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Why Eliot Spitzer wants to track analysts' ratings

Some stock analysts are proven right and some are proven wrong, but luckily for the latter it's not always easy for investors to keep track.

TipRanks, backed by former New York Gov. Eliot Spitzer, is looking to change all that.

The company is working to add transparency to stock recommendations by using grading algorithms to measure the performance of the analysts behind them, while also monitoring and analyzing insider transactions.

"We basically allow investors to filter out the noise and see who are these people who know how to time when they're buying stocks," TipRanks founder Uri Gruenbaum told CNBC's "Closing Bell" on Friday.

Elliot Spitzer
Adam Jeffery | CNBC
Elliot Spitzer

Of course, studies have shown past performance might not be the best indicator of future results. However, Gruenbaum and Spitzer defended TipRanks' services by pointing to the returns revealed in back-testing advice from 2011 to 2015.

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Following the buying and selling of the site's top-ranked insiders yielded a return of more than 5 percent in one month, compared to the mark of just under 1 percent that came from following all insiders, according to Gruenbaum.

For Spitzer, who also serves on the company's board, TipRanks helps weed out all of the misinformation that might surround stocks.

"You see which analysts are good and which are bad, who you should completely ignore," he said Friday, also on "Closing Bell." "What you do with it is up to you, but this is information transparency the way nobody else provides it."