Oct 13, 2014
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author/source: Valuentum Analysts

Note: A more recent analysis of the Valuentum Buying Index rating system can be accessed at the following link: https://www.valuentum.com/articles/Value_and_Momentum_Within_Stocks_Too

Two separate studies have reinforced the efficacy of the Valuentum Buying Index, both as a portfolio optimization tool and as an idea generator. If you cannot view the video, please consult the transcript that follows.

The studies referred to in this video can be accessed as follows:

Why Valuentum Buying Index Ratings Matter: https://www.valuentum.com/articles/20141003_1

Valuentum’s Performance on Seeking Alpha: https://www.valuentum.com/articles/20141009

Please be sure to read the studies closely in addition to watching the video or consulting the transcript below.

Brian Nelson, CFA:

This is Brian Nelson from Valuentum Securities.

I’d like to talk about a couple studies that we’ve performed on the Valuentum Buying Index rating system. This is the numerical score that’s on the top of every one of our 16-page stock research reports. The Valuentum Buying Index breaks down into three unique pillars: 1) an extensive discounted free cash flow methodology deriving an intrinsic value estimate for each stock, 2) coupled with a relative valuation methodology using the price-to-earnings ratio and the price-earnings-to-growth ratio relative to a company’s peers and competitors, and then 3) a technical and momentum assessment that we used to gain conviction within the overall valuation context of a company.

So, the first test that I wanted to talk about was a study that was performed on 570 externally-selected stocks that Valuentum provided the Valuentum Buying Index ratings on. The performance showed a very strong correlation between high Valuentum Buying Index ratings and better returns and low Valuentum Buying Index ratings and lower returns. The Valuentum Buying Index was shown to have a very high predictability, a driver behind understanding why stocks had those particular returns in the study. The efficacy of the Valuentum Buying Index, from our perspective, continues to be second to none.

We also wanted to talk about a study that we performed thanks to our partner Seeking Alpha. Seeking Alpha recently published performance on articles that were tagged either long ideas or short ideas. Valuentum had no prior knowledge of the significance of the tagging system. Performance measured the returns of the stock over a three, six, and twelve-month period, and what the results showed was that the Valuentum Buying Index, the Valuentum process, revealed significant outperformance over a three-month, six month time horizon, and with respect to some of the quote/unquote short ideas they were actually negative over a three month horizon.

The Seeking Alpha study has some limitations and though the results were very affirming in terms of the efficacy of the Valuentum process, we think one of the most important parts of the study is to show just how well some of our ideas are performing even in a public context and provide that perspective and transparency to continue to continue to gain your trust. I hope this video was informative. The Valuentum Buying Index continues to showcase its strong predictive nature, and we look to continue to roll it out across new strategies.

Thank you very much for joining us. If you have any questions please reach out to us. We’re available at info@valuentum.com. Thanks.

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Tickerized for Best Ideas portfolio holdings at the time of original publication. The Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio are not real money portfolios. Results are hypothetical and do not represent actual trading. Past results are not a guarantee of future performance.


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The High Yield Dividend Newsletter, Best Ideas Newsletter, Dividend Growth Newsletter, Nelson Exclusive publication, and any reports and content found on this website are for information purposes only and should not be considered a solicitation to buy or sell any security. Valuentum is not responsible for any errors or omissions or for results obtained from the use of its newsletters, reports, commentary, or publications and accepts no liability for how readers may choose to utilize the content. Valuentum is not a money manager, is not a registered investment advisor, and does not offer brokerage or investment banking services. The sources of the data used on this website and reports are believed by Valuentum to be reliable, but the data’s accuracy, completeness or interpretation cannot be guaranteed. Valuentum, its employees, independent contractors and affiliates may have long, short or derivative positions in the securities mentioned on this website. The High Yield Dividend Newsletter portfolio, Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio are not real money portfolios. Performance, including that in the Nelson Exclusive publication, is hypothetical and does not represent actual trading. Actual results may differ from simulated information, results, or performance being presented. For more information about Valuentum and the products and services it offers, please contact us at info@valuentum.com.