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The Thomson Reuters Analyst Awards

The gold standard in sell-side analyst performance

Methodology

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Latin America

2017

2017 THOMSON REUTERS ANALYST AWARDS

METHODOLOGY FOR LATIN AMERICA

Based on StarMine methodology, the Thomson Reuters Analyst Awards objectively measure the performance of analysts based on the returns of their buy/sell recommendations and the accuracy of their earnings estimates. The 2017 stock picking awards for Latin America are based on the 2016 calendar year performance of recommendations. The 2017 awards for estimating performance are scored on the fiscal period that reported between 01 April 2016 and 31 March 2017. Only analyst performance on companies that are based in Latin America is included in the awards calculations.

DATA SOURCE

The Analyst Awards for Latin America are based on StarMine’s estimates and recommendations as recorded in the Thomson Reuters I/B/E/S database. The Analyst Awards use the GICS (Global Industry Classification System) for its industry definitions. In some instances in Latin America, the GICS has resulted in industries that are not large enough for ranking purposes. When this has been the case, the Analyst Awards have combined multiple industries to reflect the way analysts organize their coverage for Latin America. For example, the Analyst Awards’ "Health Care" industry is a composite of the following GICS industries: Biotechnology, Health Care Equipment & Supplies, Health Care Providers & Services, Health Care Technology, Life Sciences Tools & Services and Pharmaceuticals.

INDUSTRY STOCK PICKING AWARDS

Analysts are ranked according to their Industry Excess Return, computed from a portfolio simulation that measures each analyst relative to an industry-based benchmark.

Calculation of Industry Excess Return: All analyst returns are calculated relative to the return on a market capitalization-weighted portfolio of all of the stocks in a given industry.

For comparison purposes, the Analyst Awards build a non-leveraged portfolio for each analyst based on his recommendations. For each "Buy" recommendation, the portfolio is one unit long the stock and simultaneously one unit short the benchmark. The result gives the analyst credit for the amount by which the stock outperformed the benchmark. "Strong Buys" get a larger investment of two units long the stock and two units short the benchmark. "Holds" invest one unit in the benchmark (i.e., for an excess return of zero). "Sells" are the reverse: long the benchmark and short the stock. "Strong Sells" get a larger investment of two units long the benchmark and short the stock. The portfolio return is opportunity adjusted to facilitate a fair comparison of analyst performance regardless of their coverage universe.

The resulting portfolio is rebalanced each month and whenever the analyst adds coverage, drops coverage, or changes a rating.

Qualification Criteria: To qualify for a Industry Stock Picking Award, an analyst must have met the following criteria:

  • (1) An analyst must have covered at least five stocks in a given industry throughout the awards period. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.
  • (2) An analyst's industry return must have exceeded the return of the relevant industry benchmark. That is, his Industry Excess Return must be positive.
  • (3) An analyst must have delivered at least a 3-star performance on their overall coverage (i.e., for all industries covered), as measured by StarMine's Coverage-Relative Rating.

OVERALL STOCK PICKING AWARDS

Overall Stock Picking Awards go to the top ten qualifying analysts, based on overall excess return. To calculate overall excess return, the Analyst Awards use the weighted average of each analyst's Industry Excess Returns, where weighting is based on the number of stocks the analyst covers in each industry.

Qualification Criteria: To qualify for the overall stock-picking awards, analysts must have covered at least five stocks. In addition, the Analyst Awards require analysts to have earned at least a 5-star rating on their overall coverage (i.e., for all industries covered), as measured by StarMine's Coverage-Relative Rating.

OVERVIEW OF EARNINGS ESTIMATE AWARDS

The Analyst Awards’ proprietary metric, Single-stock Estimate Score (SES), measures the accuracy of each analyst's earnings forecasts. SES is a measure of relative accuracy; that is, analysts are compared against their peers. An analyst's SES can range from 0 to 100, with 50 representing the average analyst. To get a score higher than 50, an analyst must make estimates that are both significantly different from and more accurate than other analysts' estimates.

