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The Sabrient Methodology
Sabrient’s proprietary, fundamentals-based, quantitative methodology underlies all Sabrient products including the Sabrient indices, unit investment trusts (UITs), and other structured products.
Our strategies and rankings are used by investment professionals for hedging, position weighting, indexing, and sector rotation.
Four important features distinguish Sabrient’s quantitative methodology.
- We use multi-factor scoring algorithms to create a variety of strategies and thematic models. These algorithms, each composed of dozens of fundamentals-based factors, are used to identify stocks that we believe exhibit desirable attributes, yet appear to be undervalued.
- We rely on scientific hypothesis testing, rather than regression, data-mining, or curve-fitting, to test our scoring algorithms. Algorithms are tested on a regular basis on our FSYS platform, using an adaptive process to help us ensure that our scoring algorithms remain effective in a dynamic market.
- Our strategies and rankings are based on relevance scoring, rather than filtering or sequential elimination, which allows us to identify our top-ranked or bottom-ranked stocks for any strategy. Each stock in a 5,000-plus universe is measured against other stocks in dozens of categories, verified with external sources, and ranked in order of best opportunities for the current market based on our scoring methodology.
- All Sabrient algorithms and strategies have a forward-looking emphasis, rather than simply screening historical trends. The Sabrient Outlook Rank plays a primary role in our strategies. The Outlook Rank is based on current and forward valuation, historical and projected growth metrics, the dynamics of Wall Street analysts’ consensus estimates and revisions, and the Sabrient/Gradient Earnings Quality Rank (EQR).
The qualitative methodology of our subsidiary Gradient Analytics has expanded Sabrient’s capabilities into the areas of financial analysis, forensic accounting, and executive behavior.
Gradient publishes unbiased insights into the financial performance and equity valuation of public companies selected from more than 15,000 liquid publicly-traded companies globally. Gradient analysts identify key indicators of underperformance and outperformance, research that is relied upon by mutual fund managers, hedge fund managers, and other professional money managers.