Estimize Proves More Accurate Than Wall Street
NEW YORK (TheStreet) -- A lot of people chide Wall Street analysts (yours truly included, sometimes) for being so wrong on stock calls. One outfit, Estimize, seeks to be more accurate than Wall Street's consensus and to help traders profit off of its accuracy.
The company, founded by Leigh Drogen ( Leigh and I used to work together at StockTwits) , issued a white paper showing that the consensus from Estimize, which draws its estimates from day traders, hedge funds and investors and now is starting to include some sell-side analysis, is more accurate between 58% and 65% of the time than Wall Street estimates.
The Estimize Consensus increases toward the 65% level when a particular stock has 20 or more ratings. The paper noted that there is a "post-earnings drift strategy which produces 50 basis points of cumulative returns and a pre-earnings drift strategy producing 25 basis points of residual returns."
The paper also noted that the average error is smaller than the Wall Street error, as it relates to actual reported earnings compared to estimates. When there are 20 or more contributors, the Estimize Consensus is 12 basis points smaller than the Wall Street Consensus.
The white paper can be read in its entirety here.
--Written by Chris Ciaccia in New York
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