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International Combo Model

The International Combo Model is designed to be a stock selection tool for investors in non-US markets who need to analyze individual equities within specific country markets. International Combo stock rankings represent forecasts of expected alpha versus the company’s home market return.

Combo was Columbine’s first complete multifactor stock selection model; we created the US model in 1985 and began publishing Combo Model rankings in 1986. We added International Combo Model rankings in 1992, creating optimized, country-specific versions of the model for markets outside the US. At first we could offer only five country-specific versions of Combo rankings, but we now have International Combo Models for more than thirty developed and developing market countries around the world. The remaining smaller markets are covered by an Emerging Markets version of the model.

Recognizing the higher level of transactions costs generally experienced outside the US, we optimize each version of the International Combo Model to achieve superior risk-adjusted portfolio return at realistic levels of portfolio turnover. The design process focuses on big-cap, highly-liquid, institutional-grade securities like those that make up the major international indices. Our experience shows that these issues are the most efficiently priced. Any multifactor model that can successfully generate alpha in these securities will have no problem with smaller cap, less efficiently priced companies.

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