In April 2022, we adopted a new coverage universe methodology – a set of criteria for adding companies to coverage. Below is a brief explanation of how our coverage universe was selected historically, an explanation about our current coverage criteria, and a description of our current coverage universe as of 3/14/2022.
Historical Coverage Summary
New Constructs was founded in 2002 to provide unrivaled insights into the fundamentals and valuation of public businesses. Our initial clients were primarily fundamentals-focused institutional portfolio managers and analysts. As a result, our coverage universe was designed to meet the needs of these clients. As our client base has evolved over time, our coverage universe has changed to meet their needs. Learn more about our coverage universe history.
Current Coverage Criteria
We add companies to coverage based on their membership in the following indexes prioritized in the order presented.
- S&P 500
- S&P 400
- S&P 600
- Russell 3000
This means we prioritize adding a company we currently do not cover from the S&P 500 to coverage before adding a company from the Russell 3000.
Companies are further prioritized by average daily volume. Companies with the largest 3-month average daily volume in each index are added to coverage first. When a company is added to coverage, we add its full history back to 1998 or its first filing.
In addition to the criteria above, we also prioritize additions to coverage by a company’s sector. Healthcare companies in the Russell 3000, with a market cap of $1bn or less, are sorted to the bottom of the coverage priority list. Our research shows these companies are the most likely to shrink over time, and as a result, are of lower value in our coverage universe.
Clients can request coverage of a company as long as the company has a market cap of $1bn and files with the SEC.
All upcoming IPOs with an estimated market cap of $10bn or more are added to our coverage universe. The $10bn threshold was set because companies of this size garner meaningful public and media interest. We add IPOs to our coverage universe once the company has filed an S-1 with the SEC and pricing information is publicly available.
Companies with no revenue in the current period are not added to coverage.
We add between 5 & 10 companies to coverage each month. This is our capacity for adding new companies to coverage given our technology, the size of our analyst team, and other business priorities.
Coverage attrition occurs frequently by mergers and acquisitions, bankruptcies, delistings and other corporate events.
- We cover 2748 actively traded companies as of 3/14/2022, this includes:
- All companies in the S&P 500
- 386 of the 400 companies (97%) in the S&P 400 (Mid Cap)
- 527 of the 601 companies (88%) in the S&P 600 (Small Cap)
- 2168 of the 3038 companies (71%) in the Russell 3000
- 577 other US equities not included in one of the indices above
- 165 ADRs/International companies
- 9 of which are included in an index above
Our current coverage universe is updated daily and available here.
This article originally published on July 19, 2022.
Disclosure: David Trainer, Kyle Guske II, Matt Shuler, and Brian Pellegrini receive no compensation to write about any specific stock, sector or theme.