SES takes into account many factors: the analyst's absolute forecast error, the analyst's error compared to other analysts, the variance of the analysts' errors, the timing of the estimates, and the absolute value of the actual earnings for the stock. SES is computed daily and aggregated to provide scores on individual stocks, industries (the Industry Estimate Score), and the analyst overall (the Overall Estimate Score).

INDUSTRY EARNINGS ESTIMATE AWARDS

To determine the winners of Industry Earnings Estimate Awards, the Analyst Awards rank qualifying analysts based on their Industry Estimate Score for the stocks in a specific industry.

Qualification Criteria: To qualify for this ranking, an analyst must have had coverage on at least five stocks throughout the awards period. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.

OVERALL EARNINGS ESTIMATE AWARDS

The ten qualifying analysts with the highest Overall Estimate Scores earn the Analyst Awards Overall Earnings Estimate Awards.

Qualification Criteria: To qualify for the Analyst Awards’ Top 10 list, an analyst must have had coverage on at least five stocks throughout the awards period.

TOP BROKER AWARDS

Awards go to the three brokerage firms that have accumulated the greatest number of individual analyst awards in each of the three regions. If an analyst has changed firms during an awards year, performance is attributed to the firm where the analyst worked for the majority of the year.

COUNTRIES COVERED IN LATIN AMERICA:

Argentina, Brazil, Chile, Colombia, Mexico, Panama and Peru.

2016

2016 THOMSON REUTERS ANALYST AWARDS

METHODOLOGY FOR LATIN AMERICA

Based on StarMine methodology, the Thomson Reuters Analyst Awards objectively measure the performance of analysts based on the returns of their buy/sell recommendations and the accuracy of their earnings estimates. The 2016 stock picking awards for Latin America are based on the 2015 calendar year performance of recommendations. The 2016 awards for estimating performance are scored on the fiscal period that reported between 01 April 2015 and 31 March 2016 (typically FY December 2015). Only analyst performance on companies that are based in Latin America is included in the awards calculations.

DATA SOURCE

The Analyst Awards for Latin America are based on StarMine’s estimates and recommendations as recorded in the Thomson Reuters I/B/E/S database. The Analyst Awards use the GICS (Global Industry Classification System) for its industry definitions. In some instances in Latin America, the GICS has resulted in industries that are not large enough for ranking purposes. When this has been the case, the Analyst Awards have combined multiple industries to reflect the way analysts organize their coverage for Latin America. For example, the Analyst Awards’ "Health Care" industry is a composite of the following GICS industries: Biotechnology, Health Care Equipment & Supplies, Health Care Providers & Services, Health Care Technology, Life Sciences Tools & Services and Pharmaceuticals.

INDUSTRY STOCK PICKING AWARDS

Analysts are ranked according to their Industry Excess Return, computed from a portfolio simulation that measures each analyst relative to an industry-based benchmark. The top three qualifying analysts in each industry receive an award.

Calculation of Industry Excess Return: All analyst returns are calculated relative to the return on a market capitalization-weighted portfolio of all of the stocks in a given industry.

For comparison purposes, the Analyst Awards build a non-leveraged portfolio for each analyst based on his recommendations. For each "Buy" recommendation, the portfolio is one unit long the stock and simultaneously one unit short the benchmark. The result gives the analyst credit for the amount by which the stock outperformed the benchmark. "Strong Buys" get a larger investment of two units long the stock and two units short the benchmark. "Holds" invest one unit in the benchmark (i.e., for an excess return of zero). "Sells" are the reverse: long the benchmark and short the stock. "Strong Sells" get a larger investment of two units long the benchmark and short the stock. The portfolio return is opportunity adjusted to facilitate a fair comparison of analyst performance regardless of their coverage universe.

The resulting portfolio is rebalanced each month and whenever the analyst adds coverage, drops coverage, or changes a rating.

