Profit from the Stock Markets Fastest Growing Companies…

Emulate Our Long|Short Portfolio and Start Generating 62.2%/Year Avg Return Trading Just Five Stocks/Week, Fully Hedged by the Russell 2000 Index.

Capital Growth: Jan 2010-Oct 2018 (Starting Cap: $10K)

SmallCap Portfolio - Equity Growth

Plus: Nine Years of Consistent Market Beating Performance

SmallCap Portfolio - Yearly Performance

Week-by-Week Profit/Loss (%): Jan 2010-Oct 2018 (Total 460 Weeks)

SmallCap Stock Portfolio - Week by Week Performance
  • Trades Just Five Stocks, Issued 8pm Every Sunday.
  • Fully Hedged by Short-Position in Russell 2000 Index (IWM).
  • Average Annual Return 62.2%/Year Since January 2010.
  • Up 34.5% so far in 2018 (January to October).
  • Hedge Ensures Low Risk of Loss from Market-Downturns.
  • No Margin/Leverage Used (Low Risk).
  • Based on Fully-Automated, 12-Rule Algorithm.
  • Focused 100% on SmallCap Growth Companies.
  • Profitable in 9/9 Years Since Inception.
  • Outperformance vs the S&P500 Benchmark in 9/9 Years.

Powered by a Fully Automated 12-Point Algorithm…

At valuScreen, we have been developing stock trading strategies for over fifteen years, with a focus on capturing deep-value, fundamentally superior stocks we believe will consistently outperform industry-competitors, and the S&P500 index.

Our method of trading, captures five stocks to buy (updated every weekend), which are fully hedged by a short position of equal dollar value in the Russell 2000 index ETF (symbol: IWM)…

For instance, if we buy 5 stocks at $2,000 each (total $10,000), the position is hedged by an equal $10,000 short-position in IWM, providing a neutral long/short fully-hedged portfolio.

The hedge ensures very low risk from market downturns/crashes. Thanks to this prudent, long/short method of trading, our portfolio has grown by over 7,293% in nine years, with low downside risk.

Our proven approach to trading, powered by a fully-automated 12-rule algorithm, scans every NYSE/Nasdaq smallcap stock (market-cap of less than $2 Billion) to find our five-stock long positions, every week.

The scanner continually screens each stock against multiple deep-data company fundamentals.

This initial process captures the strongest, free-cash-flow generating growth companies, with healthy (low debt) balance sheets.

The algorithm then applies a second formula which combines price/volume indicators with pattern institutional-activity on only this group of pre-qualified stocks. Companies with the highest institutional/smart-money order-flow (relative to historical avg) are ranked highest.

The final list of top-five ranked stocks are emailed to our subscribers every weekend, ready for Monday’s open. The five-stock portfolio is always fully hedged by an equal-dollar value short position in the Russell 2000 Index ETF (symbol: IWM)…

Strong Company Fundamentals Take Centre Stage…

Built upon professional, time-tested valuation methods (inc discounted cash-flow and free-cash-flow-yield metrics), we developed our unique strategy by integrating 12 logical rules, taking into account key fundamentals that capture quality growth businesses with robust cash-flows and a healthy balance sheet, then applying price/money-flow signals to only this group of pre-screened stocks.

The result is a powerful, systematic method of investing, which zooms in on only high-probability stocks investors can focus on.

Moreover, it is this complete, fully-integrated method of intelligently timed entry into pre-qualified stocks, that has delivered continually positive returns, year after year…

Based on historical testing, the results have proven to demonstrate profitability every year since inception, and consistent outperformance against the S&P500 benchmark in 9 out of nine years. The below performance data show the net results from the fully-hedged portfolio…

  • Starting Capital: $10,000
  • Total Gains ($): $1,143,029
  • Total Losses ($): $413,698
  • Net Profit ($): $729,331
  • Win/Loss Ratio: 2.76
  • Return on Capital (%): 7,293%
  • Avg Return/Year (%): 62.2%

Note: The results shown are based on algorithmic, simulated tests. Always keep in mind, trading does involve risk, and past performance is not necessarily indicative of future results.

Only the Strongest, Free-Cash-Flow Generating Companies Make the Watchlist…

Based on a weekly stock screen applied to all 1,500+ smallcap stocks (with the exclusion of financial stocks), only those companies which meet a stringent 12-point criteria, make the watchlist.

The rules take into account key company fundamentals, derived from each company’s quarterly profit/loss, balance sheet, and cash-flow statements. Our fully-automated algorithm applies very specific quirks to how company data is read and interpreted. This deeper data-drilling into the metrics, in itself provides a distinctive edge…

For instance, we prefer to focus on gross profits (and margins) as opposed to just the sales revenue. We look specifically for current and expected improvements in free-cash-flow margins, instead of just looking blankly at EPS growth/expectations.

We dissect comparative value measures such as free-cash-flow-to-enterprise-value yield (FCF/EV), which provides depth and accuracy (as this takes into account both market-cap and total debt baked into the equation), towards measuring cross-industry valuation multiples. This provides a superior edge, than relying on the more commonly used, and intrinsically flawed price-to-earnings (or P/E) ratio.

In addition, the algorithm compares a company’s price/sales (P/S) ratio, relative to the cross-industry median. Only those stocks which exhibit a lower P/S ratio (offering potential ‘deeper value’) relative to it’s peers get through to the final watchlist.

