Xalgo5 brings you detailed independent analysis of accounting related risks that is thorough, insightful and clear. Improving our clients' research efforts, knowledge and risk management is the foundation of our process. Xalgo5 ideas are often undiscovered in the market and are a great source of absolute short return. Most external research can be biased in the form of “Buy, Hold, Sell” recommendations. We offer probabilities to identify deteriorating accounting trends.
Xalgo5 identified 27 stocks out of 625 stocks within the Healthcare sector for the fiscal year end of 2014 that had a negative impact over the course of 2015. The average annual return was a total of -39.16% (Figure 1) with a peak –56.23% based upon the worst month from the date the stock filed their annual report with the SEC.
These impacts were typically earnings surprises or the commencement of class action lawsuits. Our process is a unique lens that identifies the corrosion of accounting fundamentals by identifying financial anomalies found on the annual reports of public companies. Xalgo5 can provide a probability that a negative impact will occur for a stock over the next year. Below (Figure 2) is the 12 month return of the 5 stocks identified by Xalgo5 on the reported release date of the annual report with the SEC.
This is done by analyzing more than 50 data points, 72 ratios and over 500,000 different combinations linked via a proprietary algorithm developed to help identify financial anomalies that may be calculated into a stock price. Once the anomalies are identified, Xalgo5 assigns a probability and rolls it into an overall score that allows our users to quickly target those specific stocks for further research (Figure 3).
In conclusion, the S&P 500 was down 0.69% for 2015 and Xalgo5 picks were down -39.16%.