Quadrix® is our proprietary quantitative stock-rating system developed by Horizon Investment Services Chief Investment Officer Rich Moroney.
Quadrix ranks more than 4,000 stocks based on more than 80 different variables for each stock. Quadrix allows us to explore a big opportunity set from which to find what we believe are attractive stocks.
Quadrix scores are percentile rankings (0-100). For example, a stock with an Overall score of 97 means the stock scores better than 97% of all stocks in the Quadrix universe of more than 4,000 stocks.
More than 80 variables are considered in our Quadrix system. A stock’s Overall score is determined by the individual scores of six categories – Financial Strength, Value, Quality, Momentum, Earnings Estimates, and Performance. A seventh category, Volume Metrics, is not used in the calculation of the Overall score.
Stocks with Quadrix Overall scores of 80 and above (top quintile – Group 1) have historically outperformed stocks in Group 2 (Quadrix Overall scores of 60 to 80), and Group 2 stocks have consistently outperformed stocks in Group 3, and so on. (Please see the chart below for the real-time performance of Quadrix since 2Q 2000.)
Our Quadrix universe covers some 4,000 stocks. This is our fishing pond. We generally exclude stocks with market capitalizations below $200 million. To narrow the universe, we use various Quadrix threshold scores to eliminate companies. Generally speaking, we only consider stocks that score in the upper quintile (80 to 100 in Quadrix Overall Score) of the Quadrix universe. We also use other threshold Quadrix scores in such important Quadrix subcategories as Value, Momentum, Performance, and Earnings Estimates to winnow down the universe of stocks.
We believe a numerical ranking system like Quadrix can be a great first screen for building portfolios. Because the system uses only quantifiable factors, it is designed to narrow the focus on companies achieving superior results.
Similarly, because Quadrix is not influenced by fear, hope, and greed that can cloud the judgment of investors, the system is designed to be used as an effective tool to track current portfolio holdings.
More About Quadrix
*The information above reflects the performance of our proprietary Quadrix system and does not reflect the performance of any client account or composite. The information is calculated as follows: Quadrix ranks more than 4,000 stocks based on over 80 different variables. Each stock in the Quadrix system is then assigned a percentile ranking from 0-100 – for example, a score of 90 means that the stock scored better in our Quadrix system than 90% of the other stocks Quadrix analyzes. We then separate the stocks into deciles, and view the quarterly performance of each of the deciles. The decile scores are then averaged to arrive at quintile scores, which are reflected on the chart. We then track the performance of each stock contained in the quintile on a quarterly basis, starting over again each quarter to reflect a quarterly rebalancing of the stocks contained in each quintile. The returns for each quarter are linked to the previous quarter. The Quadrix returns reflect the reinvestment of dividends and other earnings.
There are no transaction costs or HIS management fees reflected in the calculation of Quadrix performance, and the performance does not reflect HIS’ management of a client account or composite. Because Horizon client portfolios hold a significantly smaller number of stocks, performance of HIS client accounts may be materially different than performance portrayed in the Quadrix chart. The Quadrix performance also does not reflect the impact that material economic and market factors might have had on HIS’ decision-making if HIS were actually managing client assets. From time to time HIS may change the weightings of the various metrics that go into computing Quadrix scores.
The Quadrix® stock-rating system is a proprietary product wholly-owned by Horizon Publishing Company, Horizon Investment Services’ sister company. Horizon Investment Services has contracted with Horizon Publishing Company to use the Quadrix stock-rating system for its stock-screening processes.
Past performance is no guarantee of future results.