TrimTabs Investment Research
Encyclopedia
TrimTabs Investment Research, Inc. is an independent investment research firm based in Sausalito, California
.
liquidity--including mutual fund
and exchange-traded fund
flows—as well as withheld and non-withheld tax collections. Founded by Charles Biderman
in 1990, TrimTabs provides institutional investors with trading strategies and investment insights. About twenty-five percent of the top fifty hedge funds in the world use its research for market timing
.
TrimTabs’ perspective relies on the insight that stock prices are a function of supply and demand and have nothing to do with value. To track the supply of stock on both the U.S. stock market
and on non-U.S. stock markets, TrimTabs uses proprietary techniques to collect data on cash takeovers, stock buybacks, new offerings, and insider trading
. To track the demand for stock
, TrimTabs measures the daily monetary flows into and out of mutual funds and exchange-traded fund
s and the monthly monetary flows into and out of hedge funds.
founded TrimTabs in Santa Rosa, California
in 1990. The company originally focused on providing stock
trading ideas to hedge funds. Its first recommendation was the short sale of Midlantic National Bank, which traded in the high $20s in January 1990. Ultimately, Midlantic was taken over at a price of under $10 to save the bank from bankruptcy.
Biderman eventually noticed that no one was tracking money flows into and out of the U.S. stock
market on a regular basis. He began searching for real-time data on money flows of all sorts, including corporate buying and selling, mutual fund
flows, and changes in margin
debt.
Corporate America became a heavy net buyer of stock
in late 1994, and inflows into stock
mutual funds from individuals began to accelerate in 1995. By that time, Biderman realized that TrimTabs’ specialty of short selling
was not working well because of the sheer volume of cash flooding into the U.S. stock market
from corporate America and individual investors. In August 1995, he began to analyze U.S. stock market
liquidity in what would later become TrimTabs Weekly Liquidity Review. TrimTabs' investment approach is described in detail in TrimTabs Investing: Using Liquidity Theory to Beat the Stock Market (John Wiley & Sons
, 2005).
TrimTabs has broadened its offerings in recent years. In 2002, it launched TrimTabs Weekly Macro Analysis, which uses real-time indicators such as income tax
collections and online job postings to assess the health of the U.S. economy
. In 2005, TrimTabs Asset Management was founded. This subsidiary manages money using an absolute return strategy that applies TrimTabs’ investment insights. In 2006, TrimTabs unveiled TrimTabs Sector Liquidity, which assesses the liquidity of U.S. stock market
sectors and sub-sectors. It also launched TrimTabs Global Liquidity Review, which currently tracks liquidity on the London Stock Exchange
, the Euronext Paris
, the Hong Kong Stock Exchange
, and the Toronto Stock Exchange
.
On February 11, 2008, Goldman Sachs
announced that it had made a minority investment in TrimTabs through its Hudson Street Services business.
that runs the length of the main rudder. To change the ship’s direction, one must first turn the trim tab, and then the main rudder follows. TrimTabs contends that just as the movement of a trim tab determines the direction of a ship, changes in the trim tabs of liquidity theory are the key to understanding the stock market
’s direction.
Sausalito, California
Sausalito is a San Francisco Bay Area city, in Marin County, California, United States. Sausalito is south-southeast of San Rafael, at an elevation of 13 feet . The population was 7,061 as of the 2010 census. The community is situated near the northern end of the Golden Gate Bridge, and prior to...
.
Business Description
TrimTabs is an independent research service that publishes detailed daily coverage of global stock marketStock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
liquidity--including mutual fund
Mutual fund
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
and exchange-traded fund
Exchange-traded fund
An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE...
flows—as well as withheld and non-withheld tax collections. Founded by Charles Biderman
Charles Biderman
Charles Biderman is the Founder and Chief Executive Officer of TrimTabs Investment Research, Inc., an independent investment research firm based in Sausalito, CA that specializes in publishing detailed daily coverage of stock market liquidity...
in 1990, TrimTabs provides institutional investors with trading strategies and investment insights. About twenty-five percent of the top fifty hedge funds in the world use its research for market timing
Market timing
Market timing is the strategy of making buy or sell decisions of financial assets by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis...
.
TrimTabs’ perspective relies on the insight that stock prices are a function of supply and demand and have nothing to do with value. To track the supply of stock on both the U.S. stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
and on non-U.S. stock markets, TrimTabs uses proprietary techniques to collect data on cash takeovers, stock buybacks, new offerings, and insider trading
Insider trading
Insider trading is the trading of a corporation's stock or other securities by individuals with potential access to non-public information about the company...
. To track the demand for stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
, TrimTabs measures the daily monetary flows into and out of mutual funds and exchange-traded fund
Exchange-traded fund
An exchange-traded fund is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks, commodities, or bonds, and trades close to its net asset value over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE...
s and the monthly monetary flows into and out of hedge funds.
Corporate history
Charles BidermanCharles Biderman
Charles Biderman is the Founder and Chief Executive Officer of TrimTabs Investment Research, Inc., an independent investment research firm based in Sausalito, CA that specializes in publishing detailed daily coverage of stock market liquidity...
founded TrimTabs in Santa Rosa, California
Santa Rosa, California
Santa Rosa is the county seat of Sonoma County, California, United States. The 2010 census reported a population of 167,815. Santa Rosa is the largest city in California's Wine Country and fifth largest city in the San Francisco Bay Area, after San Jose, San Francisco, Oakland, and Fremont and 26th...
in 1990. The company originally focused on providing stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
trading ideas to hedge funds. Its first recommendation was the short sale of Midlantic National Bank, which traded in the high $20s in January 1990. Ultimately, Midlantic was taken over at a price of under $10 to save the bank from bankruptcy.
