The Web’s Best Stock Screens: Looking for the next winning investment

by on February 9, 2010

fish_netStock screens allow investors to sort through lots of different stocks in search for only the ones that fit certain criteria.  Investors looking for the next stock pick for their portfolios can use basic screening tools, available at both Yahoo! Finance and Google Finance. MSN recently retired its highly-regarded stock screening tools, leaving what’s freely available somewhat lacking.

Screening 2.0, something I like to discuss on the site, provides the same outcomes but incorporates more algorithmic know-how, some artificial intelligence (how do you deal with an infinite P/E one year?), better ability to backtest results, and preset criteria to match results of the world’s best investors.

I decided to piece together a list of some of the Internet’s best free and premium stock screening resources.

So, here goes:

General Investing

  • Validea: One of my favorites and started by author of The Guru Investor, John Reese.  Validea is a premium service that tracks screens preconfigured with the investing criteria of history’s greatest investors, like Buffett, Graham, Peter Lynch, Ken Fisher, and more.
  • Finviz: Lots of stuff going on here. IMO, the most powerful, free screener available.  With fewer preset screens, Finviz is for more advanced investors who have specific criteria they look for in stocks.  A whole lotta descriptive, fundamental, and technical ways to sort for new ideas.
  • Manual of Ideas: Mentioned in my post from last week, Top 6 Ideas for Piggyback Investing, MOI has both free and premium screens like 10×45 Bargain Hunter, European Value Report, Equities and Tobin’s Q.  These screens come in form of subscription newsletters (again, some free, some premium) with more analysis included beyond the output of the stock screens.
  • AAII Screens: Blown away by how many screens the American Association of Individual Investors has on its website (you have to join AAII to access these screens).  You can find growth and value screens with preset parameters (like IBD Stable 70 and CAN SLIM) as well as guru screens that look for specific investment criteria established by famed investors like Graham, Buffett, Dreman, Lynch, Zweig, etc.
  • Zacks: Nice combination of some free screens (Earnings & Margins, Growth and Income) and premium screens (Zacks Rank 1)
  • CNBC: lets users save custom made screens and also has a few prepackaged screens for free
  • The Kirk Report: Couldn’t be remiss in mentioning the great screens Kirk puts together for subscribers to his service.  He calls his screens, the Stock Screen Machine.
  • The Motley Fool’s CAPS: Nifty free screener that incorporates the community’s CAPS ratings into the screens. Allows users to download results to spreadsheets.

Value Investing

  • Old School Value: Nice site with numerous free screeners for all kinds of value investing
  • MagicFormulaInvesting: Built by the man, himself — Joel Greenblatt, this is a nice free site to do basic screening for stocks that fit the criteria of the Magic Formula

Institutional Ownership

  • AlphaClone: Of course, this hedge fund slicer-and-dicer is a stock screen of sorts.  This premium product (read my review here) allows users to identify the top performing funds, peer into their holdings and backtest their strategies.

Insider Buying/ Selling

  • GuruFocus: Interesting free and premium offerings that track top guru buys as well as insider transactions.  Can download results into spreadsheets for more analysis.

Technicals

  • StockFetcher: Nice premium screen for technical investors encompassing Bollingers, Candlesticks, Moving Averages, and more. Output is downloadable to Excel.

I am SURE I left really good tools out — let me know in the comments if you think I should include something I’ve missed.

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Superbowl team: online finance’s best

by on February 8, 2010

Football Team

In the wake of the big commercial fest Super Bowl yesterday (wait, there was a game yesterday??), I thought it would be interesting to put together a team of the Web’s best financial analysts, talking heads, and pundits.  An all star team of sorts for online finance.

Offense

Quarterback: The Big Picture, Barry Ritholtz.  Barry’s the go-to guy, calling the shots — the plays, as you will — of what’s happening as it’s happening.  With the eye of an on-field general, Barry’s commentary pulls no punches and provides a certain vision.

Wide receiver: Zero Hedge.  With all the flair, bling, and panache of an OchoCinco or Terrell Owens.  When he hits it big, he hits it, but when he’s off, well, he’s still a personality…

Running Back: The Pragmatic Capitalist.  Being a good back requires strength, grit, patience and explosiveness.  TPC’s coverage of core issues and broad/narrow analysis has upped it a notch this past year.

Offensive Line: Abnormal Returns, The Reformed Broker, Here, we’re looking for people who produce — day in and day out — without getting a lot of the headlines but contributing to the success of the rest of their teams.

Strength Coach: Gregor.us. You want to understand energy policy, technologies, and energy market dynamics — he’ll pump you up.

Kicker: Anal_yst.  Kicking is about coming in when it matters and producing under a lot of stress.  The Atlantic’s Anal_yst doesn’t post often, but when he does, it’s worth reading.

Offensive Coaches: David Merkel (The Aleph Blog), Felix Salmon. Offensive coaching is about teaching technique, hawkish understanding of the plays and assimilating what the defense is giving you.  It’s about being smarter than the other guys and finding the best way to exploit weaknesses.

Statistician: Bespoke Investment Group.  Wanna know anything about anything?  Bespoke consistently provides food/analysis for thought by slicing and dicing the data to help investors make better decisions.

