Knowledge is power when it comes to investing

Do you have any stock in your investment or retirement portfolio? I bet you do. Have you ever checked out the company’s financial statements? I bet you haven’t. Therein lies one of the biggest challenges for the common investor. Here comes Hamilton-based Verdant Analysis to the rescue (see www.verdantanalysis.com).

It was the seemingly simple task of investing for her daughters’ education that ultimately led to the creation of Verdant Analysis. But let’s qualify this. Choosing a stock is simple if: 1) someone else is doing it for you, 2) you are investing in the flavour of the month, or 3) you are throwing a dart at a list of securities. It’s not so simple if you are taking the time yourself to investigate the soundness of a company and looking for good value for your dollar.

“Analyzing financial statements manually is tedious, labour intensive and time consuming,” says Jennifer Cameron, co-founder of Verdant Analysis, “and ultimately it is an untenable strategy because of the sheer volume of information that changes on a regular basis.” There are software solutions out there that analyze financial information for you but they’re geared towards larger institutions and are priced prohibitively, some as much as $25,000 per year. The DeGroote School of Business was one of the first schools in North America to house such sophisticated software in its trading floor as part of a philanthropic gift from Allen H. Gould.

When it comes to investing, there is no shortage of financial data. But unless you can convert a company’s financial results into something meaningful, either by comparing it to other companies or comparing it over time, it remains just data. “Until now there has been a monopoly on financial knowledge,” says Jennifer.

But is this an application for everyone? Some people will have a more obvious propensity to use it, for example portfolio managers, analysts, accountants, financial advisors and CFOs. In other words, people who are responsible for investing other people’s money. At the other end of the spectrum are finance students who must still analyze financial statements but don’t necessarily have access to real financial assets. In the middle are individual investors for whom this is a hobby or who feel that they need to perform a bit more due diligence before making an important investment decision. Verdant targets this particular group.

An adjunct to Verdant’s analytical tool is the ability for users to create forecasts. A forecast is a user’s prediction of what a stock should be priced at, or what it will move to over time. The software calculates and displays the projected and actual annualized return at the close of each business day. Forecasts can be kept private or they can be made public.

Users can search public forecasts and comment on them. Forecasts can also be Tweeted throughout the web … I am sure you can imagine where the social networking application of this is going. Professional and/or amateur investors can use this to garner a following and to develop a reputation. In academia, professors could setup contests to see who has the best investment strategy by comparing students’ returns.

The web-based application is offered on a subscription basis. Pricing starts at a reasonable $5 per month for students and goes up from there. However, during the company’s current beta period the application is free to try. If you’re a student or amateur investor and want to learn to become a better one, you literally have nothing to lose. Give it a shot.

The Hamilton region is not necessarily known as a financial centre. But Jennifer sees it differently. She aims to create new jobs in the city as her enterprise grows. “Hamilton’s business environment is changing rapidly. Verdant is a knowledge-intensive enterprise but we’ll still need a physical location. I like the artistic atmosphere of James Street North. This is where I see building a twenty-first century company that will attract bright, creative people to our downtown core and make Verdant one of Hamilton’s shining stars,” Jennifer says.

Verdant is another example of the new-age start-ups that are sprouting up throughout the city. The passion and love that entrepreneurs like Jennifer have for Hamilton should be commended and supported. Try out her software solution for free while it’s still in beta, and be sure to provide her with constructive feedback … and don’t forget, be sure to provide me with a percentage of any gains you end up having in your burgeoning investment portfolio … just kidding. Happy investing!