Introduction to Alpha Picks Review
In search of Alpha’s newest product, “Alpha Picks,” it aims to give you a hint of the best stock picks before they shoot up. Let’s review Alpha Picks and see how they compare to the competition.
Predicting where the stock market is going is… difficult. You can look at the charts all day. You can draw trend lines, calculate moving averages, perform technical analysis, consult shamans, sacrifice goats, see if Warren Buffet sees his shadow, etc., etc.
Many people prefer to park their money in a 401(k) or hand it over to money managers who may or may not know what they’re doing. There’s nothing wrong with that, not everyone has the time, experience or testicular fortitude to take their wallet into their own hands, but even the most steely ones need a little third-party advice based on a rigorous analysis at times.
On that note, may we introduce you to our friend Alpha Picks?
Alpha Picks, the newest service from the mad geniuses at Seeking Alpha, is designed specifically for investors looking to turn market noise into useful information.
If you’re familiar with Seeking Alpha, you already know how much cognitive firepower they bring to the table. If you are not familiar with Seeking Alpha
you should be ashamed of yourself here is a quick overview.
How to search for alpha Search Alpha
Seeking Alpha is a website, community and crowdsourced research platform made by and for investors. The site is home to the world’s largest investment community, with 20 million visitors each month, and offers an unprecedented variety of analysis, market-specific news and investment tools that rival those found in trading terminals of Wall Street.
In addition to all of the above, Seeking Alpha is also home to possibly the largest collection of collective investment theses written, reviewed and debated by professional investors. About 7,000 well-vetted contributors publish more than 10,000 investment ideas each month, each of which is reviewed by Seeking Alpha’s editors to ensure that each post meets their quality standards.
If that wasn’t enough, Seeking Alpha also hosts news, discussion and data-driven analysis on small-cap stocks, commodities, ETFs, cryptocurrencies and almost any other security in the market. And if you want to dig even deeper, Seeking Alpha’s PREMIUM membership gives you access to a frankly insane amount of investment ideas, data visualizations and author, quantity and dividend scores, plus the ability to track of the performance of individual authors.
In other words: it’s heaven quant.
Now that you have an idea of where their information comes from, let’s get back to the reason we’re all here: Alpha Picks.
What makes Alpha Picks different?
Finding great stocks to buy on Seeking Alpha can be a bit like panning for gold. It can take a while to sift through all the good stuff to get to the really great stuff, and there’s so much valuable information that the market could have advanced by the time you’re done reading the research, scanning the charts, and checking it out. out of all discussions.
If you’re thinking it would be great if Seeking Alpha had a service that did all the gold digging for you and just delivered you the biggest, shiniest nuggets, guess what: they’re two steps ahead of you.
Alpha Picks is a subscription service that Seeking Alpha designed for this exact purpose. It takes all the information from the Seeking Alpha Quant model and filters it down to the two stocks with the most potential for positive stock price growth each month.
Many stock selection services hide their methodology for various reasons: to create mystique, because they are afraid that someone will steal their proprietary recipe, because they identify with the Wizard of Oz. The wizard of Oz, etc, but not the Alpha options. Their methodology and stock criteria are completely transparent, and their results speak for themselves.
But don’t take our word for it. Here’s a quick overview of how Alpha Picks compares to two of the most prominent stock-picking services out there: The Motley Fool and Zacks.
Alpha Picks Review: Stock criteria
To qualify for Alpha Picks, a stock must:
- Maintain a Strong Buy Quant rating for a minimum of 75 days
- Have a market capitalization of $500 million or more
- List as common shares on standard stock exchanges
- Have and maintain a stock price of more than $10 per share
- Not having been previously recommended for at least one year from the time of selection
The motley idiot
To qualify for a Motley Fool recommendation, a stock must…
The Motley Fool does not make its stock selection methodology available on its website. Or maybe they do if you pay for their premium services, but who knows?
Zacks has a list, the Zacks Rank, that rates stocks from 1 (strong buy) to 5 (strong sell). It apparently uses a set of formulas to leverage revisions to earnings estimates to predict stock price growth and assigns letter grades (AFs) for any stock’s value, growth and momentum.
