System and method for analyzing analyst recommendations on a single stock basis

• US 8,311,923 B2
• Filed: 01/21/2011
• Issued: 11/13/2012
• Est. Priority Date: 10/18/2004
• Status: Active Grant

• Current Assignee: Refinitiv US Organization, LLC (Refinitiv US Holdings, Inc.)
• Original Assignee: Thomson Reuters LLC (The Woodbridge Co. Ltd.)
• Inventors: Gatto, Joseph G., McNeil, Iain, Jha, Vinesh, Lichtblau, David
• Primary Examiner(s): Kazimi, Hani M
• Assistant Examiner(s): Vyas, Abhishek
• Application Number:
  US13/011,723
• Publication Number:
  US 20110119116A1
• Time in Patent Office: 662 Days
• Field of Search: 705 36- 37, 705/35
• US Class Current: 705/36.R
• CPC Class Codes: G06Q 10/06393 Score-carding, benchmarking or key performance indicator [KPI] analysis
• CPC Class Codes: G06Q 30/0202 Market predictions or forecasting for commercial activities
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A system and method for measuring and creating a score for the performance of one or more contributor recommendations on a single stock. According to one embodiment, the score may be derived via a payoff function that depends on a variety of factors. For example, the factors may include one or more of: i) the performance of the stock; ii) the performance of a selected benchmark; iii) the recommendation of the contributor for the stock; and/or iv) other factors. According to one embodiment the payoff function may be designed such that certain desired characteristics are satisfied.

Claims

1. A computer-implemented method of scoring at least one contributor for the performance of the contributor'"'"'s recommendation with respect to a single stock, the method being implemented in a computer system, the method comprising:

executing one or more computer program modules on one or more processors of the computer system to create a score for a contributor'"'"'s recommendation on a stock relative to a benchmark, the score being determined based on a payoff function that determines the score as a function of a plurality of factors, the factors comprising;

i) a benchmark-relative return on the stock, wherein the benchmark-relative return of the stock is a return on the stock relative to a return on a benchmark that corresponds to the stock; and

ii) the recommendation made by the contributor;

wherein the payoff function for a neutral recommendation on the stock has a maximum score at a baseline benchmark-relative return, and has scores that decrease away from the maximum score for benchmark-relative returns greater than and less than the baseline benchmark relative return; and

storing the score in one or more electronic storage media associated with the server.

2. The method of claim 1 wherein the recommendation is selectable by the contributor from a group of at least three types of recommendations, including a positive recommendation, a neutral recommendation and a negative recommendation, and wherein the payoff function for the positive recommendation is a function having a positive slope with respect to the benchmark-relative return and the payoff function for the negative recommendation is a function having a negative slope with respect to the benchmark-relative return.

3. The method of claim 1 wherein the recommendation is selectable by the contributor from a group of at least five types of recommendations, including a positive recommendation, a more positive recommendation, a neutral recommendation, a negative recommendation and a more negative recommendation, and wherein the payoff function for the positive recommendation is a function having a first positive slope with respect to benchmark-relative return and a first positive function baseline value at the baseline benchmark-relative return, the payoff function for the more positive recommendation is a function having a second positive slope with respect to benchmark-relative return greater than the first positive slope and a second positive function baseline value that is offset in a positive direction from the first positive function baseline value along a benchmark-relative return axis, the payoff function for the negative recommendation is a function having a first negative slope with respect to benchmark-relative return and a first negative function baseline value at the baseline benchmark-relative return, and the payoff function for the more negative recommendation is a function having a second negative slope with respect to benchmark-relative return more negative than the first negative slope and a second negative baseline value that is offset in a negative direction from the first negative function baseline value along the benchmark-relative return axis.

4. The method of claim 1, wherein the baseline benchmark-relative return is zero.

5. The method of claim 1, wherein the benchmark includes a variable benchmark, including one of a sector benchmark, an industry benchmark, a geographic benchmark or a coverage benchmark.

6. The method of claim 1, wherein the contributor is an analyst, and the analyst is associated with a broker and the benchmark comprises a broker-specific benchmark.

7. The method of claim 1, wherein the contributor is an analyst, and the analyst is associated with a broker and where different brokers may associate recommendations with different numerical scales, the method further comprising the step of standardizing a recommendation to a common numerical scale.

8. The method of claim 1, further comprising executing one or more program modules on the one or more processors of the computer system to normalize the score for the contributor'"'"'s recommendation for the stock.

