StarMine:
Methodology
Show Methodology for 2013, Asia
2013 STARMINE ANALYST AWARDS*
METHODOLOGY FOR ASIA
*(based on 2012 results)
StarMine objectively measures the performance of analysts based on the returns of their buy/sell recommendations and the accuracy of their earnings estimates. The 2013 stock picking awards for Asia are based on the 2012 calendar-year performance of recommendations. The 2013 awards for estimating performance are scored on the fiscal period that reported between 01 April 2012 and 31 March 2013 (typically FY December 2012). Only analyst performance on companies that are based in Asia is included in the awards calculations.
DATA SOURCE
StarMine's awards for Asia are based on the estimates and recommendations as recorded in the Thomson Financial I/B/E/S database. StarMine uses the GICS (Global Industry Classification System) for its industry definitions. In some instances in Asia, the GICS has resulted in industries that are not large enough for ranking purposes. When this has been the case, StarMine has combined multiple industries to reflect the way analysts organize their coverage for Asia. For example, StarMine's "Health Care" industry is a composite of the following GICS industries: Biotechnology; Health Care Equipment & Supplies; Health Care Providers & Services; Health Care Technology; Life Sciences Tools & Services; and Pharmaceuticals.
INDUSTRY STOCK PICKING AWARDS
Analysts are ranked according to their Industry Excess Return, computed from a portfolio simulation that measures each analyst relative to an industry-based benchmark. The top three qualifying analysts in each industry receive an award.
Calculation of Industry Excess Return: All analyst returns are calculated relative to the return on a market capitalization-weighted portfolio of all of the stocks in a given industry.
For comparison purposes, StarMine builds a non-leveraged portfolio for each analyst based on his recommendations. For each "Buy" recommendation, the portfolio is one unit long the stock and simultaneously one unit short the benchmark. The result gives the analyst credit for the amount by which the stock outperformed the benchmark. "Strong Buys" get a larger investment of two units long the stock and two units short the benchmark. "Holds" invest one unit in the benchmark (i.e., for an excess return of zero). "Sells" are the reverse: long the benchmark and short the stock. "Strong Sells" get a larger investment of two units long the benchmark and short the stock. The portfolio return is opportunity adjusted to facilitate a fair comparison of analyst performance regardless of their coverage universe.
The resulting portfolio is rebalanced each month and whenever the analyst adds coverage, drops coverage, or changes a rating.
Qualification Criteria: To qualify for a 2013 Industry Stock Picking Award, an analyst must have met the following criteria:
(1) An analyst must have covered at least five stocks in a given industry throughout 2012. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.
(2) An analyst's industry return must have exceeded the return of the relevant industry benchmark. That is, his Industry Excess Return must be positive.
(3) An analyst must have delivered at least a 3-star performance on their overall coverage (i.e., for all industries covered), as measured by StarMine's Coverage-Relative Rating.
OVERALL STOCK PICKING AWARDS
Overall Stock Picking Awards go to the top ten qualifying analysts, based on overall excess return. To calculate overall excess return, StarMine uses the weighted average of each analyst's Industry Excess Returns, where weighting is based on the number of stocks the analyst covers in each industry.
Qualification Criteria: To qualify for the overall stock-picking awards, analysts must have covered at least five stocks. In addition, StarMine requires analysts to have earned at least a 5-star rating on their overall coverage (i.e., for all industries covered), as measured by StarMine's Coverage-Relative Rating.
OVERVIEW OF EARNINGS ESTIMATE AWARDS
StarMine's proprietary metric, Single-stock Estimate Score (SES), measures the accuracy of each analyst's earnings forecasts. SES is a measure of relative accuracy; that is, analysts are compared against their peers. An analyst's SES can range from 0 to 100, with 50 representing the average analyst. To get a score higher than 50, an analyst must make estimates that are both significantly different from and more accurate than other analysts' estimates.
