SumZero is an online community for professional
investor
An investor is a person who allocates financial capital with the expectation of a future Return on capital, return (profit) or to gain an advantage (interest). Through this allocated capital most of the time the investor purchases some specie ...
s (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
A hedge fund is a pooled investment fund that trades in relatively liquid assets and is able to make extensive use of more complex trading, portfolio-construction, and risk management techniques in an attempt to improve performance, such as sho ...
,
mutual fund
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. The term is typically used in the United States, Canada, and India, while similar structures across the globe include the SICAV i ...
,
private equity fund
A private equity fund (abbreviated as PE fund) is a collective investment scheme used for making investments in various equity (and to a lesser extent debt) securities according to one of the investment strategies associated with private equity ...
, or
investment banking
Investment banking pertains to certain activities of a financial services company or a corporate division that consist in advisory-based financial transactions on behalf of individuals, corporations, and governments. Traditionally associated wit ...
proprietary trading
Proprietary trading (also known as prop trading) occurs when a trader trades stocks, bonds, currencies, commodities, their derivatives, or other financial instruments with the firm's own money (instead of using depositors' money) in order to make ...
desk. SumZero is a closed, application-based community, which currently has over 16,000
buyside members and over 60,000 'Basic' users.
Roughly 75% of buyside applicants for membership are rejected.
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.
History
The site's co-founder and current CEO
Divya Narendra
Divya Narendra (; born March 18, 1982) is an American businessman. He is the CEO and co-founder of SumZero along with Harvard classmate Aalap Mahadevia. He also co-founded HarvardConnection (later renamed ConnectU) with Harvard University classma ...
came up with the idea for SumZero in April 2007, while working for the hedge fund
Sowood Capital in
Boston
Boston (), officially the City of Boston, is the state capital and most populous city of the Commonwealth of Massachusetts, as well as the cultural and financial center of the New England region of the United States. It is the 24th- mo ...
. Narendra and college friend Aalap Mahadevia subsequently launched SumZero in March 2008.
In June 2012,
Winklevoss Capital made an
angel investment
An angel investor (also known as a business angel, informal investor, angel funder, private investor, or seed investor) is an individual who provides capital for a business or businesses start-up, usually in exchange for convertible debt or owners ...
of $1.05 million into SumZero.
In October 2012 the site announced its first Annual Investing Challenge, jointly organized by SumZero and the Value Investing Congress. The top 3 ideas were pitched on the
CNBC
CNBC (formerly Consumer News and Business Channel) is an American basic cable business news channel. It provides business news programming on weekdays from 5:00 a.m. to 7:00 p.m., Eastern Time, while broadcasting talk sho ...
television show ''
Fast Money'' and winner Ryan Fusaro presented his investment idea at the Value Investing Congress on October 1, 2012, alongside the portfolio managers
Bill Ackman
William Albert Ackman (born May 11, 1966) is an American billionaire investor and hedge fund manager. He is the founder and CEO of Pershing Square Capital Management, a hedge fund management company. His investment approach makes him an activis ...
,
David Einhorn, and Barry Rosentein.
SumZero hosted a co-branded research idea contest with
Institutional Investor
An institutional investor is an entity which pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include commercial banks, central banks, credit unions, government-linked co ...
in November 2014. The event was hosted at the
Bloomberg Tradebook
Bloomberg Tradebook, LLC., the agency broker of Bloomberg L.P., serves global investment advisors, money managers, hedge funds, proprietary desks and broker dealers, with access to global trading venues, proprietary trading algorithms, execution c ...
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.
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
Long/short equity is an investment strategy generally associated with hedge funds. It involves buying equities that are expected to increase in value and selling short equities that are expected to decrease in value. This is different from the ri ...
fund was selected as the final winner of the Challenge for founder Will Thomson's stock pitch on
Lucara Diamond
Lucara Diamond Corp. is a diamond exploration and mining company, founded in 2009 by two Canadian mining executives, Eira Thomas, Catherine McLeod-Seltzer and Swedish-Canadian mining billionaire Lukas Lundin, operating in Southern Africa but esta ...
. 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.
The site opened applications for the Van Biema Small-Cap Ex-US Challenge in March 2018 and selected 5 finalists in May 2018.
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 office
A multi-family office (MFO) is an independent organization that supports multiple families to manage their entire wealth. Multi-family offices typically provide a variety of services including tax and estate planning, risk management, objective f ...
s,
endowment fund
A financial endowment is a legal structure for managing, and in many cases indefinitely perpetuating, a pool of financial, real estate, or other investments for a specific purpose according to the will of its founders and donors. Endowments are of ...
s, and
fund of funds
A "fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as multi-manager investment. A f ...
. 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
Drexel University is a private research university with its main campus in Philadelphia, Pennsylvania. Drexel's undergraduate school was founded in 1891 by Anthony J. Drexel, a financier and philanthropist. Founded as Drexel Institute of Art, S ...
, Bryan Johnson of
Creighton University
Creighton University is a private Jesuit research university in Omaha, Nebraska. Founded by the Society of Jesus in 1878, the university is accredited by the Higher Learning Commission. In 2015 the university enrolled 8,393 graduate and undergra ...
, and
Rice University
William Marsh Rice University (Rice University) is a Private university, private research university in Houston, Houston, Texas. It is on a 300-acre campus near the Houston Museum District and adjacent to the Texas Medical Center. Rice is ranke ...
’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
Long may refer to:
Measurement
* Long, characteristic of something of great duration
* Long, characteristic of something of great length
* Longitude (abbreviation: long.), a geographic coordinate
* Longa (music), note value in early music mensur ...
and
short
Short may refer to:
Places
* Short (crater), a lunar impact crater on the near side of the Moon
* Short, Mississippi, an unincorporated community
* Short, Oklahoma, a census-designated place
People
* Short (surname)
* List of people known as ...
calls on U.S. equity securities submitted to the website by 1,112 buyside analysts from 910 different funds.
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.
References
External links
* {{official website, http://www.sumzero.com/
Financial services companies based in New York City
Internet properties established in 2008
Economics websites