SumZero

Last updated
SumZero, Inc.
Company typePrivate
IndustryFinancial Technology
Founded2008 (2008)
Founders Divya Narendra, Aalap Mahadevia
Headquarters
Soho, New York City,
NY
,
U.S.
ProductsSumZero Basic, SumZero Elite, SumZero Buyside, SumZero Cap Intro, SumZero Job Vault
Website SumZero.com

SumZero is an online community for professional investors (collectively referred to as the "buyside"), which hosts investment research, job opportunities, and capital introduction services. Buyside professionals are granted membership per an application, where they must be on the research team at a hedge fund, mutual fund, private equity fund, or investment banking proprietary trading desk. [1] [2] [3] SumZero is a closed, application-based community, which currently has over 16,000 buyside members and over 60,000 'Basic' users. [4] Roughly 75% of buyside applicants for membership are rejected. [5] [6] Members gain access to SumZero's Research platform and approximately 12,000 long-form theses on publicly traded securities. SumZero's ancillary products include Cap Intro and Job Vault.

Contents

History

The site's co-founder and current CEO Divya Narendra came up with the idea for SumZero in April 2007, while working for the hedge fund Sowood Capital in Boston. Narendra and college friend Aalap Mahadevia subsequently launched SumZero in March 2008. [7]

In June 2012, Winklevoss Capital made an angel investment of $1.05 million into SumZero. [5] [8] [9] [10] [11]

In October 2012 the site announced its first Annual Investing Challenge, jointly organized by SumZero and the Value Investing Congress. [12] [13] The top three ideas were pitched on the CNBC television show Fast Money [14] and winner Ryan Fusaro presented his investment idea at the Value Investing Congress on October 1, 2012, alongside the portfolio managers Bill Ackman, David Einhorn, and Barry Rosenstein. [15]

SumZero hosted a co-branded research idea contest with Institutional Investor in November 2014. The event was hosted at the Bloomberg Tradebook headquarters in NYC. Over 250 SumZero members attended for live 4-minute presentations of stock pitches from 20 emerging managers, judged by a panel of professional investors. [16]

In March 2017, SumZero announced the Van Biema Small-Cap Challenge in conjunction with van Biema Value Partners and the Royce Funds. The contest called for research ideas on international small- and micro-cap stocks from funds managing less than $50 million. Massif Capital, a NY-based long/short equity fund was selected as the final winner of the Challenge for founder Will Thomson's stock pitch on Lucara Diamond. The winner received allocations from the family offices of Chuck Royce and Michael Van Biema, as well as operational advice from Van Biema Value Partners. [17]

The site opened applications for the Van Biema Small-Cap Ex-US Challenge in March 2018 and selected 5 finalists in May 2018. [18]

Products

SumZero's product suite consists of three sub-platforms: Research, Cap Intro, and Job Vault. The Research platform contains over 11,000 actionable recommendations on publicly traded securities. Approved ideas are about 2,000 words in length and include valuation, risks, and catalysts. The contributing analyst or the analyst's fund typically has a direct position in the idea.

The Cap Intro platform allows emerging fund managers to raise external capital by connecting them with a community of pre-vetted Allocators. The allocator pool includes single- and multi-family offices, endowment funds, and fund of funds. Cap Intro operates a reverse solicitation model in which allocators reach out directly to funds.

The Job Vault allows SumZero members to apply for buyside job opportunities submitted by firms on the site. All applicants must already be SumZero members and thus represent a pre-screened pool of candidates.

2012 study

A paper by Wesley Gray of Drexel University, Bryan Johnson of Creighton University, and Rice University’s Steven Crawford and Richard A. Price III, "Do Buy-Side Recommendations Have Investment Value?”, analyzes a subset of SumZero's Idea database, which is composed of 2,135 long and short calls on U.S. equity securities submitted to the website by 1,112 buyside analysts from 910 different funds. [19]

This study shows that short recommendations from these analysts generate an immediate and significant decline in price, and long recommendations have positive short-term returns and exhibit a positive drift. The collective evidence presented in the paper suggests that buy-side recommendations have investment value. The paper also documents that broad institutional ownership decreases significantly for buy-side recommendations, but increases for the buy-side analysts’ employers, suggesting there is a wealth transfer between the broader institutional market and buy-side firms in the sample. [20]

Related Research Articles

A financial analyst is a professional undertaking financial analysis for external or internal clients as a core feature of the job. The role may specifically be titled securities analyst, research analyst, equity analyst, investment analyst, or ratings analyst. The job title is a broad one: In banking, and industry more generally, various other analyst-roles cover financial management and (credit) risk management, as opposed to focusing on investments and valuation; these are also discussed in this article.

