There is a great deal of value creation by corporate organizations in an open society with a stable legal framework. Brilliant and driven people come together in companies to further an idea or a product.
In the case of publicly traded companies, it is possible for anyone to participate in such value creation by buying shares in outstanding companies with superb prospects.
With the cost of such stock purchases going towards zero, the stock market is the ideal conduit to building a diversified portfolio comprising shares in the best companies in the US or even worldwide.
Good idea, in theory
Sounds like a good idea. And, it is. But…
- How to identify the best performing companies/stocks out of tens of thousands of companies in dozens of industries and countries?
- How to evaluate the companies’ stocks and rank them properly based on a large number of relevant key performance indicators?
- How to monitor the portfolio companies over time?
Introducing the Ziggma Score
To enable anyone to invest with confidence, we have created Ziggma and our proprietary Ziggma Scores. The objective of the Ziggma Score is to assist investors in their research by providing an overview of a stock's relative strengths vs. its industry peers. As seasoned financial analysts who are embracing the data revolution we decided to combine classic fundamental research with big data analytics. Our system crunches hundreds of data points on over 4,000 listed US companies on a daily basis. Basically our systems does the work for each stock within an industry what any diligent investor is trying to do on thousands of data points, on a daily basis: Weigh all of the quantitative KPIs on a company itself and against the competition. Needless to say, most or all of us do not have the processing power to conduct this type of analysis. Our machines do. And they are objective at doing this.
Institutional investors have employed machines for fundamental analysis for years, now Ziggma is making this approach available to all investors.
Experience and professionalism is key
At Ziggma, as in our careers in institutional finance, we are doing things with the utmost diligence. We have spent several several on developing the best methodology and we continue to re-evaluate it periodically in light of changing market dynamics.
This is where Ziggma sets itself apart from other research platforms.
- We do NOT score companies across industries. A bank's KPIs are very dissimilar from a tech firms.
- We look at both track record (historical KPIs) and forward looking consensus information
- We do NOT mix fundamental analysis with momentum.
What goes into the Ziggma Score?
As mentioned before, the Ziggma Score reflects the overall economic and financial quality of a company and its stock relative to its peers. Unless you want to put all your eggs into the same basket, read industry, you will look for the most attractive opportunity in various industries.
We rank companies in each industry based on between 4 and 6 KPIs within each of the categories growth, profitability, valuation and financial position. In each category, on Ziggma shown as sub-scores, and for each KPI we employ time series data. Both the data points in time and the respective KPIs receive weightings to reflect their relevance. In essence, we are looking at how a company has been performing on a myriad of KPIs over time.
The categories or sub-scores also carry specific weights respectively.
While we do not disclose which KPIs we are using, we can assure you that we do not have any magic recipe. If you have been doing investment research you would likely recognize all of them. It is important to add that we use industry-specific KPIs for specific industries, such as banking, REITs and insurance companies.
The real value added by the Ziggma Scores is in the computing of massive amounts of data on a daily basis on a stock and on a relative basis.