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 November
20, 2000
Websites start picking on the stock pickers; Winners and losers facing new scrutiny - by Rosemarie Maldonado With so many know-it-alls touting stocks these days, it seemed only a matter of time before somebody started picking on the stock pickers. Enter Validea.com, the latest to join the field, following the lead of companies such as Bulldog Research.com and Starmine.com, which evaluate and rank professionals. Validea, however, goes one step further and zeroes in on the losers as well as the winners. Its website singles out top pickers du jour like Kevin Landis, portfolio manager at Firsthand, and Mona Eraiba, a semiconductor analyst at Rosetta Management Group, whose recommendations racked up strong gains this year. And it sheds a somewhat harsher light on the likes of Paul Johnson, a sell-side analyst at Robertson Stephens, and Edward Kerschner, an equity strategist at PaineWebber, who received low ratings. Henry Seigel, president of Validea .com, says the site is different from Bulldog's because it provides a broader coverage of analysts. Validea .com ranks sell-side and buy-side analysts, financial journalists and television pundits. Bulldog, he says, takes a different approach, focusing only on analysts who have made the most successful recommendations. ''They only post people who are doing very well or received awards; they aren't comprehensive. I think ours is a more accurate presentation of performance across the board,'' Mr. Seigel says. But Andrew Farver, a spokesman for Bulldog, says: ''We don't find value in showing you who the worst is. If you are interested in trading stocks and finding out more information about a research analyst, you will go to the one who has had the most success.'' Five light bulbs? In its rating system, Validea awards up to five light bulbs to analysts with the strongest week, month, six-month and year track records. Ratings are assigned to individuals with a minimum of seven picks or pans, and bulbs are awarded based on a standard bell curve where the top 5% receive a five-bulb rating and the bottom 5% receive a one-bulb rating. The average return is based on the performance of each recommendation from the time of mention divided by the total number of recommendations. Since October, the site has also given a monthly Unsung Hero award to an analyst who has made superior recommendations. In keeping with the light bulb theme, analysts who win the Unsung Hero award receive a whimsical year's supply of rubber light bulbs. This month's Unsung Hero is Steven Levy at Lehman Brothers in New York. Mr. Levy began to warn investors about Lucent, the telecommunications giant, last April. His recommendation of Redback Networks Inc. was also on target. The company's stock rose from $96.06 June 1 to $119.50 earlier this month. Robert Loest, chief executive officer and senior portfolio manger of IPS Advisory in Knoxville, Tenn., was the Unsung Hero for October. ''They're lowering the cost of information for people. I browsed the recommendations of some of my friends, and from what I can see, it looks like they are doing the right thing,'' he says. Mr. Loest, the portfolio manager for the IPS Millennium and the IPS New Frontier funds, had warned investors to steer clear of AT&T and Dell Computer. On another portion of the Validea site, the guru analysis section matches investors with some of the industry's hot hands. The methodologies of well-known stock pickers such as Peter Lynch, Martin Zweig and others can be used as analytical engines. Investors can run stocks through the engines and see if the guru would show any interest in a particular stock. ''It's not just a list of stock picks. You see the point made when someone makes a recommendation,'' says Mr. Seigel. ''It saves the average investor time because they don't have to read 15 magazines, view 15 websites and view six television shows all at the same time. We do the reading and analyzing for them,'' he adds. |
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