Defense

Defensive line: BaselineScenario, Paul Kedrosky, Capital Spectator. These guys make sure that nothing gets through, picking up and tackling anyone that attempts to go through or around and putting pressure on the offense.

Defensive Coaches: Farnam Street, CrossingWallStreet, Jeff Miller, MarketSci. These guys are hawks, looking for any inefficiencies in the market, and trying to find ways to exploit them

Linebacking crew: Naked Capitalism, Calculated Risk, Leigh Drogan.These are the guys you DON’T want chaperoning your daughters.  They’re aggressive, quick, and really strong.  Always bringing the heat.

Defensive backs: Vix and More, Meb Faber, James Altucher. These guys are quick, some of the best athletes on the field.  Most importantly, they need to be able to cover the offense deep over the air while being strong/aggressive enough to step up and make a play on the ground.

All purpose player/Utility: Howard Lindzon, This athlete can do a little of everything, contributing all over the field (and off).

*******************

Referee: IR Web Report.  Dominique has been on the front lines, calling it as he sees it for all issues surrounding financial reporting, for investors, analysts and firms themselves.

Cheerleader: DealBreaker, with coverage of the uh, underbelly of the ‘real’ finance world, this game is a better place with DB.

So, there it is.  Who do you think would win in a smackdown? You make the call.

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Study shows (again) that mutual fund hot hands quickly cool

by on February 7, 2010

As if we needed another study to spell this out, S&P published a recent study (.pdf) that undermines the hot money chasing performance in the mutual fund industry.  The study shows that very few funds demonstrate persistence — the ability of asset managers to consistently achieve top-quartile or top-half performance.

The amazing take-away from the study:

Over the five years ending September 2009, only 4.27%
large-cap funds, 3.98% mid-cap funds, and 9.13% small-cap funds maintained a top-half ranking over the five consecutive 12-month periods. No large- or mid-cap funds, and only one small-cap fund maintained a top quartile ranking over the same period.

Couple of things here:

  • Not one large-cap or mid cap fund maintained top quartile ranking.  Should investors just use large cap and mid cap indices for their exposure here regardless?
  • While still posting rather poor results, there are twice the percentage of small cap funds achieving top-half performance than large caps.  There still seems to be significantly more value in active portfolio management in the small cap arena.

The study’s ultimate takeaway:

Our research suggests that screening for top-quartile funds may be inappropriate.A healthy plurality of future top-quartile funds comes from the prior period’s second, third and even fourth quartiles. Screening out bottom quartile funds may be appropriate, however, since they have a very high probability of being merged or liquidated.

Compare that to the findings of Jagannathan, Malakhov, and Novikov in “Do Hot Hands Exist Among Hedge Fund Managers?”:

We find evidence of persistence in the performance of funds relative to their style benchmarks. It appears that on average more than 25% of the abnormal performance during a three year interval will spill over into the following three year interval.

[Hat tip: Pragmatic Capitalist]

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ETFs, overindexing and the power of financial brands

February 7, 2010

Just doing some thinking about the growth and future of the ETF industry:
In my eyes, ETFs began as a second-generation of mutual funds with the following characteristics:

Passively managed: ETFs were passively managed (though that’s changing), building upon Jack Bogle’s success at Vanguard.  Most research at the time clung to the Efficient Market Hypothesis and academics [...]

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Investment newsletters REALLY bearish — time to buy?

February 4, 2010

Wow! Expectations that U.S. stocks will drop at least 10% has risen to the highest levels since April 1984.
In a recent survey of investment newsletters by Investors Intelligence, Bloomberg reports that:

The following are results from Investors Intelligence’s
analysis of investment newsletters for Jan. 27 through
yesterday. The company determines the proportion of writers who
are bullish and bearish [...]

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Bloomberg beefing up reflects good things for financial industry

February 4, 2010

I’ve written about previously (here and here) about Bloomberg’s expansion and eventual dominance of financial media from news to data and consumer.  The WSJ reports today that indeed, Bloomberg is forecasting a respectable 10% growth rate for 2010 and plans to add an additional 1300 employees.
The revenue gains would come largely from a projected increase [...]

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Top 6 resources for piggyback investing

February 3, 2010

Piggyback investing is the art/science of building portfolios based on mimicking the stock picks of some of the best superinvestors — asset managers who have exhibited long term market-beating results.
Early research (check out some here) has shown that investors can achieve similar returns by piggybacking as the can by investing directly with the asset managers [...]

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Online Finance Wishlist: Can you show a brother some love?

February 2, 2010

So much progress has been made in online finance, but man,  we still have so much more to do! While the amount of investing information has exploded online, there are still major gaps in many of the top sites that seem like no-brainers to fix.
The following list — submitted to me over the past 12 [...]

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Smallcap performance: does size matter?

February 1, 2010

Long standing conventional wisdom has it that small caps exhibit a “size-effect” — they tend to outperform larger stocks in general over the long term.
MarketSci has done some great work digging in to why this is the case in a recent article. According to the post:
I break from conventional wisdom on the subject of the [...]

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