Qualification Criteria: To qualify for a 2016 Industry Stock Picking Award, an analyst must have met the following criteria:

  • (1) An analyst must have covered at least five stocks in a given industry throughout 2015. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.
  • (2) An analyst's industry return must have exceeded the return of the relevant industry benchmark. That is, his Industry Excess Return must be positive.
  • (3) An analyst must have delivered at least a 3-star performance on their overall coverage (i.e., for all industries covered), as measured by StarMine's Coverage-Relative Rating.

OVERALL STOCK PICKING AWARDS

Overall Stock Picking Awards go to the top ten qualifying analysts, based on overall excess return. To calculate overall excess return, the Analyst Awards use the weighted average of each analyst's Industry Excess Returns, where weighting is based on the number of stocks the analyst covers in each industry.

Qualification Criteria: To qualify for the overall stock-picking awards, analysts must have covered at least five stocks. In addition, the Analyst Awards require analysts to have earned at least a 5-star rating on their overall coverage (i.e., for all industries covered), as measured by StarMine's Coverage-Relative Rating.

OVERVIEW OF EARNINGS ESTIMATE AWARDS

The Analyst Awards’ proprietary metric, Single-stock Estimate Score (SES), measures the accuracy of each analyst's earnings forecasts. SES is a measure of relative accuracy; that is, analysts are compared against their peers. An analyst's SES can range from 0 to 100, with 50 representing the average analyst. To get a score higher than 50, an analyst must make estimates that are both significantly different from and more accurate than other analysts' estimates.

SES takes into account many factors: the analyst's absolute forecast error, the analyst's error compared to other analysts, the variance of the analysts' errors, the timing of the estimates, and the absolute value of the actual earnings for the stock. SES is computed daily and aggregated to provide scores on individual stocks, industries (the Industry Estimate Score), and the analyst overall (the Overall Estimate Score).

INDUSTRY EARNINGS ESTIMATE AWARDS

To determine the winners of Industry Earnings Estimate Awards, the Analyst Awards rank qualifying analysts based on their Industry Estimate Score for the stocks in a specific industry.

Qualification Criteria: To qualify for this ranking, an analyst must have had coverage on at least five stocks throughout 2015. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.

OVERALL EARNINGS ESTIMATE AWARDS

The ten qualifying analysts with the highest Overall Estimate Scores earn the Analyst Awards Overall Earnings Estimate Awards.

Qualification Criteria: To qualify for the Analyst Awards’ Top 10 list, an analyst must have had coverage on at least five stocks throughout 2015.

TOP BROKER AWARDS

Awards go to the three brokerage firms that have accumulated the greatest number of individual analyst awards in each of the three regions. If an analyst has changed firms during an awards year, performance is attributed to the firm where the analyst worked for the majority of the year.

COUNTRIES COVERED IN LATIN AMERICA:

Argentina, Brazil, Chile, Colombia, Mexico, Panama and Peru.

2015

2015 STARMINE ANALYST AWARDS*
METHODOLOGY FOR LATIN AMERICA
*(based on 2014 results)

StarMine objectively measures the performance of analysts based on the returns of their buy/sell recommendations and the accuracy of their earnings estimates. The 2015 stock picking awards for Latin America are based on the 2014 calendar year performance of recommendations. The 2015 awards for estimating performance are scored on the fiscal period that reported between 01 April 2014 and 31 March 2015 (typically FY December 2014). Only analyst performance on companies that are based in Latin America is included in the awards calculations.

DATA SOURCE
StarMine’s awards for Latin America are based on the estimates and recommendations as recorded in the Thomson Financial I/B/E/S database. StarMine uses the GICS (Global Industry Classification System) for its industry definitions. In some instances in Latin America, the GICS has resulted in industries that are not large enough for ranking purposes. When this has been the case, StarMine has combined multiple industries to reflect the way analysts organize their coverage for Latin America. For example, StarMine’s “Health Care” industry is a composite of the following GICS industries: Biotechnology, Health Care Equipment & Supplies, Health Care Providers & Services, Health Care Technology, Life Sciences Tools & Services and Pharmaceuticals.

INDUSTRY STOCK PICKING AWARDS
Analysts are ranked according to their Industry Excess Return, computed from a portfolio simulation that measures each analyst relative to an industry-based benchmark. The top three qualifying analysts in each industry receive an award.

