Equity strategy is a tool to analyze categories of stocks, rather than individual stocks. Stocks can be categorized in a variety of ways, such as:

Value vs Momentum
Small vs Large Cap
USA vs International
Growth vs Defensive
By Industry

Equity strategy is an important complement to single stock selection. A lot of institutional money flows across these dimensions. There are many mutual funds or ETFs that have specific mandates to invest in one of these categories, and money flows in or out depending on what is happening in the economy. Equity strategy is about anticipating global economic or political trends and allocating money to stocks within the categories that have the most (or least) exposure.

Our focus is primarily on picking the right industry. We believe the relative attractiveness of different industries is what drives the largest reallocations, and the theses change more frequently than in other equity strategies. It also dovetails well with our single stock selection strategy. We can triangulate the best stock picks by understanding which industries will likely outperform relative to other industries AND which stocks within that industry will likely outperform relative to their peers.

We categorize every industry as Outperform, Market Perform, or Underperform based on our relative value framework. Our rankings are not linear, either across categories or within categories. That means gains in the Outperform category can be of a greater magnitude than losses in the Underperform category, and a stock in the Outperform category can go up more than anther stock in the Outperform category. It’s important to read our full investment thesis to understand the qualitative factors behind our recommendations.

How we determine relative rankings for each industry. Industries rated Outperform have high upside potential, clear catalysts, and limited downside risk. Industries rated Market Perform have limited return potential, lack clear catalysts, and risk/reward is more balanced. Industries rated Underperform have high downside potential, clear catalysts, with limited upside risk. 

Scroll down for a list of our most recent research notes organized by equity strategy. The most recent research notes from across our coverage are listed here. You can also go to out Research Notes – StockCrunch to search or filter our research notes.