System and method for evaluating securities and portfolios thereof

• US 20030212621A1
• Filed: 05/09/2003
• Published: 11/13/2003
• Est. Priority Date: 05/10/2002
• Status: Abandoned Application

• Current Assignee: Portfolio Aid, Inc.
• Original Assignee: Portfolio Aid, Inc.
• Inventors: Gilday, Neil, Poulter, John
• Application Number:
  US10/434,170
• Publication Number:
  US 20030212621A1
• Time in Patent Office: Days
• US Class Current: 705/36
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A computer-based system and method for evaluating securities of a company of interest in which quality and value composite measures are computed based on quality and value assessment measures for each company of a group of companies respectively. Output to the user based on the quality and value composite measures for the company of interest is generated, whereby the output reflects a valuation of the company of interest relative to other companies in the group.

Claims

1. A method of evaluating a security issued by a company of interest, the method to be performed by a computer, wherein the method comprises the following steps:

a) computing a value for one or more quality assessment measures for each company of a group of companies;

b) computing a value for one or more value assessment measures for each company of the group;

c) for each quality assessment measure, computing a first mean and a first standard deviation of the values therefor across all companies in the group and computing a relative quality score associated therewith for the company of interest, the relative quality score being a function of the first mean and the first standard deviation;

d) for each value assessment measure, computing a second mean and a second standard deviation of the values therefor across all companies in the group and computing a relative value score associated therewith for the company of interest, the relative value score being a function of the second mean and the second standard deviation;

e) computing a quality composite measure for the company of interest, wherein the quality composite measure is a function of the relative quality scores associated with at least one quality assessment measure;

f) computing a value composite measure for the company of interest, wherein the value composite measure is a function of the relative value scores associated with at least one value assessment measure; and

g) generating output to the user based on the quality and value composite measures for the company of interest, whereby the output reflects a valuation of the company of interest relative to other companies in the group.

2. The method as claimed in claim 1, wherein the relative quality score associated with each quality assessment measure is computed by dividing the difference between the first mean and the value of the respective quality assessment measure for the company of interest by the first standard deviation.

3. The method as claimed in claim 2, wherein the quality composite measure is computed as a weighted sum of the relative quality scores associated with at least one quality assessment measure.

4. The method as claimed in claim 3, wherein a plurality of user-defined weights are used to compute the weighted sum of the relative quality scores associated with at least one quality assessment measure.

5. The method as claimed in claim 1, wherein the relative value score associated with each value assessment measure is computed by dividing the difference between the second mean and the value of the respective value assessment measure by the second standard deviation.

6. The method as claimed in claim 5, wherein the value composite measure is computed as a weighted sum of the relative value scores associated with at least one value assessment measure.

7. The method as claimed in claim 6, wherein a plurality of user-defined weights are used to compute the weighted sum of the relative value scores associated with at least one quality assessment measure.

8. The method as claimed in claim 1, wherein steps (a) through (g) are repeated for each company in the group.

9. The method as claimed in claim 8, further comprising the steps of deriving a position on a chart for each company in the group from the quality composite measure and the value composite measure therefor, and generating a chart in which an identifier associated with each company in the group is displayed on the chart at the position derived therefor, wherein the chart is output to a user at step (g), and whereby the position of the identifiers in the graph illustrates the relative values of the quality and value composite measures of the companies in the group.

10. The method as claimed in claim 9, further comprising the step of computing a risk composite measure for each company in the group, wherein the identifier associated with each company as displayed in the chart reflects the value of the risk composite measure computed therefor.

11. The method as claimed in claim 10, wherein the color of the identifier associated with each respective company in the chart reflects the value of the risk composite measure computed therefor.

12. The method as claimed in claim 9, further comprising the step of computing a market capitalization measure for each company in the group, wherein the identifier associated with each company as displayed in the chart reflects the value of the market capitalization measure computed therefor.

13. The method as claimed in claim 10, wherein the font size of the identifier associated with each respective company in the chart reflects the value of the market capitalization measure computed therefor.

14. The method as claimed in claim 1, wherein the companies in the group belong to the same industry sector.

15. The method as claimed in claim 1, wherein the companies in the group are associated with a plurality of securities held in a user-defined portfolio.

16. The method as claimed in claim 15, further comprising the steps of computing and outputting a weighted portfolio composite measure, wherein the weighted portfolio composite measure is a function of the quality and value composite measures for the companies in the group, and wherein the weighted portfolio composite measure reflects the weights of the securities in the portfolio.

17. The method as claimed in claim 1, wherein the output includes a target price for the security issued by the company of interest.

18. The method as claimed in claim 17, wherein the output further includes a report containing target prices for each company in the group.

19. The method as claimed in claim 17, wherein said output further includes a buy or sell recommendation based on said target price.

20. The method as claimed in claim 1, wherein the method further comprises the step of computing a plurality of simplified data items from data in one or more financial databases, for use in subsequent computations of quality and value assessment measure values for companies in the group.

21. A security evaluation system for evaluating securities, the system comprising a system database in which values of a plurality of quality assessment measures and value assessment measures for each company of a group of companies are stored, a user interface for receiving input from a user and providing output to the user, and a processing engine connected to the system database and the user interface, wherein the processing engine is programmed to perform the steps of:

a) computing a value for one or more quality assessment measures for each company of a group of companies;

b) computing a value for one or more value assessment measures for each company of the group;

c) for each quality assessment measure, computing a first mean and a first standard deviation of the values therefor across all companies in the group and computing a relative quality score associated therewith for the company of interest, the relative quality score being a function of the first mean and the first standard deviation;

d) for each value assessment measure, computing a second mean and a second standard deviation of the values therefor across all companies in the group and computing a relative value score associated therewith for the company of interest, the relative value score being a function of the second mean and the second standard deviation;

e) computing a quality composite measure for the company of interest, wherein the quality composite measure is a function of the relative quality scores associated with at least one quality assessment measure;

f) computing a value composite measure for the company of interest, wherein the value composite measure is a function of the relative value scores associated with at least one value assessment measure; and

g) generating output to the user based on the quality and value composite measures for the company of interest, whereby the output reflects a valuation of the company of interest relative to other companies in the group.

22. A computer-readable medium containing instructions for evaluating a security issued by a company of interest to be performed by a computer, wherein the following steps are performed upon execution of the instructions:

a) a value for one or more quality assessment measures for each company of a group of companies is computed;

b) a value for one or more value assessment measures for each company of the group is computed;

c) for each quality assessment measure, a first mean and a first standard deviation of the values therefor across all companies in the group is computed and a relative quality score associated therewith for the company of interest is computed, the relative quality score being a function of the first mean and the first standard deviation;

d) for each value assessment measure, a second mean and a second standard deviation of the values therefor across all companies in the group is computed and a relative value score associated therewith for the company of interest is computed, the relative value score being a function of the second mean and the second standard deviation;

e) a quality composite measure for the company of interest is computed, wherein the quality composite measure is a function of the relative quality scores associated with at least one quality assessment measure;

f) a value composite measure for the company of interest is computed, wherein the value composite measure is a function of the relative value scores associated with at least one value assessment measure; and

g) output to the user based on the quality and value composite measures for the company of interest is generated, whereby the output reflects a valuation of the company of interest relative to other companies in the group.