Eleven Years of Consistent Market-Beating Performance…
Discover the Long/Short “Market-Neutral” Portfolio that has Generated an Average 43.7%/Year Return, while Fully-Hedged Against Downside Market-Risk.
Step 1: Every S&P500 Company is Screened Against a Precise 12-Point Checklist…
Every Friday after the market close, our computers run a systematic algorithm, which screens every S&P500 stock, against a precisely formulated 12-rule checklist of deep-value company fundamentals, plus technical ‘timing’ indicators.
Every stock is automatically given a SmartRank score (0-100), based on the 12-point algorithm.
2: Each Stock is Automatically Ranked into a Sort-Order from Highest-to-Lowest SmartRank Score (Updated Weekly)…
Stocks near the top of the list provide the most optimum, deep-value trading opportunities. We buy and hold the top-five ranking stocks (refreshed weekly)…
3: The Five-Stock Portfolio is Fully-Hedged by the S&P500 Index ETF…
All five stocks are fully-hedged by an equal-dollar value ‘short’ position in the S&P500 index ETF (symbol: SPY), thus resulting in a balanced, market-neutral long/short portfolio.
For instance, if we are buying the five stocks at $2,000 each (total $10,000 ‘long’), then this long position is counter-balanced by a short position in the SPY for the equivalent dollar value ($10,000 ‘short’).
The objective is to protect against market-risk. If the market has a downturn (or even a major correction/crash), the profitable S&P short position would compensate to some degree, any losses on the long-stocks.
For example, during the 2008 financial-meltdown, the SmartRank portfolio delivered a 96.45% net gain, compared to a 37% downturn in the S&P500 benchmark. This is thanks to prudence and discipline in adopting a permanently hedged, market-neutral long/short portfolio.
Every Buy, Sell and Hold – Clearly Defined…
Every Friday (after the market close), we run the stock-screen/ranking process above, in order to check if there have been any new stocks which have entered the top-five.
The trading rules are simple…
Whenever a stock newly enters the top-five rankings, this represents a ‘buy’ signal for that stock. We buy that stock on the Monday open.
Whenever a currently held stock drops below the top-five, this represents a ‘sell’ (exit) signal for that stock. We sell that stock on the Monday open.
As long as a stock remains in the top-five rankings, we need do nothing, and continue to ‘hold’ that stock.
The entire five-stock position is fully hedged by an equal-dollar value short position in the S&P500 index ETF (SPY).
Trading the five-stock portfolio, the model has generated an average 43.7%/year returns, while fully-hedged (permanently) against downside market-risk…
Easily Copy Our Trades
Focused on liquid, easy-to-trade S&P500 stocks, you can easily copy our trades (updated every Monday). Since inception, the portfolio (fully-hedged) has been profitable in 11/11 years, with an average annual growth of 43.7%/year.
The SmartRank Portfolio holds just 5 stocks (updated weekly). The entire position is fully hedged by an equal-dollar ‘short’ position in the S&P500 ETF (symbol: SPY). This ensures the portfolio is [always] equally long and short, protecting against market-risk.
Focus on Liquid Stocks
Often overlooked, ‘liquidity’ plays a critical role in successful investing. The SmartRank Portfolio steers clear of hard-to-execute stocks. Our focus is on liquid, easy-to-trade S&P stocks (low-slippage, fast-executions). We want to be done by 10:30am.
The Stock Selection Method – Step-by-Step…
At the core of everything we do, is the SmartRank algorithm – a precise integration of 12 distinct ‘bullish’ indicators. The algorithm synergizes both company fundamentals (identifying the highest quality deep-value + growth stocks) and technical-analysis (price, volume, and money-flow), for precision entry-timing…
Here’s how the method works…
In the below example, you can see a snapshot of the 12-factor model algorithm applied to just one example stock, Humana Inc. (don’t worry if you don’t fully grasp the method – you don’t need to know all the nuts-and-bolts of the strategy to profit from it).
We run simultaneous screens across all five-hundred S&P stocks (refreshed weekly)…
A single factor is either a fundamental indicator (such as ‘gross margin growth’ or ‘price/sales ratio’), or a technical indicator (such as ‘relative volume flow’, or an ‘overbought/oversold’ indicator)…
Each individual indicator is automatically given a ‘bullish-to-bearish score’ depending on how that indicator is performing ‘relative’ to history, and how it is performing in relation to industry-peers (competitors).