SES takes into account many factors: the analyst's absolute forecast error, the analyst's error compared to other analysts, the variance of the analysts' errors, the timing of the estimates, and the absolute value of the actual earnings for the stock. SES is computed daily and aggregated to provide scores on individual stocks, industries (the Industry Estimate Score), and the analyst overall (the Overall Estimate Score).
INDUSTRY EARNINGS ESTIMATE AWARDS
To determine the winners of Industry Earnings Estimate Awards, StarMine ranks qualifying analysts based on their Industry Estimate Score for the stocks in a specific industry.
Qualification Criteria: To qualify for this ranking, an analyst must have had coverage on at least five stocks throughout 2012. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.
OVERALL EARNINGS ESTIMATE AWARDS
The ten qualifying analysts with the highest Overall Estimate Scores earn StarMine's Overall Earnings Estimate Awards.
Qualification Criteria: To qualify for StarMine's Top 10 list, an analyst must have had coverage on at least five stocks throughout 2012.
TOP BROKER AWARDS
Brokerage firms can win an award in any of three categories:
Top Three Brokerage Firms: Awards go to the three brokerage firms that have accumulated the greatest number of individual analyst awards in each of the three regions. If an analyst has changed firms during an awards year, performance is attributed to the firm where the analyst worked for the majority of the year.
Three Most Productive Brokers: Most Productive Broker awards go to the three firms that have earned the highest number of individual analyst awards relative to the total number of qualifying analysts in their firm. To be considered for this award, a firm must have a minimum of ten analysts who qualified for a 2013 FT | StarMine Analyst Award.
Top Global Broker:
The award for No.1 Global Broker for 2013 goes to the firm that had the best collective performance across the United States, Europe and Asia. Each firm's regional performance was normalized by dividing the firm's regional awards count by the number of awards won by the region's top broker. The regional scores for each broker were then totaled. The firm with the highest total score is the recipient of the No. 1 Global Broker Award.
ASIAN COUNTRIES COVERED
China, Hong Kong, Korea, Malaysia, Singapore, Taiwan.
METHODOLOGY FOR ASIA
*(based on 2012 results)
StarMine objectively measures the performance of analysts based on the returns of their buy/sell recommendations and the accuracy of their earnings estimates. The 2013 stock picking awards for Asia are based on the 2012 calendar-year performance of recommendations. The 2013 awards for estimating performance are scored on the fiscal period that reported between 01 April 2012 and 31 March 2013 (typically FY December 2012). Only analyst performance on companies that are based in Asia is included in the awards calculations.
DATA SOURCE
StarMine's awards for Asia are based on the estimates and recommendations as recorded in the Thomson Financial I/B/E/S database. StarMine uses the GICS (Global Industry Classification System) for its industry definitions. In some instances in Asia, the GICS has resulted in industries that are not large enough for ranking purposes. When this has been the case, StarMine has combined multiple industries to reflect the way analysts organize their coverage for Asia. For example, StarMine's "Health Care" industry is a composite of the following GICS industries: Biotechnology; Health Care Equipment & Supplies; Health Care Providers & Services; Health Care Technology; Life Sciences Tools & Services; and Pharmaceuticals.
INDUSTRY STOCK PICKING AWARDS
Analysts are ranked according to their Industry Excess Return, computed from a portfolio simulation that measures each analyst relative to an industry-based benchmark. The top three qualifying analysts in each industry receive an award.
Calculation of Industry Excess Return: All analyst returns are calculated relative to the return on a market capitalization-weighted portfolio of all of the stocks in a given industry.
For comparison purposes, StarMine builds a non-leveraged portfolio for each analyst based on his recommendations. For each "Buy" recommendation, the portfolio is one unit long the stock and simultaneously one unit short the benchmark. The result gives the analyst credit for the amount by which the stock outperformed the benchmark. "Strong Buys" get a larger investment of two units long the stock and two units short the benchmark. "Holds" invest one unit in the benchmark (i.e., for an excess return of zero). "Sells" are the reverse: long the benchmark and short the stock. "Strong Sells" get a larger investment of two units long the benchmark and short the stock. The portfolio return is opportunity adjusted to facilitate a fair comparison of analyst performance regardless of their coverage universe.