Biderman eventually noticed that no one was tracking money flows into and out of the U.S. stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
market on a regular basis. He began searching for real-time data on money flows of all sorts, including corporate buying and selling, mutual fund
Mutual fund
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
flows, and changes in margin
Margin (finance)
In finance, a margin is collateral that the holder of a financial instrument has to deposit to cover some or all of the credit risk of their counterparty...
debt.
Corporate America became a heavy net buyer of stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
in late 1994, and inflows into stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
mutual funds from individuals began to accelerate in 1995. By that time, Biderman realized that TrimTabs’ specialty of short selling
Short selling
In finance, short selling is the practice of selling assets, usually securities, that have been borrowed from a third party with the intention of buying identical assets back at a later date to return to that third party...
was not working well because of the sheer volume of cash flooding into the U.S. stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
from corporate America and individual investors. In August 1995, he began to analyze U.S. stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
liquidity in what would later become TrimTabs Weekly Liquidity Review. TrimTabs' investment approach is described in detail in TrimTabs Investing: Using Liquidity Theory to Beat the Stock Market (John Wiley & Sons
John Wiley & Sons
John Wiley & Sons, Inc., also referred to as Wiley, is a global publishing company that specializes in academic publishing and markets its products to professionals and consumers, students and instructors in higher education, and researchers and practitioners in scientific, technical, medical, and...
, 2005).
TrimTabs has broadened its offerings in recent years. In 2002, it launched TrimTabs Weekly Macro Analysis, which uses real-time indicators such as income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
collections and online job postings to assess the health of the U.S. economy
Economy
An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area...
. In 2005, TrimTabs Asset Management was founded. This subsidiary manages money using an absolute return strategy that applies TrimTabs’ investment insights. In 2006, TrimTabs unveiled TrimTabs Sector Liquidity, which assesses the liquidity of U.S. stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
sectors and sub-sectors. It also launched TrimTabs Global Liquidity Review, which currently tracks liquidity on the London Stock Exchange
London Stock Exchange
The London Stock Exchange is a stock exchange located in the City of London within the United Kingdom. , the Exchange had a market capitalisation of US$3.7495 trillion, making it the fourth-largest stock exchange in the world by this measurement...
, the Euronext Paris
Euronext Paris
Euronext Paris is France's securities market, formerly known as the Paris Bourse, which merged with the Amsterdam, Lisbon and Brussels exchanges in September 2000 to form Euronext NV, which is the second largest exchange in Europe behind the UK's London Stock Exchange...
, the Hong Kong Stock Exchange
Hong Kong Stock Exchange
The Hong Kong Stock Exchange is a stock exchange located in Hong Kong. It is Asia's third largest stock exchange in terms of market capitalization behind the Tokyo Stock Exchange and the Shanghai Stock Exchange and fifth largest in the world...
, and the Toronto Stock Exchange
Toronto Stock Exchange
Toronto Stock Exchange is the largest stock exchange in Canada, the third largest in North America and the seventh largest in the world by market capitalisation. Based in Canada's largest city, Toronto, it is owned by and operated as a subsidiary of the TMX Group for the trading of senior equities...
.
On February 11, 2008, Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
announced that it had made a minority investment in TrimTabs through its Hudson Street Services business.
Corporate Name
TrimTabs takes its name from the trim tab that lies deep within an ocean-going ship. The trim tab is a minuscule rudderRudder
A rudder is a device used to steer a ship, boat, submarine, hovercraft, aircraft or other conveyance that moves through a medium . On an aircraft the rudder is used primarily to counter adverse yaw and p-factor and is not the primary control used to turn the airplane...
that runs the length of the main rudder. To change the ship’s direction, one must first turn the trim tab, and then the main rudder follows. TrimTabs contends that just as the movement of a trim tab determines the direction of a ship, changes in the trim tabs of liquidity theory are the key to understanding the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
’s direction.
Research Highlights
- December 27, 1999. "Historically bull markets end for one reason and one reason only: the supply of shares exceeds the demand. Liquidity analysis is the only way to know to determine when a bull market will end. Liquidity is bullish right now. But that will change starting with the new year. . . .Therefore, starting in February the free float could grow each month by $60 billion - $23 billion, or $37 billion. Where will the more than $37 billion of new cash monthly come from to stop a market collapse?" (Liquidity TrimTabs, December 27, 2002)
- December 26, 2002. “We are as bullish this year end as we were bearish at the end of 2001. This is the first time since the end of 1999 that all three of our liquidity indicators at year-end were fully aligned with anecdotal evidence. (At the end of 1999) we were bearish, now we are bullish. L1, the net change in the trading float of shares, is bullish as corporate buying outweighs corporate selling. L2, flows in and out of U.S. equity funds, is bullish due to the extreme bearishness of fund investors. L3, margin debt, either shrank more than the market when stocksStocksStocks are devices used in the medieval and colonial American times as a form of physical punishment involving public humiliation. The stocks partially immobilized its victims and they were often exposed in a public place such as the site of a market to the scorn of those who passed by...
dropped or rose less than the market when stocksStocksStocks are devices used in the medieval and colonial American times as a form of physical punishment involving public humiliation. The stocks partially immobilized its victims and they were often exposed in a public place such as the site of a market to the scorn of those who passed by...
rose since July, 2002.” (Barron's MagazineBarron's MagazineBarron's is an American weekly newspaper covering U.S. financial information, market developments, and relevant statistics. Each issue provides a wrap-up of the previous week's market activity, news reports, and an informative outlook on the week to come....
, January 6, 2003)