Top Stocks Loved by the Smart Money Crowd

One of the most tried and true paths to investment success is following the “Smart Money”. 

As you already know, the Smart Money crowd are the folks with an inside track to a stock which gives them a serious investing edge. That list includes:

• Corporate Insiders
• Wall Street Analysts
• Hedge Funds 

The Zen Ratings makes it easy to take advantage of the Smart Money crowd as we have found 14 proven factors of their activity that leads to share price outperformance. 

These 14 factors are combined into our Sentiment component rating where the A & B label points out the top 20% of stocks enjoying healthy attention from these wise investors. 

Let’s dig in a bit more into some of the specifics that helps drive the outperformance found in the Sentiment rating.

Insider Action

There is no denying how beneficial it is to know what insiders are doing with their own companies' stock. Remember that the bulk of insider compensation is from corporate stock. 

So for these insiders to reach into their own pockets to buy even more shares is a tremendous tip off that they are supremely confident in more growth ahead for the company that will drive up the share price. 

Earnings Estimate Revisions

I spent 19 years at Zacks Investment Research where the central thesis was that earning estimate revisions by Wall Street analysts was the most telling indicator of future stock performance. 

Rising estimates = the future looks brighter with earnings prospects on the rise, thus increasing fair value and attracting more investors to the shares. 

Falling estimates = the opposite of above. That the future outlook is growing dimmer leading to lower earnings…lower fair value…and lower share price. 

There is good reason why earnings estimates are in just about every reliable quant model for stock picking. That is why I ensured it had a strong presence in the Zen Ratings to help zero in on the healthiest stocks (and yes, to avoid the worst stocks based on their earnings outlook).

Short Interest

Large hedge funds pride themselves on understanding the dynamics of a company more than anyone else. Their favorite treat is finding accounting issues with a company that come to light later and destroy shares. 

This leads to a ripe shorting opportunity and why it is unwise for you to own shares in a company with a large short position stacked against the company as history shows that the shorters are usually right. 

Our monitoring of short interest activity ensures that we avoid stocks with high short interest. And yes, very low short interest is something that increases the odds of share price outperformance. 

In all there are 14 different factors inside the Sentiment rating. The 3 elements above being the most beneficial areas worthy of discussion. 

Where to Find Top Sentiment Stocks

We have simplified the process with the creation of this premium Stock Ideas screen:

Positive Investor Sentiment

When you first get there it will show you 408 stocks that combine A & B overall rating with A & B for Sentiment. (Non-Premium members will just see the first 5 stocks). 

You can keep filtering down from there to find the best stocks for your needs. 

For example, just click on the “Edit Filter” button and you can quickly narrow down to just A rated for both overall and Sentiment leading to a more manageable 43 stocks. 

Is There An Easier Way to Find the Best Stocks?

Yes…and it's called Zen Strategies. 

In total we have created 11 different stock selection strategies. 

Each featuring the top 7 stocks. Each featuring market beating performance.

Why? 

Because the Zen Strategies portfolios narrow down to the 7 highest rated stocks which unlocks even more outperformance. And that includes the highest Sentiment rated stocks as well. 

Here are the top performing strategies looking back to the start of the year: 

+92.41% Buy the Dip

+68.23% Momentum

+55.33% Stocks Under $10

+52.02% Technology

+41.95% AI Factor

Please feel free to click on any of the links above to explore the complete performance details for these strategies going back more than 20 years. 

However, the list of the top 7 stocks for each is only shared with members of Zen Strategies. 

To learn more about the service and see if it is right for you, then check out this recent presentation:

10 Minutes a Month to Beat the Market >

Wishing you a world of investment success!

Steve Reitmeister…but everyone calls me Reity (pronounced “Righty”)

Editor-in-Chief of WallStreetZen

Want to get in touch? Email us at news@wallstreetzen.com.