The resulting portfolio is rebalanced each month and whenever the analyst adds coverage, drops coverage, or changes a rating.
Qualification Criteria: To qualify for a 2013 Industry Stock Picking Award, an analyst must have met the following criteria:
(1) An analyst must have covered at least five stocks in a given industry throughout 2012. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.
(2) An analyst's industry return must have exceeded the return of the relevant industry benchmark. That is, his Industry Excess Return must be positive.
(3) An analyst must have delivered at least a 3-star performance on their overall coverage (i.e., for all industries covered), as measured by StarMine's Coverage-Relative Rating.
OVERALL STOCK PICKING AWARDS
Overall Stock Picking Awards go to the top ten qualifying analysts, based on overall excess return. To calculate overall excess return, StarMine uses the weighted average of each analyst's Industry Excess Returns, where weighting is based on the number of stocks the analyst covers in each industry.
Qualification Criteria: To qualify for the overall stock-picking awards, analysts must have covered at least five stocks. In addition, StarMine requires analysts to have earned at least a 5-star rating on their overall coverage (i.e., for all industries covered), as measured by StarMine's Coverage-Relative Rating.
OVERVIEW OF EARNINGS ESTIMATE AWARDS
StarMine's proprietary metric, Single-stock Estimate Score (SES), measures the accuracy of each analyst's earnings forecasts. SES is a measure of relative accuracy; that is, analysts are compared against their peers. An analyst's SES can range from 0 to 100, with 50 representing the average analyst. To get a score higher than 50, an analyst must make estimates that are both significantly different from and more accurate than other analysts' estimates.
SES takes into account many factors: the analyst's absolute forecast error, the analyst's error compared to other analysts, the variance of the analysts' errors, the timing of the estimates, and the absolute value of the actual earnings for the stock. SES is computed daily and aggregated to provide scores on individual stocks, industries (the Industry Estimate Score), and the analyst overall (the Overall Estimate Score).
INDUSTRY EARNINGS ESTIMATE AWARDS
To determine the winners of Industry Earnings Estimate Awards, StarMine ranks qualifying analysts based on their Industry Estimate Score for the stocks in a specific industry.
Qualification Criteria: To qualify for this ranking, an analyst must have had coverage on at least five stocks throughout 2012. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.
OVERALL EARNINGS ESTIMATE AWARDS
The ten qualifying analysts with the highest Overall Estimate Scores earn StarMine's Overall Earnings Estimate Awards.
Qualification Criteria: To qualify for StarMine's Top 10 list, an analyst must have had coverage on at least five stocks throughout 2012.
TOP BROKER AWARDS
Brokerage firms can win an award in any of three categories:
Top Three Brokerage Firms: Awards go to the three brokerage firms that have accumulated the greatest number of individual analyst awards in each of the three regions. If an analyst has changed firms during an awards year, performance is attributed to the firm where the analyst worked for the majority of the year.
Three Most Productive Brokers: Most Productive Broker awards go to the three firms that have earned the highest number of individual analyst awards relative to the total number of qualifying analysts in their firm. To be considered for this award, a firm must have a minimum of ten analysts who qualified for a 2013 FT | StarMine Analyst Award.
Top Global Broker:
The award for No.1 Global Broker for 2013 goes to the firm that had the best collective performance across the United States, Europe and Asia. Each firm's regional performance was normalized by dividing the firm's regional awards count by the number of awards won by the region's top broker. The regional scores for each broker were then totaled. The firm with the highest total score is the recipient of the No. 1 Global Broker Award.
ASIAN COUNTRIES COVERED
China, Hong Kong, Korea, Malaysia, Singapore, Taiwan.
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