ShareAlpha provides curated investment ideas for do-it-yourself (DIY) investors from investment analysts.
Can you tell us about your respective professional journeys? How did you meet?
Fouad: Hi Phil, thank you for meeting us. We both have years of experience in institutional investments. I’ve taken more of a quantitative approach by working as an equity and derivative broker at the Bank of Montreal, and later as a quantitative investment analyst at Montrusco Bolton. Patrick, on the other hand, has taken a more fundamental approach, working in equity research in the paper and forestry and financial industries.
We actually met while we were both working together at Montrusco Bolton, a Montreal-based asset manager, for about 18 months. We were often discussing side projects in the hallways, often for too long. Eventually I left Canada to work in Dubai for less than a year and we lost touch, but when I came back, we went for lunch. Both our aspirations to become portfolio managers were diminishing and we instead wanted to get our hands dirty by building a business. It’s near that time that we discussed an early stage idea that became ShareAlpha.
I had the idea a while back, but never pursued it by myself as it was a larger undertaking, but Patrick told me that the idea was worth pursuing further. After a few discussions, we decided this summer to join the Founder Institute together to validate our idea.
What is ShareAlpha?
Patrick: We are an online marketplace where DIY investors receive stock, etf and cryptocurrency investment ideas from top investment analysts. These analysts are either freelancers, former investment analysts or current analysts. We have analysts with great pedigrees having worked at investment banks, insurance companies, money managers and hedge funds.
Today, DIY investors mostly get tips from newsletters, blogs, or they ask friends for new investment ideas. Through 100+ in-person interviews and surveys, we know that investors want new investment ideas, but from trustworthy sources. Some stock pickers might overly focus on their best picks, but neglect to mention their worst performers. Our solution is to curate investment analysts through our platform with different performance metrics. We want investors to access investment ideas from only the best analysts. Now, instead of having one portfolio manager, you can manage your own ‘team’ of investment analysts, each an expert in their sector, contributing new investment ideas to you. Even the experts rely on other experts to find the best new investment ideas.
What makes ShareAlpha different from other offerings?
Fouad: ShareAlpha allows investors to access on-demand investment predictions, whereas traditional business models charge a monthly or yearly subscription fee.
Our business model is also 100% performance-based, which means that investors receive a refund for the cost of the investment information purchased on our platform, that falls below the preset analyst expectation. Under our business model, we make sure to align interests of all parties: the investors, the analysts and finally ShareAlpha.
As you mentioned, you’re part of the Founder Institute. What have you learned from this experience so far and why did you join?
Patrick: I think the Founder Institute really pushes first-time founders to make a lot of progress very quickly. We’ve been able to move from a very early stage idea to an incorporated company with a landing page, a list of potential customers, an upcoming minimum viable product, a senior technical person joining our team and a strong support network.
I think the Founder Institute is like overload training. Whenever, you attain a level where you feel you have adapted to, the workload increases, and now you have to adapt to another higher level. You notice however that these bursts of overload actually keep you from falling into that comfort zone. And after three and a half months, you’ve formed a habit; a habit of continuous self-challenge.
Tell us about your respective investment philosophies. What are you looking for when investing?
Patrick: Fouad and I are quite different when it comes to investing. I’m a fundamental-based investment analyst. One of the first criteria I look at is the ability of a management team and a board of directors to allocate limited capital. I think that excellent capital allocators tend to surprise positively. Analysts tend to overestimate short-term outcomes, but under-appreciate the long-term impact of compounding positive outcomes. I also like to dig deep into businesses and find today’s underdogs, as they can easily become tomorrow’s flavour of the month.
Fouad: I’m a Quant, so I care more about the numbers than who’s the CEO of the company. My investment horizon is shorter-term, so I rebalance my portfolio on a monthly basis. I’m also factor-driven and that’s why I focus on momentum as well as value, because I think it’s a powerful combination. It has proved in the past to be a consistent strategy that performed better than the market.
What’s next for ShareAlpha in 2018?
Fouad: We expect to officially launch our platform in the first quarter of 2018. In the meantime, we’re preparing for a soft launch where investors and investment analysts alike will have the opportunity to test our platform and improve it. The top 1,000 investors and investment analysts to subscribe to our interactive queue will earn early access to our platform. We’re building something that DIY investors can really enjoy, so we want all feedback (good and bad).
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