Q3 Top Performers


The research firm with top performing buy recommendations over the three years ending September 30, 2011 was Benchmark Company LLC, followed closely by Market Profile Theorems, according to data collected by Investars.  We analyzed the performance of stock recommendations made from October 1, 2008 through September 30, 2011, as tabulated by Investars, a performance measurement specialist.  Investars tracks the recommendations of 90 research firms, on which the analysis was based.

The third quarter 2011 was a difficult market environment but over a three year period, some research firms had successful track records for their buy recommendations.  Benchmark Company LLC,  a boutique investment bank based in NYC, has eleven senior analysts covering eight sectors.  Many of the analysts, like media analyst Ed Atorino, have had long careers at major investment banks.  Benchmark’s limited coverage tends to make its track record more volatile.  Note the relatively low batting average of 42%, which suggests that a minority of big winners contributed to Benchmark’s success.  On the positive side, Benchmark’s buy recommendations had a very low maximum drawdown, which is a measure of the largest percentage loss the recommended portfolio of stocks would have experienced during the 3 year time horizon.

Market Profile Theorems Inc., a Seattle-based quantitative research provider covering 5,000 equities, was a close second based on the three year performance of its buy recommendations.   MPT’s quantitative model incorporates insider buying and selling information based on Form 4 filings with the SEC, supplemented with earnings information and technical analysis. MPT had a very strong batting average, which measures the proportion of buy recommendations that moved in the predicted direction, suggesting consistent performance across the large universe of its buy recommendations (over 2000 during the period).  However, the model is very trading oriented, with average holding periods of only 13 days for each recommendation.

MKM Partners is a research boutique based in Stamford CT with 15 senior analysts, perhaps the best known being economist Michael Darda.  MKM has a low batting average, and its one year performance presages a deteriorating track record going forward.

Haugen Custom Financial Systems, Inc. is a quantitative research firm based in Durango, CO which uses over 70 factors in its model.  Coverage is over 7,000 stocks, from which it made fewer than 700 buy recommendations during the three year period measured.  Like MPT, the model has short holding periods, averaging only 37 days for each buy recommendation.

B. Riley & Co. is a boutique investment bank based in Los Angeles with fifteen senior analysts.  B. Riley recently hired four analysts from San Francisco based Merriman Capital, which is now down to three senior analysts.


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