Performance Of The 25 Most Followed Stocks On SeekingAlpha

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Includes: AABA, AMZN, BAC, CSCO, CVX, F, FB, GE, GILD, GOOG, IBM, INTC, JNJ, JPM, KO, MSFT, NLY, PFE, PG, SBUX, T, TSLA, VZ, XOM
by: Robert Mattei

Summary

We review the performance of the stocks with the most followers on the SeekingAlpha site.

We examine the performance of two portfolios: an equally weighted portfolio and one weighted by number of followers.

We compare the results to the S&P 500.

I find it interesting to review what stocks the SeekingAlpha community is most interested in and to examine how those stocks have been performing. The data used to select the "most followed stocks" is: the number of people who have signed up to receive email alerts about the stock. This number is displayed on the stock info page. For example:

I use a program to scrape this data from the SeekingAlpha site. I gather the number of followers for the entire S&P 500 and 725 other stocks. I believe that I have found the most heavily followed stocks. However, if you believe there is a stock that should be on the list let me know.

In previous articles I reported on the 30 most popular stocks. In this article I have narrowed that number to 25 stocks to allow me to use PortfolioVisualizer.com instead of my own custom software. This has the advantage of allowing readers to reproduce the results and/or change the inputs if they so desire.

I used the stocks that are currently the most followed. It would be useful to see how the stocks that were the most followed at the beginning of 2014 have done since the beginning of 2014, but I don't have that historical information. I do have information on what stocks were most popular at the end of 2014 and the changes are minor.

Rank

2014 Rank

Stock

Followers Now

Followers End 2014

Weighted now

Weighted End 2014

1

1

Apple (NASDAQ:AAPL)

346831

321822

17.14%

16.77%

2

2

Google (NASDAQ:GOOG)

188224

176400

9.30%

9.19%

3

3

Facebook (NASDAQ:FB)

114270

109946

5.65%

5.73%

4

4

General Electric (NYSE:GE)

107982

103525

5.34%

5.39%

5

5

Bank of America (NYSE:BAC)

104781

102146

5.18%

5.32%

6

6

Microsoft (NASDAQ:MSFT)

103162

97371

5.10%

5.07%

7

7

Ford (NYSE:F)

83488

80876

4.13%

4.21%

8

8

Intel (NASDAQ:INTC)

76610

74046

3.79%

3.86%

9

9

Citigroup (NYSE:C)

73062

72089

3.61%

3.76%

10

10

AT&T (NYSE:T)

72973

69280

3.61%

3.61%

11

11

Cisco (NASDAQ:CSCO)

69884

67798

3.45%

3.53%

12

12

Tesla (NASDAQ:TSLA)

68203

64863

3.37%

3.38%

13

13

Amazon (NASDAQ:AMZN)

66948

63223

3.31%

3.29%

14

14

International Business Machines (NYSE:IBM)

65869

62224

3.25%

3.24%

15

15

Exxon Mobil (NYSE:XOM)

56522

50358

2.79%

2.62%

16

16

Johnson & Johnson (NYSE:JNJ)

51065

48659

2.52%

2.53%

17

17

Verizon (NYSE:VZ)

49348

47094

2.44%

2.45%

18

18

Pfizer (NYSE:PFE)

44819

42959

2.21%

2.24%

19

25

Gilead Sciences (NASDAQ:GILD)

41749

36665

2.06%

1.91%

20

19

Coca-Cola (NYSE:KO)

40640

39640

2.01%

2.07%

21

20

JPMorgan Chase (NYSE:JPM)

40099

38756

1.98%

2.02%

22

22

Starbucks (NASDAQ:SBUX)

39821

37624

1.97%

1.96%

23

23

Procter & Gamble (NYSE:PG)

39312

37523

1.94%

1.95%

24

21

Yahoo (YHOO)

39184

37486

1.94%

1.95%

25

28

Chevron (NYSE:CVX)

38791

34123

1.92%

0.00%

26

24

Annaly Capital Management (NYSE:NLY)

36592

37179

0.00%

1.94%

NLY has dropped off CVX has been added. My guess is that the list of stocks that are currently the most followed does not differ significantly from the most followed stocks at the beginning of 2014.