<span class="mw-page-title-main">Value investing</span> Investment paradigm

Value investing is an investment paradigm that involves buying securities that appear underpriced by some form of fundamental analysis. Modern value investing derives from the investment philosophy taught by Benjamin Graham and David Dodd at Columbia Business School starting in 1928 and subsequently developed in their 1934 text Security Analysis.

Market portfolio is an investment portfolio that theoretically consisting of a weighted sum of every asset in the market, with weights in the proportions that they exist in the market, with the necessary assumption that these assets are infinitely divisible.

Morningstar, Inc. is an American financial services firm headquartered in Chicago, Illinois, and was founded by Joe Mansueto in 1984. It provides an array of investment research and investment management services.

Active management is an approach to investing. In an actively managed portfolio of investments, the investor selects the investments that make up the portfolio. Active management is often compared to passive management or index investing.

<span class="mw-page-title-main">Asset allocation</span> Investment strategy

Asset allocation is the implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. The focus is on the characteristics of the overall portfolio. Such a strategy contrasts with an approach that focuses on individual assets.

Buy-side analysts ("buy-siders") work for buy side money management firms such as mutual funds, pension funds, trusts, family offices, and hedge funds. They are tasked with identifying investment opportunities that will improve the net worth of the portfolio for which they work.

Joel Greenblatt is an American academic, hedge fund manager, investor, and writer. He is a value investor, alumnus of the Wharton School of the University of Pennsylvania, and adjunct professor at the Columbia University Graduate School of Business. He runs Gotham Asset Management with his partner, Robert Goldstein. He is the former chairman of the board of Alliant Techsystems (1994–1995) and founder of the New York Securities Auction Corporation. He was a director at Pzena Investment Management, a firm specializing in value investing and asset management for high net worth clients.

Sell side is a term used in the financial services industry to mean providing services to sell securities. Firms or institutions on this side include investment banks, brokerages and market makers, who facilitate offering securities to investors, conducting research and creating financial products.

In finance, the private-equity secondary market refers to the buying and selling of pre-existing investor commitments to private-equity and other alternative investment funds. Given the absence of established trading markets for these interests, the transfer of interests in private-equity funds as well as hedge funds can be more complex and labor-intensive.

ConnectU was a social networking website launched on May 21, 2004, that was founded by Harvard students Cameron Winklevoss, Tyler Winklevoss, and Divya Narendra in December 2002. Users could add people as friends, send them messages, and update their personal profiles to notify friends about themselves. Users were placed in networks based upon the domain name associated with the email address they used for registration.

<span class="mw-page-title-main">Alternative investment</span> Investments other than stocks, bonds and cash

An alternative investment, also known as an alternative asset or alternative investment fund (AIF), is an investment in any asset class excluding capital stocks, bonds, and cash.

A portfolio manager (PM) is a professional responsible for making investment decisions and carrying out investment activities on behalf of vested individuals or institutions. Clients invest their money into the PM's investment policy for future growth, such as a retirement fund, endowment fund, or education fund. PMs work with a team of analysts and researchers and are responsible for establishing an investment strategy, selecting appropriate investments, and allocating each investment properly towards an investment fund or asset management vehicle.

<span class="mw-page-title-main">Tyler Winklevoss</span> American businessman and rower

Tyler Howard Winklevoss is an American investor, founder of Winklevoss Capital Management and Gemini cryptocurrency exchange, and former Olympic rower. Winklevoss co-founded HarvardConnection along with his brother Cameron Winklevoss and a Harvard classmate of theirs, Divya Narendra. In 2004, the Winklevoss brothers sued Mark Zuckerberg, claiming he stole their ConnectU idea to create the social networking service site Facebook. As a rower, Winklevoss competed in the men's pair rowing event at the 2008 Summer Olympics with his identical twin brother and rowing partner, Cameron.