The higher the score for an indicator, the more ‘bullish’ the stock based on that ‘singular’ indicator (also known as a single ‘factor’)…
The individual scores are then combined (depending on weighting of each indicator) to return a total, simplified SmartRank score, between 0 to 100.
The higher the score, the more ‘bullish’ the stock.
Based on this logic and rationale, we always hold the top-five ranking stocks in the SmartRank portfolio, fully hedged by the S&P500 index ETF.
12 Distinct Factors. One Complete Trading Strategy…
Building a factor-based trading algorithm begins with a clear theme/objective. In our 12-factor algorithm, we look for companies which exhibit positive datapoints ‘relative’ to each company’s own history.
For instance, the algorithm would measure current price/sales ratio against a company’s own historical equilibrium, and cross-check this against industry peers.
There are multiple factors the algorithm takes into account, including sustainability in both sales revenue and gross profit margins, debt/capital levels, operating and free-cash-flow margins, institutional buying, etc.
Specifically, we apply 12 distinctive rules (factors). These are…
- Price/Sales Ratio (P/S Ratio)
- Enterprise-Value/Free-Cash-Flow (EV/FCF Ratio)
- Enterprise-Value/EBITDA (EV/EBITDA Ratio)
- Free-Cash-Flow/Capital (FCF/Capital Ratio)
- Debt/Capital Ratio
- Gross Margin Growth (Relative)
- Operating Margin Growth (Relative)
- Free-Cash-Flow Margin Growth (Relative)
- Revenue Sustainability
- Institutional (Smart-Money) Order-Flow
- Relative Volume Trend
- Technical Analysis Indicators (Oversold)
A precise formula combines all 12 factors (weighted), resulting in a single, simplified SmartRank score (between 0-100), for each of the five-hundred S&P companies we track.
The goal is to capture the strongest businesses which offer deep-value/growth, trading at a relative-discount (undervalue), confirmed by smart-money-flow, allowing us to enter at an optimal-value price point.
The algorithm targets specific stocks that have undergone a recent technical pullback, combined with pattern price/volume (positive accumulation) activity, backed by institutional (smart) money-flow.
This combined method (which fully integrates both qualitative company fundamentals and technical-analysis/timing indicators) delivers trading ideas which offer a high-probability of success, and the opportunity for us (and our members) to profit from the resulting recovery/rally.
Smarter, Better Informed, Better Prepared Trades…
Every Sunday around 6pm, we publish the latest, top-five ranking S&P500 stocks, based on the strategy. This allows us (and our subscribers) to see all the latest ‘buys’, ‘holds’ and ‘sells’…
We ‘buy’ any new stock which has entered the top-five. We ‘sell’ (exit) any stock no longer in the top-five. We ‘hold’ any stock which continues to remain in the top-five. Subscribers can easily emulate our trades.
The entire portfolio of five-stocks is always fully hedged by the S&P500 index ETF (SPY).
As a member, having access to pre-screened, superior-quality stock-picks will save hours of research time capturing those companies which offer the best value, relative to the 12-point algorithm…
Let Us Do The Math…
Our subscribers do not need to worry about every mathematical ratio, or complex fundamental or technical indicator. Emulating our trades is a straightforward process. By focusing only on liquid, largecap S&P500 stocks, traders can enter/exit trades with ease.
As a subscriber, you will receive the following…
- Every Sunday, around 6pm, we send each member an email report (PDF format).
- The report shows the top-five ranking stocks based on the 12-point method.
- If a new stock enters the top-five, we ‘buy’ the stock on Monday (you can easily copy the trade).
- If a previously held stock no longer appears in the top-five, that stock is ‘sold’.
- If a stock re-appears from the previous week, that stock is simply ‘held’.
- The total dollar-value of the portfolio is hedged by an equal-dollar short position in SPY.
- Members will have full access to our helpdesk at any time throughout membership.
- Ask any questions, no matter how simple or complex – we are here to help you advance.
We don’t just stop at providing our weekly top-five report. Our goal is to make you a smarter, better informed, better-prepared trader. You will build confidence witnessing market-outperformance, trading alongside experienced, fully knowledgeable, self-directed traders.
We combine deep research tools, with a precise rule-based stock-selection approach. The result is a more superior, complete trading plan-of-action – one that has proven to deliver consistent profitability and outperformance against the stock market, while permanently hedging against market-risk.
Join us today, and start elevating your trading to a new level. To get started, click the subscribe link below. If you have any questions, please get in touch with us at any time.