Performance Since Beginning of 2014

Below are two portfolios made up of the 25 most followed stocks on SeekingAlpha. The first portfolio has the stocks weighted by number of followers.

The second portfolio has the 25 most followed stocks with equal weighting.

Here are the results from the beginning of 2014 to the end of May 2015. All returns are with dividends reinvested.

The portfolio weighed by followers grew the fastest and had the best risk adjusted returns based on both the Sharpe and Sortino Ratio. The portfolio with equal weighting had a Compounded Annual Growth Rate that was similar to the S&P 500, but was slightly more volatile causing it to have lower risk adjusted returns.

The portfolio weighted by followers had a large allocation to Apple. How much of an influence did apple have on the results? Let's create a weighted portfolio without Apple:

How does it compare:

The weighted portfolio without Apple underperforms the other two portfolios and the S&P 500 based on both CAGR and Risk Adjusted returns.

How much influence did Apple have on the equally weighted portfolio? Here are the results from the portfolio weighted by followers, the equally weighted portfolio and the equally weighted portfolio without Apple:

The equal weighted portfolio without Apple trails the S&P 500 for both returns and risk adjusted returns.

Returns Broken Down By Stock

Stock

2014 returns

2015 returns

Apple

40.62%

18.98%

Google

-5.97%

1.36%

Facebook

42.76%

1.50%

General Electric

-6.70%

8.91%

Bank of America

15.73%

-7.48%

Microsoft

27.54%

2.26%

Ford

3.71%

-0.19%

Intel

44.27%

-3.66%

Citigroup

3.92%

0.06%

AT&T

0.65%

5.79%

Cisco

27.93%

6.89%

Tesla

47.85%

12.76%

Amazon

-22.18%

38.31%

International Business Machines

-12.39%

7.30%

Exxon Mobil

-6.07%

-6.37%

Johsson & Johnson

17.34%

-2.86%

Verizon

-0.56%

8.14%

Pfizer

5.30%

13.47%

Gilead Sciences

25.51%

19.11%

Coca-Cola

5.27%

-2.20%

JPMorgan Chase

9.88%

6.49%

Starbucks

6.24%

27.52%

Procter & Gamble

15.42%

-12.62%

Yahoo

24.90%

-14.99%

Chevron

-6.98%

-6.38%

The S&P 500 returns were 13.69% in 2014 and 3.23% in 2015 (through end of May).

  • In 2014 12 of the 25 stocks beat the S&P 500.
  • In 2015 12 of the 25 stocks are beating the S&P 500.
  • 4 of the stocks have outperformed the S&P 500 in both 2014 & 2015.

Conclusions

We back tested portfolios consisting of the most followed stock on SeekingAlpha from the start of 2014 to the end of May 2015. The results were:

  • A portfolio created of the most followed stocks on SeekingAlpha weighted by number of followers outperformed the S&P 500.
  • The equally weighted portfolio performed about the same as the S&P 500.
  • The performance of Apple had a significant effect on both the follower weighted and equally weighted portfolios. Without Apple both portfolios underperform the S&P 500.

It is not surprising that the evenly weighted portfolio tracked the S&P 500 closely. The most followed stocks are fairly diversified by sector and comprised almost exclusively of stocks in the S&P 500.

Given Apple's superior performance since the beginning of 2014 it is also not surprising that a portfolio with a large allocation of Apple would outperform.

In general the most followed stocks on SeekingAlpha have performed about as well as the market.

I am not a professional advisor or researcher. I am an individual investor who studies investing and shares my thoughts. I encourage all investors do their own due diligence and please share your findings. I strongly feel the best thing about Seeking Alpha is the sharing of ideas. Please comment; I value your input. Divergent opinions are welcome.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.