Most critically, we identify the strongest buy-side signals coming into each of these pre-qualified stocks, from the money-flow activity of notable institutional funds (the smart money). This is what ultimately triggers the ‘strong-buy’ signals in our top-five ranked stocks.

The Top Five Stocks Published 8pm Every Sunday…

The entire process is fully automated. You do not need to worry about every mathematical ratio, or complex fundamental or technical indicator. Once the screener is applied, the results place every qualifying stock, based on the precise screening rules, into the watchlist.

The results are then ranked (re-sorted) in order of highest positive change in institutional money-flow, relative to historical levels.

The stock with the highest relative money-flow is placed at the top, then the next highest, and so on. The top-five stocks from the results are noted. These are the stocks bought on the Monday, and held over a one-week period, fully hedged by the Russell 2000 ETF…

SmallCap Stocks - Top Ranked Stocks

The Entire Five-Stock Portfolio is Fully Hedged by the Russell 2000 Index ETF (IWM)…

Our five-stock portfolio is permanently hedged by the Russell 2000 index ETF (symbol: IWM). This is critical to ensure we are not exposed to any naked market risk. It is inevitable there will always be downturns in the overall stock market.

Hedging a stock (or entire portfolio) is a simple, logical process, as explained in the below example…

Imagine you are bullish on Apple stock. To capitalize on this speculation, you enter into a new long (bullish) position in the stock.

Now, despite Apple being a fundamentally strong company, it is never immune to impact from the wider economic cycles of boom and bust. At any time, the stock market can take a hit. This could be due to any number of reasons. For instance, Interest rates moving higher, an over-inflated property bubble, an ensuing global recession, a trade war with China, or whatever.

One effective way professional traders reduce the risk of loss from a market downturn, is to enter the long position in the bullish stock (eg., Apple) as normal, but at the same time, enter a short position in a major market index, such as the S&P500 index, or the Russell 2000 index.

This is possible with instruments such as an exchange-traded-fund (ETF), which trade just like stocks, and can be shorted. By going long the bullish stock and short the index (both in equal dollar value), a trader is effectively hedging against the overall market risk, which includes major corrections, and market-crashes.

For example, assume the trader has a $5,000 long position in Apple, and a $5,000 short position in IWM. One morning, following a major event, all stocks generally open 10%-15% lower, with Apple opening 10% lower, and IWM also opening 10% lower…

The long Apple/short IWM pair-trade would of course, result in a loss on Apple (10% drop = $500 loss). But, at the same time, this would be countered by a profit on the IWM short position (10% drop = $500 profit). So, in spite of the crash, the trader comes out even.

Logic, Reason and Focus on Detail – Why the Method Works…

Based on both historical and forward testing, the method has proven to demonstrate consistent profitability every year since inception, and outperformance against every major stock index. There is good reason for this…

While there is some limited value to focusing entirely on company fundamentals, such as dissecting the profit/loss, cash-flow, and balance-sheet statements, applying machine learning logic to crunch the hundreds of line-items and raw numbers present within each company’s quarterly statement (then multiplied by 1,500+ companies), the solitary focus on fundamentals alone doesn’t cut it. It’s not enough.

Everything we know about fundamentals, from cash-flows, capital expenditure (capex), discounted cash-flows, free-cash-flow-yields, debt-to-capital ratios, inventory surplus/deficits, impact of projected interest-rates on the balance sheet, etc., has been rigorously tested.

This near-obsessive exercise of dissecting every fundamental metric and ratio provides some limited value. It allows our systems to identify companies which are ‘potentially’ undervalued (or overvalued), from a purely fundamental perspective. The process produces for us, a smaller (than the original 1,500) list of ‘quality’ companies which we can more practically focus on, and to which we can apply the next step…

The Game Changer…

What has worked for us, consistently, within historical testing, and in real-time trading, has been the integration of technical price/volume/money-flow factors, into our fundamentally qualitative watchlist of stocks.

What we have found is that no matter how great a company looks on paper, from a fundamental perspective, nothing moves the share price until the large hands (institutional/smart money-flow) start accumulating the stock above the normal (average pattern) activity.

There are intricate, intelligent methods of identifying these patterns…

With the same computing power we use for dissecting company fundamentals, we are able to measure in real-time, the price activity, market-depth, volume-at-the-bid, and volume-at-the-ask data. In other words, the ‘trading activity’ within individual stocks.

These pattern measures can be viewed and quantified by applying algorithms which measure this buy-side activity, and more specifically signal when the normal (average sample) pattern is disrupted. It is a critical element in knowing when stock prices are likely to move.

While tracking all 1,500+ smallcap companies is an ask, what is absolutely do-able (and practical), is to apply the price/volume/money-flow trackers to the focal list of qualifying, pre-screened stocks (usually around 40-50 stocks).

By firstly narrowing down the stocks to only those companies with the strongest cash-flow and balance-sheet fundamentals, and then applying the smart-money algorithms to only these ‘select’ companies, it is possible to capture optimal entry points into these stocks.

Start Receiving the Latest Five-Stocks – Published 8pm Every Sunday…

We publish and email the top-five ranked stocks for the smallcap-portfolio around 8pm, every Sunday evening.

The portfolio is always fully-hedged by a short position in the Russell 2000 index ETF (symbol: IWM). Full information will be provided to subscribers on how to short the Russell 2000 index (IWM), to protect the five-stock portfolio against market risk.

To sign up, please click on the ‘Subscribe’ button below. If you have any questions, please get in touch with us, at any time.

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