The good stuff, the Zacks Rank #1 list, is hidden behind a paywall, but presumably works just like the regular Zacks Rank.
To qualify for the Zacks Rank #1 list, a stock must:
- Pass some quantitative test
- Get high marks in their equity research reports
- Do this through their highly rated Earnings Estimates Review formulas
So essentially, Zacks is very much like the Motley Fool when it comes to hiding their methodology.
Alpha Picks Review: Portfolio process
Alpha Picks is designed for investors who like to buy and hold stocks for longer periods of time, and their process reflects this ethos.
- A stock is selected on the first trading day and the nearest trading day after the 15thth of each month
- Stocks that have fallen into Sell or Strong Sell territory will be sold at the beginning of each month
- Stocks that have a neutral rating for more than 180 days will also be sold
- The (simulated) cash generated from dividends and asset sales will be immediately reinvested
- Stocks that have doubled in price since purchase receive a sell or strong sell recommendation, although only the initial investment will be sold
- A stock will be sold if another sell or strong sell is triggered while the stock is less than double the value of the initial investment
Pretty simple, right?
The motley idiot
Once again, the methodology for the Motley Fool portfolio process is hidden (possibly behind a paywall). The closest we have is the six-step investment philosophy on their website:
- Buy over 25 companies over time
- Hold shares for more than five years
- Add new savings regularly
- Maintain market volatility
- Let your winners run
- Long-term profitability objective
It’s not entirely clear whether Zacks follows the same portfolio-based model as Alpha Picks and the Motley Fool, though again there may be more clarity hidden behind its paywall. That said, it’s probably safe to assume that their portfolio process, if any, is based on their Zacks Rank #1 list.
Alpha Picks Review: performance
Although they are packaging Alpha Picks as a new product, Seeking Alpha Quant Rating has been collecting rocket stocks for years. With Alpha Picks, you’ll get the cream of the crop from their top-rated Quant stocks. So if you take a look back at their top-rated quant stocks since 2010, you get this mind-blowing chart:
You don’t have to be a mathematician to appreciate numbers like this.
The Alpha Picks portfolio has returned over 470% since 2010 compared to a 290% return for the S&P 500 as a whole, meaning Alpha Picks has outperformed the S&P 500 by 180% over the past 12 years .
The motley idiot
The Motley Fool measures their returns since their inception in 2002 instead of 2010 by Alpha Picks, but the time periods don’t have to be exactly the same to get a sense of their overall performance.
According to their site, stocks picked by the Motley Fool have outperformed the market by 3 to 1 over the past 20 years. Their ads and other content on their site make it a little harder to tell what’s what: one ad says “STOCK ADVISOR VS S&P 500 +400% vs +128%”, what, what?, so let’s go with the 3 to 1 figure.
The Zacks website says stocks that Zacks ranks as No. 1 Strong Buys have outperformed the S&P 500 by an average of 13.9% each year since they began picking stocks 34 years ago.
It’s hard to offer an apples-to-apples comparison here, but suffice it to say that all three services do a good job of beating the market.
A subscription to Alpha Picks will give you two top-quality stock recommendations per month for a discounted rate of $99 per year. Its actual (non-discounted) price is $199 per year, so you should be sure to take advantage of the discounted rate while you can.
The motley idiot
The Motley Fool’s Stock Advisor service is $199 per year, but that’s not the only service they offer. Their Epic package, which gives you access to Stock Advisor, Rule Breakers, Everlasting Stocks and Real Estate Winners is $499 per year, and their other services range from $100 for a one-time stock recommendation to a option called One, which offers full access to all its services for $13,999 per year.
Zacks services range from $249 per year for Zacks Premium, $495 per year for Zacks Investor Collection, and $2,995 per year for Zacks Ultimate, giving you access to virtually everything Zacks has to offer.
There are many quality stock picking services out there and Alpha Picks is hitting the road with the best of the best. Alpha Picks gives you all the research and quantitative excellence you expect from Seeking Alpha, a promising portfolio with a transparent and rigorous methodology and a price that will pay for itself in no time.