Hillcrest Behavioral Insights

Started in 2020, Hillcrest Behavioral Insights  is a recurring research publication that is designed to share data-driven observations from our quantitative research efforts that are paired with behavioral explanations and takeaways.

Behavioral Insight #1: The Use of Return on Equity and Similar Metrics in Stock Selection

September 2020

The goal of this issue is to share data-driven observations from our research efforts that are paired with behavioral explanations and takeaways. As we regularly note, quantitative research is a foundational aspect of our firm, and, therefore, our research efforts are constantly ongoing. We hope that sharing a selection of our accumulated research findings will prove beneficial to our readers and serve to reinforce the importance of making objective and evidence-based investment decisions.

Behavioral Insight #2: The Use of Sell-Side Price Targets in Stock Selection

March 2021

In our inaugural edition of Behavioral Insights, we examined the widely held market assumption that Return on Equity (ROE) and other similar indicators of operational quality are predictive of future stock returns. The data that we analyzed showed that the conventional market wisdom regarding these indicators is incorrect. ROE and similar metrics alone do not translate to an effective means of stock selection. In this edition of Behavioral Insights, we utilize our quantitative research capabilities to examine another market indicator that can be a pitfall to investors: sell-side analyst price targets.