Discovering tomorrow's winning stocks . . . today.
"With some 17,000 publicly traded companies in the United States alone, we all need some way to winnow the chaff into a smaller pile of wheat."
“How to Find the Best Stocked Ponds”, Barron’s, February 8, 2010
We believe that two of the best methods to “winnow the chaff into a smaller pile of wheat” are:
1. Identify what the “smart” money is doing – the professional investors who relentlessly search for tomorrow’s winning stocks; and,
2. Identify stocks that experience unusual trading activity.
We track unusually large investments being made by more than 40 of the nation's largest institutional investment management firms and more than 40 of the nation's largest hedge funds. Included in the institutional investment managers that we track are BlackRock, Fidelity, T. Rowe Price, and Morgan Stanley. Included in the hedge funds that we track are Adage Capital, Citadel Group, Clearbridge Advisors, and D.E. Shaw.
When any of these institutional investment managers or hedge funds discovers a stock that offers compelling potential for delivering above-average performance they do what any savvy investor would do: They make an inordinately large investment in that stock.
Said differently, they make a Big Bet.
Usually that investment will entail acquiring 5% or more of the company’s stock. Once that 5% threshold has been passed, they must file an SC-13 report with the Securities and Exchange Commission (SEC).
An Institutional Investor Signal is generated when an SC-13 filing from one of the institutional investment managers or one of the hedge funds that we track makes a Big Bet that is either a new investment or an increase to an existing investment. Our hedge fund Big Bets are roughly $25 million and higher while our institutional investment manager Big Bets are roughly $100 million and higher.
As a supplement to our Institutional Investor Signals, we also track Unusual Volume for both NYSE and Nasdaq stocks. When a stock experiences Unusual Volume and closes at a price higher than the previous day’s close for a specific number of days, we generate an Unusual Volume Signal.
The Institutional Investor Signals and the Unusual Volume Signals also work in reverse. Said differently, the same information sources that identify stocks with extraordinary buying activity often identify stocks with extraordinary selling activity. This extraordinary selling activity also generates Signals.
When they are triggered, the Institutional Investor Signals and Unusual Volume Signals are e-mailed to Members, usually at the end of each trading day.
