Analyst-Ranking App Geared Toward Retail Investors
Analysts just got a new scorecard for their stock-picking performance.
An Israeli company, TipRanks, launched a free tool Tuesday that rates more than 5,000 sell-side analysts based on their past recommendations.
The app is aimed at helping individual investors better assess analysts' performance before deciding to follow their advice. Users also can search any stock to view the most successful analysts' recommendations.
TipRanks co-founder and CEO Uri Gruenbaum said that the motive behind making the product was simple—and personal: He was sick of losing money on poor investments.
"The bottom line is I invested in some stocks and I started losing money, and when I tried to figure out why I was losing money I realized I had bad stock-picking advice," Gruenbaum said.
While institutional investors can use products from Thomson Reuters and Bloomberg to review analysts, retail investors have to do a lot of research before they get an accurate picture, he said. TipRanks, which is not affiliated with any investment firm, is a resource that will help those investors make better decisions, Gruenbaum said.
Users download the application from TipRanks website. The app works within your browser, so whenever you view a story from a business news website that mentions an analyst TipRanks follows, a display window appears that you can click on to get performance and ranking information.
Rankings take success ratios and average return on buy/sell recommendations in account. Both factors are compared with the S&P 500, so if the market goes up, rankings rise only for those analysts who outperform it.
The app works on Chrome, Firefox, Internet Explorer and Safari browsers; it supports 44 websites, including CNBC, Bloomberg, Reuters, MarketWatch, The Wall Street Journal, Yahoo Finance and CNN Money.
Gruenbaum said that he developed the program behind the app with TipRanks CTO Gilad Gat and Roni Michaely, a finance professor at Cornell University.
TipRanks plans to expand its coverage of sell-side analysts, and to include technical analysts and financial bloggers.
"We want to be everywhere," Gruenbuam said. "We want to be the individual investor's best friend."