<span class="mw-page-title-main">Cameron Winklevoss</span> American businessman and rower

Cameron Howard Winklevoss is an American cryptocurrency investor, former Olympic rower, and cofounder of Winklevoss Capital Management and Gemini cryptocurrency exchange. He competed in the men's pair rowing event at the 2008 Summer Olympics with his rowing partner and identical twin brother, Tyler Winklevoss. Winklevoss and his brother are known for co-founding HarvardConnection along with Harvard classmate Divya Narendra. In 2004, the Winklevoss twins sued Facebook founder Mark Zuckerberg, claiming he stole their ConnectU idea to create the social networking site Facebook. In addition to ConnectU, Winklevoss also co-founded the social media website Guest of a Guest with Rachelle Hruska.

<span class="mw-page-title-main">Divya Narendra</span> American businessman (born 1982)

Divya Narendra is an American businessman. He is the CEO and co-founder of SumZero along with Harvard classmate Aalap Mahadevia. He also co-founded HarvardConnection with Harvard University classmates Cameron Winklevoss and Tyler Winklevoss.

<span class="mw-page-title-main">Wayne Chang</span> American businessman/entrepreneur

Wayne Chang is an American entrepreneur, angel investor, film producer, and philanthropist. He is best known for founding Crashlytics, a startup acquired by Twitter in 2013. He is also known for creating a filesharing network called i2hub, making various seed investments, and his lawsuit against the Winklevoss brothers.

<span class="mw-page-title-main">Investment fund</span> Way of investing money alongside other investors

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<span class="mw-page-title-main">Winklevoss Capital Management</span> American venture capital firm and family office

Winklevoss Capital is a family office founded in 2012 by Tyler Winklevoss and Cameron Winklevoss. The firm invests across multiple asset classes including seed funding and infrastructure to early-stage startups. The company is headquartered in New York's Flatiron District.

A royalty fund is a category of private equity fund that specializes in purchasing consistent revenue streams deriving from the payment of royalties. One growing subset of this category is the healthcare royalty fund, in which a private equity fund manager purchases a royalty stream paid by a pharmaceutical company to a patent holder. The patent holder can be another company, an individual inventor, or some sort of institution, such as a research university.

References

  1. ↑ "SumZero Founder & CEO Divya Narendra Live on Bloomberg TV with Margaret Brennan". YouTube .
  2. ↑ "The Social Network for Market Mavens".
  3. ↑ "Il Facebook per investitori" (in Italian). Rai News24. 2012-11-22.
  4. ↑ Paul, Chrystan. "Ten Years After Facebook, Divya Narendra Continues To Innovate". Forbes.
  5. 1 2 Jannarone, John (September 17, 2012). "The Return of Facebook's Winklevoss Twins". The Wall Street Journal.
  6. ↑ "Pitch Perfect Investment Pros Compete with Best Stock Ideas".
  7. ↑ "Interview with Divya Narendra, CEO of SumZero".
  8. ↑ "Death of the PC, the Winklevii's other Social Network, and tech ed in New York". 18 September 2012.
  9. ↑ "Winklevoss Twins Back 'Facebook' for Investors with $1 million". ABC News .
  10. ↑ "Winklevoss Twins Invest in SumZero". Huffington Post. September 16, 2012.
  11. ↑ "Winklevoss twins explain why they invested in new social network SumZero". CNN. September 19, 2012. Archived from the original on February 15, 2013.
  12. ↑ "Could search save Facebook stock?". CNBC.
  13. ↑ "Three Finalists Announced for First-Annual Value Investing Challenge".
  14. ↑ "3 Finalists of SumZero's Top Idea contest appear on CNBC's Fast Money".
  15. ↑ "27-Year-Old Analyst Ryan Fusaro Wowed Everyone At The Value Investing Conference With His Investment Idea". Business Insider .
  16. ↑ "Institutional Investor and SumZero Present InvestPitch 2014".
  17. ↑ "Massif Capital Receives Allocation from Van Biema/Royce".
  18. ↑ "Van Biema Ex-US Contest Finalists Announced".
  19. ↑ Costa, Len (February 28, 2012). "Do Buy-Side Investment Recommendations Add Value?".
  20. ↑ Wesley Gray; Bryan Johnson; Steven Crawford; Richard A. Price III (September 17, 2012). "Do Buy-Side Recommendations Have Investment Value". SSRN   1971533.{{cite web}}: Missing or empty |url= (help)
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