Raltin identifies investors with the best ability to pick stock outperformers compared to the S&P 500. Identifying these top funds helps other investors shortlist stocks which have a higher chance of outperforming the S&P 500 in the future. The summarized methodology is given below.
- Source All 13F Holding Data: Raltin sourced all 13F filings from the SEC website and mapped CIKs, CUSIPs & Tickers that these fund manager had invested in from Q1 2014
- Stratify New Stock Purchases in Portfolio: In these 13F filings, new stock purchases were stratified and flagged. For e.g., If Elizabeth Park Capital invested in Suntrust Banks Inc. (STI) in Q2 2017, Raltin classified that as new purchase.
- Comparison of New Purchases IRR to S&P 500: IRRs for each New stock purchase (e.g. Suntrust Banks Inc. (STI)) was calculated for various time frames (e.g. 1 Month, 1 year, 3 years) and those IRRs were then compared to the S&P 500.
- Classification of S&P 500 Over & Underperformance: Each stock performance compared to the S&P 500 was then classified according to six performance categories. These categories included >20%, 10 to 20% , 0 to 10% S&P Outperformance and then -10 to 0% , -10 to -20% and <-20% S&P underperformance.
- Identification of Investors based on S&P 500 performance categories: Funds with the highest proportion of stocks that outperformed the S&P 500 and lowest proportion in the underperformed category were deemed to be top investors who had the best ability to pick stocks.
Use Cases of the Data Sets:
- Fundamental Investors who are looking to make a purchase in a specific stock can see the top investors on those stocks
- Algorithmic / Quant / Statistical traders can use the top investors & new stock purchase data to add to their existing signals for trading algorithms
- Institutional brokerages can use this data to identify investors with the best track records in specific stocks
Here are 4 Examples of top investors that have a good track record of beating the S&P 500 on new stock purchases: