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Our portfolio of services and solutions include quantitative products that uniquely meet the needs of portfolio managers regardless of fund type or investment objective.

Earnings Quality Index

Quality of earnings analysis is a key component of many institutional money managers’ stock selection process. There is a long history of research and empirical evidence that supports the notion that high earnings quality companies (i.e., companies with robust cash flow generation relative to reported earnings) outperform their peer groups and market average over time. And, the inverse is true; low EQ firms tend to underperform over time.

Leveraging our vast experience in developing forensic accounting models (we produced the first known commercial earnings quality factor for the US and also for Europe), we have developed robust domestic and global earnings quality indexes. We created straightforward Earnings Quality variables that are transparent but uniquely relevant for different types of firms (including financials) and then weighted the firms by their EQ ranking. Alternative weighting schemes can be considered as well (i.e., adjusting a market cap weight for earnings quality).

Portfolio Strategy based on Verus Opinion scoring system

The Thomson Reuters Company-in-Context report is the most popular equity tear sheet (by a factor of 2) carried on Fidelity Investment's retail brokerage platform. The Verus Opinion score, included in the Company-in-Context report, is based on a combination of earnings quality, technical and valuation analysis, and an evaluation of the insider transactions. For 20 of the past 22 quarters, Integrity Research has ranked the Verus Opinion as the best performing stock-ranking system on Fidelity's platform.

Relative to the S&P 500, an equal weight portfolio back test of the Verus Opinion top 50 large cap stocks, using semi-annual rebalancing, demonstrated meaningfully positive excess returns, with comparable volatility. View chart

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