SumZero

SumZero, Inc.
Private
Industry Financial Technology
Founded 2008 (2008)
Founders Divya Narendra, Aalap Mahadevia
Headquarters Flatiron District, New York City,
NY, U.S.
Products SumZero Basic, SumZero Quarterly Top Idea ("QTI"), SumZero Elite, SumZero Buyside
Website SumZero.com

SumZero is an investment website for professional investors (collectively referred to as the "buyside"), and 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] Its exclusivity is said to mirror that of Facebook at its outset, and though it currently has over 10,000 buyside members and over 40,000 'Basic' users,[4] roughly 75% of buyside applicants for membership are rejected.[5][6]

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]

SumZero CEO Divya Narendra and Winklevoss twins featured in The Wall Street Journal.

In October 2012 the site announced its first Annual Investing Challenge, jointly organized by SumZero and the Value Investing Congress.[12][13] The top 3 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 Rosentein.[15]

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.[16]

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.[17]

References

  1. ↑ "SumZero Founder & CEO Divya Narendra Live on Bloomberg TV with Margaret Brennan".
  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".
  9. ↑ "Winklevoss Twins Back 'Facebook' for Investors with $1 million".
  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.
  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".
  16. ↑ Costa, Len (February 28, 2012). "Do Buy-Side Investment Recommendations Add Value?".
  17. ↑ Wesley Gray; Bryan Johnson; Steven Crawford; Richard A. Price III (September 17, 2012). "Do Buy-Side Recommendations Have Investment Value". SSRN 1971533 Freely accessible.
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