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Research Firm: Columbine Capital Services, Inc.

  • Methodology Quantitative Model Driven  
  • Approach Fundamental Analysis  
  • Equity Style Growth  
  • Report Types Stock
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About the Firm

Founded in 1976, Columbine Capital Services, Inc. is an independent quantitative research firm that has served institutional investors worldwide. Using techniques from finance, economics, and control theory, Columbine developed innovative, quantitative decision support tools for professional money managers and large institutions. In 2013, Ford Equity Research became the exclusive licensor and producer of Columbine Capital Services' research products, including this report. In the production of the Columbine Capital stock ratings, Ford applies the same quantitative models developed by Columbine Capital's founder John S. Brush, PhD. This unique quantitative methodology, formerly available only professional investors, provides objective, step-by-step analysis of each company's prospects.

Methodology

The Columbine recommendations are the product of a disciplined, consistent company evaluation methodology developed through intensive studies of the fundamental sources of stock performance in all kinds of markets. This hard-earned knowledge provides the foundation for a step-by-step analytical process that allows direct comparisons between one company and another.

Investment Philosophy

  • Winning investment strategies are based on facts. Theories about the stock market are commonplace; Columbine Capital believes that reality provides a better guide to investing. The Columbine methodology is guided by hard-earned knowledge of what has actually driven stock performance in the past.
  • A disciplined analytical methodology offers the most consistent path to long-term investment success. The Columbine recommendations are the product of a careful evaluation process designed to subject every company to exactly the same analytical steps, every time. This consistency across companies and across time allows direct comparisons between one company and another. This is the key to generating superior long-term investment performance.
  • Yet while strategies remain consistent across companies, no single strategy is appropriate for all market environments. The Columbine process recognize that accurate stock recommendations require the use of both growth- and valuation-oriented methodologies.

Process

  1. Identify the fundamentals that explain a company's past market performance. Knowledge is the foundation of the Columbine research process. Drawing on original studies into the historical sources of stock return dating back to the 1970s allowed Columbine to identify the particular characteristics that have the greatest impact on companies' future market performance, and to assess how that impact differs from company to company and in different market environments.
  2. Evaluate each company's current status on those fundamentals. Each firm is analyzed on multiple fundamental criteria. These are proven measures of a company's business value, its long-term growth characteristics, and the behavior profile of its investors.
  3. Apply the appropriate analytical framework. This framework - the product of an in-depth historical analysis - specifies how much importance to attach to a particular company's current status on each of the individual fundamental criteria. When all of these measures are positive, a company clearly will receive a high rating. However, because the Columbine approach combines these measures in complex ways, a stock's attractiveness in some areas may outweigh neutral or negative ratings in others.
  4. Evaluate the company's return potential against its peers. Following the principles of the analytical framework, Columbine's process synthesizes each company's individual measures of valuation into an overall forecast of the company's market return potential over the next twelve months. Each stock is ranked relative to its peers on this forecast and the result forms the basis for the Columbine Recommendation.
  5. Ongoing research to adjust the process. Markets evolve over time, gradually changing their pattern of rewarding some company characteristics and punishing others. Ford Equity Research continuously updates the Columbine historical studies and adjusts the evaluation process appropriately to maintain the methodology's research edge.

Coverage

Over 4,600 stocks actively traded on the NYSE, AMEX and NASDAQ including common stocks, REITs, and ADRs.

What's Provided on Fidelity.com

  • Individual Stock Research Reports, updated weekly. In addition to describing the firm's investment strategy, the reports encourage the investor to understand the analyst's conclusions at each step of the process that led to their recommendation decision. The reports also supply information about the firms themselves so investors can investigate their qualifications and the performance of their past advice.
  • Stock Ratings: Columbine uses the following terms in their assessment of a stock's potential performance over the next twelve-month period.
    • 1: Expected to outperform the S&P 500 producing above average returns.
    • 2: Expected to perform in line with the S&P 500 with average returns.
    • 3: Expected to underperform the S&P 500 producing below-average returns.

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