Investment platform uses Buffet criteria to select stocks

Two former Saxo Bank executives now based in Ireland have set up Rising Sum investment platform, directed at value investors, which aims to copy the stock selection process used by Berkshire Hathaway, Warren Buffet’s highly successful investment vehicle.

The business is led by Kevin Ashby, previously founding chairman and CEO of Saxo Bank Asia/Pacific, CEO of Patsystems Plc and chairman of Anvil. He is also deputy chairman of FX Architects, and has advised numerous banks and brokers on developing online trading.

Brian Kelly, CEO of Rising Sum, was also at Saxo Bank as director of product development and marketing for a number of product initiatives, including Saxo’s equity platform.

Rising Sum originated in early 2011 after Kelly felt no existing online screening tool met the needs of value investors, most notably intrinsic value and consistent performance on Return On Equity. Even applications that tracked portfolios delivered information too late, by which time the target stock was no longer undervalued.

The challenge was to develop a means to screen for companies that meet the acquisition criteria published by Berkshire Hathaway, enabling independent investors to make their own decisions. In September 2012 Rising Sum launched its beta site, offering a way that retail investors worldwide could screen for value opportunities.

The platform screens for companies that demonstrate consistent performance, and those undervalued (based on their intrinsic value) or overvalued. It creates graphs that present key ratios / data based on up to 10 years of key financial ratios / data and identifies stocks with the potential to improve performance.

Kelly said that at any given time, some 1% of companies in any index will be in the ‘Buffett zone’. Buffett (pictured) is regarded as the world’s foremost proponent of Value Investing and, since 1965, his Berkshire Hathaway vehicle has delivered a compound growth rate of 19.8% per year.

In 2001, Buffet published his investment criteria, which include:

1. At least $50 million of pre-tax earnings
2. Ability to deliver consistent earning power
3. Good returns on equity, while employing little or no debt
4. An offer price
5. A good management team
6. A simple business model – an easy to understand value proposition

The Rising Sum platform is available to individual subscribers but primary distribution channel is via financial institutions and associated companies, which can adjust the settings to find companies that meet individual investment styles and preferences. A white label version of the platform is available for distribution under third-party branding.


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