Part I: How to build a research system on a shoestring
Hello, Ultimate Value readers!
I am often asked about my process for generating ideas. As a private investor, I enjoy being scrappy and finding cheap/free tools to screen for interesting stuff. So, I thought I would share a few helpful tips, tools, and tricks I’ve learned.
If you find this useful, I would appreciate it if you share it with a friend or a colleague. And please leave a comment below with some of your favorite tools, etc. Thanks!
Sell-side research (free)
Most investors might not be aware, but you can get sell-side research for free if you open an account with the right broker. Here is a list of the available research.
Evercore ISI - access via Interactive Brokers (fee waived if you trade enough)
Morgan Stanley - open account via ETrade ($0)
Wells Fargo - open account via WF Securities ($30/yr)
BofA - open Merrill Edge account ($0)
Citibank - open Citi Self Invest account (I’ve heard this requires $$$)
JPM - open a self-directed JPM account ($0)
Stifel - sign up for Stifel Wealth Tracker ($0)
Morningstar research - via a Schwab or Interactive Brokers account ($0)
Valueline - access via your local library, often online ($0)
Google Alerts (free)
Site: google.com/alerts
I think Google Alerts is one of the most underrated investing tools. It is very easy to set up. You specify the term you are interested in, and Google will send you an email (I like daily) that compiles news stories with that matching term. If used right, I think it’s very powerful. The caveat is that it takes time and work to sift through these, so you must be patient.
While I don’t want to give away all of my secrets, I have Google Alerts set up with terms such as:
Strategic review
Strategic alternatives
“activist”
“spin-off”
You get the gist. If you do a lot of special situation investing, look back at old press releases and observe what common terms are used. Another idea is to set up alerts that follow specific funds or specific people if you like to follow activists into names.
Let me know what terms you like to screen for in the comments below!
Finviz (free)
Site: https://finviz.com/
Finviz is my default view of what’s happening in the US market on any given day.
As an investor who looks at inflections, I like to quickly browse through stocks that are making big moves (either up or down) and quickly scan the headlines to see if anything catches my eye. I also like to see which names are making 52-week highs and lows to understand what industries are performing well.
Twitter (free)
If you’ve followed me for a while, you will know I love Twitter. I think it’s likely the most powerful research tool I have at my disposal.
While the platform might contain a lot of nonsense, if you carefully curate a list of investing accounts, you might come across some interesting ideas.
If you are not on Twitter, I will share a few of my favorite accounts to get you started:
@clarksquarecap - Clark Square Capitalthat’s me!
@agnostoxxx - Le Shrub incredibly sharp takes and ideas. Also very funny!
@toffcap - ToffCapshares fantastic compilations of interesting special sits.
@NeckarValue - Frederik Gieschen great financial musings / historical takes.
@stockjabber - Edwin Dorsey is a must-follow for short ideas.
@MikeFritzell - Asian Century Stocks a must-follow for anything Asia.
@ideahive - Idea Hive great at compiling ideas from Fintwit.
@StockCompil - great at compiling ideas from investment letters.
@evfcfaddict - very generous with idea generation.
@WTCM3 - interesting tidbits on stocks/industries.
@BLyons151 - shares great scuttlebutt on specific names.
@puppyeh1 - the special situation king is definitely worth following.
@acidinvestments - great write-ups on special situations.
There are easily another hundred or so accounts I would urge you to follow, but I will save some for the next part.
Twitter Search (free)
Twitter search can also be a very useful tool for finding specific tickers when examining an idea for the first time. Often, you think you’ve found an obscure idea and then realize that somebody has already shared some thoughts on it—which can be quite useful!
Remember to use filters when searching to minimize the amount of spam you have to go through. You can choose to filter by the accounts that you already follow. This option is available at the top right corner of your screen when you search through the Explore tab.
The advanced search is an underrated feature that allows users to filter tweets by various criteria, including user, minimum likes, links included, date, and more. For example, if you want to find the most popular tweets from Clark Square:
Type "@clarksquarecap” in the “from these accounts” box
Input a number, say 200, into the “minimum likes” box.
The search then looks like this:
Pretty cool, no?
You can kick it up a notch by bookmarking the link generated with the advanced search so you can more easily monitor specific situations.
EdmundSEC (free)
Site: https://www.edmundsec.com/
EdmundSEC is a new tool I recently discovered that could potentially serve as a free BamSEC replacement.
The tool is very useful for US-listed securities. You can easily pull filings (10-Ks, 10-Qs, 8-Ks) and transcripts and search through filings. The best feature, in my opinion, is the ability to find (and download/merge) similar tables. This is very useful if you like to build models manually, like I do.
Alright, that’s it for now! I will keep updating this series over time with more helpful tools and tips.
Thanks for reading!
I use Google spreadsheets a lot as well. I fear the day they will discontinue that.
I am lucky enough to be able use Bloomberg but this is a great list of alternatives, thx for sharing