Methodology

Portfolio Health Score

A single 0-100 score summarizing portfolio quality across factor diversification, smart money alignment, insider signals, concentration, and red flags. This is a heuristic summary of available data, not an investment recommendation or a prediction of returns.

Data Sources

Latest portfolio positions, weights, and account metadata
Daily 19-factor exposures and portfolio concentration metrics
Holder IQ, insider-signal, and filing red-flag scores
Brokerage sync freshness and unsupported-position exclusion reasons

Validation Status

The claims registry tracks validation evidence for these scoring components. The weights below use the calculation's constants.

Backed claim

30 percent

Portfolio health score weight defined in src/services/portfolio

Evidence provenance

portfolio-health-factor-balance-30

Test evidence: tests/services/portfolio.test.ts

Backed claim

30 percent

Portfolio health score weight defined in src/services/portfolio

Evidence provenance

portfolio-health-holder-iq-30

Test evidence: tests/services/portfolio.test.ts

Source: docs/claims.json, generated 2026-09-07.

Scoring Model

Four components contribute to the score; a red-flag penalty is subtracted. Each component is scaled to 0-100:

health_score = 0.3 × factor_balance
             + 0.3 × holder_iq
             + 0.2 × insider_sentiment
             + 0.2 × diversification
             − 0.15 × red_flag_penalty

Final score clamped to [0, 100] and mapped to letter grade.

Score Components

Factor Balance

Weight: 0.3
Description: Diversification across style factors; penalizes extreme tilts
Optimal state: Measured style exposures near their targets

Smart Money Alignment

Weight: 0.3
Description: Value-weighted Holder IQ percentiles for eligible company shares
Optimal state: Higher measured Holder IQ percentiles

Insider Sentiment

Weight: 0.2
Description: Net insider buying vs selling, adjusted for role and size
Optimal state: Positive net sentiment score

Diversification

Weight: 0.2
Description: Concentration across held positions, using normalized HHI
Optimal state: More evenly distributed position weights

Red Flag Exposure

Weight: -0.15
Description: Presence of filing red flags in held positions
Optimal state: Zero critical red flags

Score components, weights, descriptions and optimal states
Component	Weight	Description	Optimal State
Factor Balance	0.3	Diversification across style factors; penalizes extreme tilts	Measured style exposures near their targets
Smart Money Alignment	0.3	Value-weighted Holder IQ percentiles for eligible company shares	Higher measured Holder IQ percentiles
Insider Sentiment	0.2	Net insider buying vs selling, adjusted for role and size	Positive net sentiment score
Diversification	0.2	Concentration across held positions, using normalized HHI	More evenly distributed position weights
Red Flag Exposure	-0.15	Presence of filing red flags in held positions	Zero critical red flags

Grade Thresholds

Numeric scores are mapped to letter grades for quick interpretation:

Grade A90-100: Highest composite score band
Grade B80-89: High composite score band
Grade C70-79: Middle composite score band
Grade D60-69: Low composite score band
Grade F0-59: Lowest composite score band; inspect coverage and components

Health score grades, numeric ranges and interpretations
Grade	Score Range	Interpretation
A	90-100	Highest composite score band
B	80-89	High composite score band
C	70-79	Middle composite score band
D	60-69	Low composite score band
F	0-59	Lowest composite score band; inspect coverage and components

Component Details

Factor Balance (30%)

Measures deviation from targets for 7 style factors. Each factor is averaged over positions with measured data. Missing exposures are excluded, rather than treated as neutral exposures.

Smart Money Alignment (30%)

Averages the Holder IQ percentiles of eligible company shares with available data, weighted by their portfolio value. Fund units and cash do not receive a company institutional-quality score.

Insider Sentiment (20%)

Aggregates open-market purchases and sales by insiders across holdings over the last 90 days. Net buying improves the score; net selling (especially by the C-suite) reduces it. Option exercises, stock awards, tax withholding, gifts and Rule 10b5-1 plan trades are left out: they are compensation or scheduled in advance, not a bet.

Diversification (20%)

Measures how evenly value is distributed across held positions. It does not inspect the securities inside a fund or compare sector weights with a benchmark. A large index-fund position can therefore reduce this component despite underlying diversification.

Red Flag Exposure (up to 15 points deducted)

Presence of critical or high-severity filing red flags in held positions reduces score. See Red Flags methodology.

Limitations

Score reflects current snapshot; does not predict future performance
Component weights are heuristic policy choices. A grade alone does not establish that a portfolio is suitable or that a critical issue exists.
Some data (e.g., 13F filings) has 45-day lag from quarter end
Company signals require identified US-listed, USD-denominated company shares. Funds, cash and other assets remain in allocation and portfolio-value coverage totals.
There is no fund look-through. Missing factor, Holder IQ or insider data receives a neutral component score of 50 when none is available; this is not evidence of a neutral investment outlook. Read coverage alongside every score.
Calculation method 2.1. Historical trends and saved comparisons use the same method; older unversioned scores are excluded rather than presented as investment performance changes.

Citations & Research Basis

Modern portfolio theory motivates diversification and concentration penalties.
Multi-factor attribution research informs factor-balance scoring and VaR targets.
Institutional ownership, insider-trading, and filing-risk evidence inform the non-price components.

See also: Attention Queue | Factor Model | Holder IQ