A new approach to equity investment opportunities

Making the Blencathra Futures Investment Model work for you

Equity markets have a range of characteristics . One important one being the obvious observation is

that growth in equity value will vary from equity to equity. Within the market there will be number

shares that outperform the rest. It is these shares that the Blencathra Model focuses on identifying

early on in their growth cycle. These are not only expected to outperform the market index but show

exceptional growth.

The paper below shows the growth of equities both in theory and in actual practice and explains the

processes used by the model to identify these shares

How Blencathra Futures Investment model can aid you in identifying shares that will

outperform market trends and how to flag buy and sell points for investments and enable

you to review hundreds of shares in a few minutes to enable you to identify those shares

which have the potential for high performance

Characteristics of equity market performance (theory)

Indices

The key indicator of the performance of an equity is the markets index eg FTSE100, Dow Jones,

SP500, CAC40

These indices give an indication of the overall direction of individual shares . The index is built from

data derived from individual shares some which will outperform the index and others that lag

behind the index

Fig 1 shows what a theoretical equity performance in a market could look like after a 100 days of

trading. This distribution is based on a normal curve ie 68% of prices will be close to the index but

there are a significant number of equities that show a 30% to 40% better performance than the

index (30 equities out 490 in the example) conversely in this example there are 30 equities showing

a similar % shortfalls. The trick is to find a methodology to identify those high flyers.

Fig 1

Characteristics of equity market performance (actual)

It is easy to set up theoretical models that produce the results you want. To test this you need to

look at the markets actual performance Fig 2 below is based on the actual performance of the FTSE

ALLSHARE index . An index based approximately 600 equities. The period covered in the chart is for

100 days from XX/XX/XX . All the prices have been set to base of 100 at day 1 those enabling the

relative performance of different equities to be measured

Fig 2

The top performing group in the chart is made up of 60 equities and has achieved an average

growth of 35% over the 100 day period. This is consistent with our modelled projections

We can further analyse this data by taking the top 10% performers and break this into 10% groups

each group containing six equities. The results are shown in fig 3. This now starts to show some

remarkable results. The top 6 equities have shown an average growth over the 100 day period of

70% plus and the next 24 equities have shown growth in excess of 30% over the period

Fig 3

Below is a list of equities, which have achieved over 20% growth in 100 days and form part

of the top four performing groups in graph above We have set the opening price to a base

of 100 with the latest and peak prices been measured against this base

Equity

Base opening

price

closing price

highest price

IP Group 100.0 208.2 208.2

Ashtead Group 100.0 174.6 174.6

Anite 100.0 176.2 176.2

Mecom Group 100.0 132.7 147.3

Imagination Technologies Group 100.0 173.6 173.6

888 Holdings 100.0 167.9 169.5

Collins Stewart Hawkpoint 100.0 135.5 137.7

Wolseley 100.0 144.0 144.0

Optos 100.0 132.3 142.1

bwin.party digital entertainment 100.0 143.2 143.6

Yell Group 100.0 131.1 139.3

Fenner 100.0 130.8 132.7

Old Mutual 100.0 134.5 134.5

Micro Focus International 100.0 135.2 137.9

Barratt Developments 100.0 151.3 151.3

Hunting 100.0 125.1 125.6

Atkins (W S) 100.0 134.0 134.0

Fiberweb 100.0 129.2 129.2

Barclays 100.0 149.3 149.3

NCC Group 100.0 119.6 124.5

Regus 100.0 146.8 146.8

ITV 100.0 141.6 141.6

Premier Farnell 100.0 133.0 138.3

easyJet 100.0 144.4 144.4