iQ Share Buyback (SHB) Screamers Model

INVESTMENT OBJECTIVE

The iQ Share Buyback (SHB) Screamers Model seeks to outperform the S&P 500 by focusing on stocks of companies that have purchased their own stock within the last twelve months and are members of super sectors that are showing favorable relative strength versus other super sectors.

WHAT ARE “SUPER SECTORS”?

An idea popularized by Morningstar, “super sectors” group the ten S&P 500 sectors into 3 categories as determined by their sensitivity to economic and market shifts (i.e.Beta).

The 3 super sectors are categorized as Sensitive (Telecom, Industrial, Technology, and Energy), Cyclical (Materials, Financial, Discretionary, and REITs), and Defensive (Healthcare, Utilities, and Staples).

In order to take advantage of international buyback opportunities, we have included an international large cap share buyback strategy in the starting universe.

INVESTMENT PROCESS

The iQ SHB Screamers Model follows the following MONTHLY rules-based process:

  • Begin with a starting universe of 3 super sectors and one international large cap share buyback strategy.

  • Sort the 4 strategies by 12-month progressive price momentum and kick out the lowest

  • Each of the remaining 3 strategies are represented by a unique five stock screen that focuses on technical and “quantamental” indicators.

This model reconstitutes every month.

Investing in share buyback stocks with a rotational edge

Investing in share buyback stocks in conjunction with super sector rotation can be a viable investment strategy for those looking to generate long-term returns. Super sector rotation involves selecting super sectors that are expected to outperform the broader market over a certain period of time, while share buyback stocks are companies that have repurchased a significant portion of their outstanding shares.

The idea behind combining these two strategies is that companies that are actively buying back shares are signaling that they believe their stock is undervalued and are looking to increase shareholder value. By investing in these companies within super sectors that are expected to perform well, investors can potentially benefit from both the stock price appreciation and potential dividend payments.

However, it's important to note that share buybacks are not always an indicator of financial health or positive future performance, and it's important to thoroughly research and analyze individual companies before making investment decisions.