Calculation of Industry Excess Return: All analyst returns are calculated relative to the return on a market capitalization-weighted portfolio of all of the stocks in a given industry.

For comparison purposes, StarMine builds a non-leveraged portfolio for each analyst based on his recommendations. For each “Buy” recommendation, the portfolio is one unit long the stock and simultaneously one unit short the benchmark. The result gives the analyst credit for the amount by which the stock outperformed the benchmark. “Strong Buys” get a larger investment of two units long the stock and two units short the benchmark. “Holds” invest one unit in the benchmark (i.e., for an excess return of zero). “Sells” are the reverse: long the benchmark and short the stock. “Strong Sells” get a larger investment of two units long the benchmark and short the stock. The portfolio return is opportunity adjusted to facilitate a fair comparison of analyst performance regardless of their coverage universe.

The resulting portfolio is rebalanced each month and whenever the analyst adds coverage, drops coverage, or changes a rating.

Qualification Criteria: To qualify for a 2015 Industry Stock Picking Award, an analyst must have met the following criteria:

  1. An analyst must have covered at least five stocks in a given industry throughout 2014. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.
  2. An analyst’s industry return must have exceeded the return of the relevant industry benchmark. That is, his Industry Excess Return must be positive.
  3. An analyst must have delivered at least a 3-star performance on their overall coverage (i.e., for all industries covered), as measured by StarMine’s Coverage-Relative Rating.

OVERALL STOCK PICKING AWARDS
Overall Stock Picking Awards go to the top ten qualifying analysts, based on overall excess return. To calculate overall excess return, StarMine uses the weighted average of each analyst’s Industry Excess Returns, where weighting is based on the number of stocks the analyst covers in each industry.

Qualification Criteria: To qualify for the overall stock-picking awards, analysts must have covered at least five stocks. In addition, StarMine requires analysts to have earned at least a 5-star rating on their overall coverage (i.e., for all industries covered), as measured by StarMine’s Coverage-Relative Rating.

OVERVIEW OF EARNINGS ESTIMATE AWARDS
StarMine's proprietary metric, Single-stock Estimate Score (SES), measures the accuracy of each analyst's earnings forecasts. SES is a measure of relative accuracy; that is, analysts are compared against their peers. An analyst’s SES can range from 0 to 100, with 50 representing the average analyst. To get a score higher than 50, an analyst must make estimates that are both significantly different from and more accurate than other analysts' estimates.

SES takes into account many factors: the analyst's absolute forecast error, the analyst's error compared to other analysts, the variance of the analysts' errors, the timing of the estimates, and the absolute value of the actual earnings for the stock. SES is computed daily and aggregated to provide scores on individual stocks, industries (the Industry Estimate Score), and the analyst overall (the Overall Estimate Score).

INDUSTRY EARNINGS ESTIMATE AWARDS
To determine the winners of Industry Earnings Estimate Awards, StarMine ranks qualifying analysts based on their Industry Estimate Score for the stocks in a specific industry.

Qualification Criteria: To qualify for this ranking, an analyst must have had coverage on at least five stocks throughout 2014. If an industry has fewer than 15 stocks, an analyst must have covered a minimum of three stocks or 1/3 of the stocks in the industry, whichever is greater.

OVERALL EARNINGS ESTIMATE AWARDS
The ten qualifying analysts with the highest Overall Estimate Scores earn StarMine’s Overall Earnings Estimate Awards.

Qualification Criteria: To qualify for StarMine's Top 10 list, an analyst must have had coverage on at least five stocks throughout 2014.

TOP BROKER AWARDS
Awards go to the three brokerage firms that have accumulated the greatest number of individual analyst awards in each of the three regions. If an analyst has changed firms during an awards year, performance is attributed to the firm where the analyst worked for the majority of the year.

COUNTRIES COVERED IN LATIN AMERICA:
Argentina, Brazil, Chile, Colombia, Mexico, Panama and Peru.