What Tickerscores Means for Investors
For individual investors using this tool, having some idea of the predictive validity (i.e. how well a given Tickerscore predicts financial success of a particular company) is crucial in determining the value of the tool. While backtesting data is limited, the early results tested against the Gold Bugs Index (HUI) and and the Junior Miners ETF (GDXJ) do show some promise in terms of reflecting how the market is also valuing companies with higher Tickerscores (>60) versus those with lower Tickerscores (<40). It will take more time and testing to see whether these results hold water, but it is nonetheless fascinating to see the data and the model starting to complement one another.
Then there are other factors to consider. Each Tickerscore gets generated within a particular economic set of conditions. Interest rates, currency rates, broader market forces and supply/demand for underlying commodities are just some of the factors that substantially impact the valuation of a particular company. The underlying model looks backwards as well as forwards andas such, the comparability across time diminishes as the interval of time increases. Each time a Tickerscore “snapshot” is generated, it is based on the trailing quarters numerical picture and the economic conditions in which the score was generated as well as the future expectations on the company’s prospects. Further, as more information about the future becomes known, the model needs to update and/or factor in changes to assumptions about the future.
Thus, for users of the Tickerscores tool, it is important to understand that while it may reduce the amount of research time required to ‘spot’ interesting opportunities, due diligence (and therefore time) is still required when looking into particular investment suitability.
At several hundred dollars per year for a subscription, Tickerscores will still have to compete with and establish itself as a research tool in a very competitive research market in which armies of analysts are also wrestling with many of same questions.
What Tickerscores Means for Industry
Of course, anytime any analyst or ranking evaluates companies there are bound to be more than a few eyebrows lifted.
By evaluating all the companies in the junior precious metals space there are bound to be those that, based on their ranking, will either celebrate or criticize the tool. When the CEO of Visual Capitalist Jeff Desjardins was asked about the impact on those companies being ranked, he stated “I’d rather ruffle a few feathers early on and have people get used to it.”
The success or failure of tools such as Tickerscores rests in large part on the strength of the research and analysis. For professionals, what’s under the hood (i.e. the model that underlies the analysis) is sure to spur debate and curiousity among analysts and business valuation experts.
As such, more testing and data validation on performance will probably be required in order for analysts to make an informed assessment on the models and how or if they can fit Tickerscores into the suite of tools they typically turn to or would endorse.
Mining and exploration companies are also likely to going to have to be prepared to speak to and understand how these scores will impact investor perception of their company as an investment.