Our quantitative approach has evolved from a body of evidence showing widespread underperformance for all types of managers. For example, the annual SPIVA® report, which covers 10,000 actively managed funds with aggregate assets of over $4 trillion, shows that only 10% were able to beat the S&P 500 return over 15 years. The vast majority of active managers use a fundamental approach which relies on subjective opinions in decision-making.
Since 1978, we have been dedicated to using statistics to evaluate stocks. Our process has evolved, but the core belief in our quantitative approach is supported by our performance.
High Profits Growth Leads to High Returns
Our research demonstrates a high correlation between the rate of profits growth and price gain. Furthermore, we have found that profits growth trumps P/E and other considerations in stock selection.
Our study on in-house portfolios during 1985-2000 shows companies which grew their earnings by 20-50% each year averaged a price gain of 39% in such years. For those companies that grew 100% or more, the average price gain was 114%.
New High Stock Research
We hold an exclusive body of knowledge on new high stock price behavior and use this knowledge in our decision-making. Our research is based on an 18-year study containing 34,232 new high stocks which reveals that new high stocks display predictive price patterns. Our research reveals that once a stock establishes a first new high, it typically will go on to make 25 or more new highs in any given year.
Our investment process is geared to capture these upward price movements.