9. The method of claim 1, further comprising executing one or more program modules on the one or more processors of the computer system to normalize the score for the contributor'"'"'s recommendation for the stock based on the volatility of the stock.

10. The method of claim 1, further comprising executing one or more program modules on the one or more processors of the computer system to aggregate the score for the contributor'"'"'s recommendation for the stock with one or more other scores for recommendations made by the contributor on the stock to create a stock-level score, executing one or more program modules on the one or more processors of the computer system to normalize the stock-level score to create a normalized stock-level score, and executing one or more program modules on the one or more processors of the computer system to create a stock set-level score by combining the normalized stock-level score with at least one other normalized stock-level score for recommendations made on another stock.

11. The method of claim 1, wherein a score is based at least in part on a period of time and further comprising executing one or more program modules on the one or more processors of the computer system to adjust an contributor'"'"'s score if the contributor'"'"'s recommendation covers only a portion of the period of time.

12. A system configured to score at least one contributor for the performance of the contributor'"'"'s recommendation with respect to a single stock, the score for the recommendation depending on a plurality of factors, including the performance of the stock, the performance of a benchmark and the recommendation made by the contributor, the system comprising:

a server configured to access, over a network, one or more electronic storage media storing information relating to stock performance, benchmark performance and contributor'"'"'s recommendations; and

one or more processors associated with the server configured to create a score for a recommendation of a contributor on an individual stock based on a payoff function, wherein the payoff function for a neutral recommendation on the stock has a maximum in score at a baseline benchmark-relative return on the stock, and has scores that decrease away from the maximum score for benchmark-relative returns greater than and less than the baseline benchmark relative return, wherein the benchmark-relative return on the stock is a return on the stock relative to a return on a benchmark that corresponds to the stock.

13. The system of claim 12 wherein the recommendation is selectable by the contributor from a group of at least three types of recommendations, including a positive recommendation, a neutral recommendation and a negative recommendation, and wherein the payoff function for the positive recommendation is a function having a positive slope with respect to benchmark-relative return and the payoff function for the negative recommendation is a function having a negative slope with respect to benchmark-relative return.

14. The system of claim 12 wherein the recommendation is selectable by the contributor from a group of at least five types of recommendations, including a positive recommendation, a more positive recommendation, a neutral recommendation, a negative recommendation and a more negative recommendation, and wherein the payoff function for the positive recommendation is a function having a first positive slope with respect to benchmark relative return and a first positive function baseline value at the baseline benchmark-relative return, the payoff function for the more positive recommendation is a function having a second positive slope with respect to benchmark relative return greater than the first positive slope and a second positive function baseline value that is offset in a positive direction from the first positive function baseline value along a benchmark-relative return axis, the payoff function for the negative recommendation is a function having a first negative slope with respect to benchmark relative return and a first negative function baseline value at the baseline percent benchmark-relative return, and the payoff function for the more negative recommendation is a function having a second negative slope with respect to benchmark relative return more negative than the first negative slope and a second negative baseline value that is offset in a negative direction from the first negative function baseline value along the benchmark-relative return axis.

15. The system of claim 12, wherein the benchmark includes a fixed benchmark or a variable benchmark.

16. The system of claim 12, wherein the baseline benchmark-relative return is zero.

17. The system of claim 12, wherein the contributor is an analyst, and the analyst is associated with a broker and the benchmark comprises a broker-specific benchmark.

18. The system of claim 12, wherein the contributor is an analyst, and the analyst is associated with a broker and where different brokers may associate recommendations with different numerical scales, the one or more processors further being configured to standardize a recommendation to a common numerical scale.

19. The system of claim 12, wherein the one or more processors are further configured to normalize the score for the contributor'"'"'s recommendation for the stock.

20. The system of claim 12, wherein the processing section within the server is configured to execute the computer software program to normalize the score for the contributor'"'"'s recommendation for the stock based on the volatility of the stock.

21. The system of claim 12, wherein the one or more processors are configured to aggregate the score for the contributor'"'"'s recommendation for the stock with one or more other scores for recommendations made by the contributor on the stock to create a stock-level score, to normalize the stock-level score to create a normalized stock-level score, and to create a stock set-level score by combining the normalized stock-level score with at least one other normalized stock-level score for recommendations made on another stock.

22. The system of claim 12, wherein a score is based at least in part on a period of time and further wherein the one or more processors are further configured to adjust an contributor'"'"'s score if the contributor'"'"'s recommendation covers only a portion of the period of time.

23. The system of claim 12, wherein the one or more processers are further configured to generate a display conveying the score.