Q/A Interview with Patrick Kuczynski, CFA, Co-Founder of ShareAlpha.
ShareAlpha is a new proprietary stock discovery and investment strategy screener offering its solutions exclusively through business partners.
I sat down with Patrick Kuczynski to discuss his newest project, ShareAlpha, which will shortly be a partnered tool for stock and strategy discovery on Hashtag Investing. ShareAlpha will allow members to discover new stocks and strategies through a proprietary quantitative analysis system. You'll be able to select inputs like factors, legendary investors like Warren Buffett, and other trading strategies to discover new winning stocks and portfolio's.
1. Can you tell us a little bit about your backstory and how you ended up being the co-founder of ShareAlpha?
We actually met while we were both working together at a Montreal-based asset manager. We both have years of experience in institutional investments. I’ve taken more of a fundamental approach, working in equity research analyzing companies in great details. My co-founder, on the other hand, has taken more of a quantitative approach by working as an equity and derivative broker at a Bank, and later as a quantitative investment analyst.
We actually started with an investment picks’ marketplace provided by professional investment analysts and decided to join the Founder Institute together to validate our business in September of 2017. However, in early 2018, we decided to move away from the marketplace concept given initial scaling difficulties at growing two userbases simultaneously. We therefore started to focus on providing as much value as possible to do-it-yourself investors. Now, we are offering our stock and etf screeners exclusively through business partners targeting discount / online brokers, discretionary portfolio managers, financial blogs, other invest-techs, investor communities, investment newsletter services, etc. In fact, we are now in the process of rolling out our tools to a few partners that cater to thousands of investors.
2. Tell us about ShareAlpha. What is it and how will it help investors?
ShareAlpha is a stock discovery and investment strategy screener catered to beginners and up to the more advanced stock pickers. We are democratizing investment management services to independent investors focusing initially on finding the best stocks tailored to investors’ investing style.
Most do-it-yourself investors are time constrained yet want to maintain control over their investments. The #1 thing they are looking for is the next great stock that also matches their investing style. Most DIY investors look for opportunities through friends, investment groups or forums. However, you soon notice that many of the same stocks always resurface (Facebook, Google, Apple, etc.). Plus, even if you hear of a new stock, you do not necessarily know whether it fits your particular investing style until you delve more into it and potentially waste time.
Using our own proprietary ranking, each stock is scored relative to all other stocks in Canada and the US. For example, if you do not like too many ups and downs in your portfolio and focus mostly on quality companies, you can simply click 2 factors to get your low-volatility quality stock screener to instantly receive up to 25 of the best rated investment ideas with those 2 factors. It is very easy to use and saves tremendous amount of time in finding stocks that matter to you. This time can then be better spent further researching these stocks.
On top of that, we show you the 3-year performance and risk-adjusted metrics of following any of the strategies in either Canada or the US. Sometimes what works in Canada might not work as well in the U.S. due to structural differences in the institutional investor base in those markets, something that you would never have uncovered except using a service like ours. So not only do you have a list of new stock ideas each month, but you can also rapidly determine whether your investing style provides a return at a level of risk you are comfortable with. If not, you can adjust your filters to find something that satisfies you more as DIY investor.
3. What is the best way for an investor to benefit most from this kind of tool?
To benefit the most out of our tools is to truly experiment and question why you are investing the way you are. Is it because it fits you the best? Someone recommended you to invest in this way? Are you still learning and are discovering yourself as an investor? If your curious, like a good DIY investor should be, then you should stay open-minded to new stock ideas and investment strategies.
At a minimum it can help you find stocks that match your investing style whereas it can also improve your investing methodology. Some strategies posted gross returns of over 100% in a single year while taking much less risk than one would expect from such a return. You can also see which strategies have outperformed the market under different market conditions.
Also, we have rule-based strategies, so if your someone that reacts strongly to “fear of missing out” or you get especially nervous when your portfolio is declining, following a rule-based strategy allows you to better cope with emotions that is often a strong source of bad performance for investors. We are our own worst enemy when it comes to investing.
4. What makes ShareAlpha different from other similar tools online?
The vast majority of screeners basically eliminate companies that do not pass your specific criteria. For example, if you use 2 minimum filters such as earnings growth of 10% and operating margin of 12%, then you will have all stocks with those 2 filters. You can then sort these stocks either by the growth rate or the margin, but not both.
At ShareAlpha, we score each stock relative to the Russell 3000 and the S&P/TSX based on several factors. You can then select all factors such as “momentum”, “profitability”, “quality” and more to get the top ranked stocks with the highest combined scores. In other words, if the investor is shown a list of 10 stocks, the stock on top of the list is the stock that should be looked at first because it matches his investing style the most. This “multi-sorting” feature is what attracts investors to ShareAlpha.
Also, since our scores are updated monthly, when a stocks’ score declines significantly in the factors that are desirable to the investor that can cause the stock to be removed from the top picks for you. It therefore provides the investor with a sell signal, which is unique since most services focus on the “buy” decision only whereas our screener gives you insights into both the “buy” and “sell” decision.
I think the combination of these things make our stock screeners very attractive to most investors whether they are beginners or more advanced.
5. What features are you looking to roll out in the future?
We are very excited about our new features. This week we actually released an income screener to find the best dividend stocks based on your investing style. With our proprietary rankings, you can combine factors such as “profitability” and “quality” to find the most profitable and highest quality stocks that also pay a good dividend yield. You can therefore weed out companies that offer unsustainably high dividends and get a curated list of stocks that matter to you for further research.
Also this week, we launched a stock finder that allows you to find new investment opportunities based on the investment style of legendary investors such as Warren Buffet, Peter Lynch, Benjamin Graham, Joel Greenblatt, and more with even more legendary investors to come. In the future, there will be many investment styles covered such as value, growth, dividend, special situations, contrarian, quant, and much more, and we will continue to build our list of legendary investors based on what our investors want to see. This allows investors to have a pre-vetted listed of new stock ideas inspired by the stringent criteria of these legends, which investors already trust, and therefore cutting on their screening time exponentially.
We are also a very open-minded business. We are for DIY investors by DIY investors. We are always open to suggestions, so feel free to send us an email at info[at]sharealpha.co with any ideas and comments.