The Analyst Ratings Portfolio shows how an analyst’s stock ratings would have performed as a simulated portfolio.
Instead of giving each rating a small fixed amount, the portfolio is always fully allocated across the analyst’s currently active ratings. This makes the performance easier to compare between analysts who rate many stocks and analysts who rate only a few.
Portfolio concept
Each analyst starts with a virtual balance of $100,000.
When the analyst has active ratings, the full $100,000 is allocated across those ratings based on rating strength.
If the analyst has no active ratings, the portfolio remains in cash until a new rating is issued.
A Strong Buy or Strong Sell receives twice the allocation of a regular Buy or Sell.
The portfolio is divided between all active ratings according to their weights.
Rebalancing
The portfolio is rebalanced whenever the analyst’s active ratings change.
This can happen when:
- the analyst issues a new rating
- the analyst changes an existing rating
- a rating expires
- a rating is reversed from Buy to Sell or from Sell to Buy
After each change, the portfolio recalculates the correct allocation across all active ratings.
Rating expiration
Each rating remains active for 100 days.
If the analyst does not update the rating within 100 days, the rating expires and the position is closed.
When a rating expires, the portfolio is rebalanced across the remaining active ratings.
Rating reversals
If an analyst changes direction on a stock, the existing position is closed and the new position is opened.
After the reversal, the full portfolio is rebalanced across all active ratings.
Why this method is used
This method is designed to make analyst performance more comparable.
Under a fixed investment model, an analyst with only one good rating may show a small portfolio gain because most of the portfolio remains unused.
With this model, if an analyst has one active rating, that rating receives the full portfolio allocation. If the analyst has many active ratings, the same $100,000 is divided across them.
This means the portfolio reflects the analyst’s active opinions rather than the number of stocks they cover.
Important notes
The Analyst Ratings Portfolio is a simulation. It does not represent actual trading activity, investment advice, or a real-money portfolio.
Performance may be affected by:
- the timing of ratings
- the number of active ratings
- rating strength
- long and short exposure
- rating expiration
- market volatility
The portfolio is intended to help users understand how an analyst’s ratings would have performed using a consistent set of rules.