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The plan is to split off the business within three years — potentially through a separate stock market float — to free up cash to invest in its pharmaceuticals arm. They say that will help the company rejuvenate its drug arm, which is facing patents expiring in its HIV business. There have been some jitters around the foundations of the housebuilding sector amid slowing sales and softening prices. But Bovis Homes should reassure investors on Tuesday when it reports its results for the first half. Any update on current trading will be closely watched.

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It turns out, however, that tech prowess also creates hidden linkages that can shape the futures of companies that seem entirely different on the surface. A new study led by Charles M. Lee , the Moghadam Family Professor and professor of accounting at Stanford Graduate School of Business, finds that shrewd investors can use this technological proximity to predict how a tech-based stock will perform in the months ahead.

A biotech company that makes pharmaceuticals is in an entirely different business from a company that makes equipment for analyzing gene sequences. If that actually is the case, Lee theorized, the stock market may be slow to recognize that important news for one company is also important for many of these hidden tech peers.

That would constitute an information lag and create an opportunity for astute investors. Step one was to identify tech peers based on how much their patents were concentrated in some different categories of technology. Step two was to test the investment strategy by running thousands of computer simulations. In essence, the researchers tested what would have happened if they had systematically bought or sold shares of companies based on whether portfolios of their tech peers were outperforming or underperforming the market.

Sure enough, the researchers found, the strategy worked. The researchers say this tech-peer momentum is distinct from the momentum of a particular industry or category of investing, such as growth stocks or large-cap stocks. The study found that the tech-peer strategy does best at predicting stock movements over the next six months, though the predictive power fades in looking further ahead. The researchers also found that the investing strategy works better for companies that attract relatively little scrutiny from analysts and professional investors.

The main insight, Lee says, is that tech-heavy companies can be both more similar and more different than they appear on the surface. Skip to main content. The Experience Overview of Experience. About Our Degree Programs. All Programs. See All Programs. Seed Transformation Program Admission. All Topics.

Subscribe Contact. Overview of Alumni. All Events. Seed Transformation Program Research Fellows. Alumni Events All Other Events. Enter the terms you wish to search for. Insights by Stanford Business. Search the Insights section. A new study finds that similarities in technological expertise can bind the fortunes of seemingly unrelated companies. October 15, by Edmund L. Investors can use technological proximity to predict how a tech-based stock will perform, new research shows.

Their fortunes are going to move together. Charles M. Accounting Finance. For media inquiries, visit the Newsroom. March 23, Two ways company insiders are taking advantage of privileged information and going undetected. October 18, What does it mean for a company to pay its fair share? October 2, Editor's Picks Editor's Picks. Professor , Accounting.

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It turns out, however, that tech prowess also creates hidden linkages that can shape the futures of companies that seem entirely different on the surface. A new study led by Charles M. Lee , the Moghadam Family Professor and professor of accounting at Stanford Graduate School of Business, finds that shrewd investors can use this technological proximity to predict how a tech-based stock will perform in the months ahead. A biotech company that makes pharmaceuticals is in an entirely different business from a company that makes equipment for analyzing gene sequences. If that actually is the case, Lee theorized, the stock market may be slow to recognize that important news for one company is also important for many of these hidden tech peers. That would constitute an information lag and create an opportunity for astute investors. Step one was to identify tech peers based on how much their patents were concentrated in some different categories of technology. Step two was to test the investment strategy by running thousands of computer simulations. In essence, the researchers tested what would have happened if they had systematically bought or sold shares of companies based on whether portfolios of their tech peers were outperforming or underperforming the market. Sure enough, the researchers found, the strategy worked.

Nevertheless, started off in a positive way. Following a strong , stocks were slow to move forward as investors cashed in some of their gains.