How are "Top Analysts" picked?


Top Analysts


An Analyst qualifies to be called a "Top Analyst" if he meets all the criteria listed below.

  • Only Analysts / Investing Group Leaders with at least 5 unique Actionable Recommendations on Qualified Securities within the last calendar year are included in the analysis.
    • Actionable Recommendations are Strong Buys / Buys / Sell / Strong Sells
    • Qualified Securities include Common/Ordinary shares, ADRs, or ETFs with a Market Capitalization greater than $20 Million USD.
    • Performance is calculated during the Holding Period, defined as the time period in which an Actionable Recommendation is active.
    • Recommendations remain active for a period of up to 12 months, unless changed earlier. After 12 months the analyst is required to update their recommendation, or it will be deemed inactive.
  • Individual Analysts Portfolio performance is evaluated based on their Strong Buy / Buy / Hold / Sell /Strong Sell recommendations.

Recommendation Methodology:

  • Strong Buy - Highest buy conviction an analyst can have. When an analyst gives this rating to a security it is added to their “pick list” and their Holding Period begins. Return for a Strong Buy rating is measured as the change in price of the Qualified Security after the Strong Buy rating is made. For purposes of Conviction Based Active Return their return is multiplied by +1.5.
  • Buy -When an analyst gives this rating to a security it is added to their “pick list” and their Holding Period begins. Return for a Buy rating is measured as the change in price of the Qualified Security after the Buy rating is made. For purposes of Conviction Based Active Return their return is multiplied by +1
  • Hold -When an analyst initiates coverage on a security with a hold rating it is not considered. However, when the analyst has made an Actionable Recommendation on a security and then gives a Hold recommendation the holding period ends.
  • Sell -When an analyst gives this rating to a security it is added to their “pick list” and their Holding Period begins. Return for a Sell rating is measured as the change in price of the Qualified Security after the Sell rating is made. For purposes of conviction based return their return is multiplied by -1.
  • Strong Sell -Highest sell conviction an analyst can have. When an analyst gives this rating to a security it is added to their “pick list” and their Holding Period begins. Return for a Strong Sell rating is measured as the change in price of the Qualified Security after the Strong Sell rating is made. For purposes of conviction based return their return is multiplied by - 1.5.

Ranking Methodology

  • Analyst are ranked using the combination of the “Fundamental Law of Active Management” and their Conviction Based Active Return.
    • Fundamental Law of Active Management = Information Coefficient * √ Breadth
           Information Coefficient = (2 x Proportion of predictions made correctly by the analyst) - 1
           Breadth = Number of actionable recommendations made by an analyst.
  • Conviction Based Active Return =Average return of all Actionable Recommendations with Strong Buy returns are multiplied by 1.5 and Strong Sell returns multiplied by -1.5.
  • Therefore, the ranking of an Analyst will depend on:
    • Security selection Skill
    • Conviction of security selection
    • How often can the analyst successfully put their skill to use.
  • Only the top 15 analysts will be displayed on the page. The Top Analyst Ideas feature looks at Seeking Alpha's Top 50 Analysts.

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