Summary
- Rigorous forensic algorithms identify top 10 positive and negative scoring stocks for 2026, leveraging models like Beneish, Altman, Ohlson, and Montier.
- Negative forensic portfolios historically deliver higher returns and volatility, with 10x more delistings or mergers than positive portfolios.
- Positive forensic portfolios offer more stable price behavior and have outperformed the S&P 500 again this year with notably +28.4% dividend adjusted returns YTD.
- Both positive and negative forensic portfolios have consistently outperformed benchmarks since 2018, with performance leadership rotating between them annually.
- Stocks can be extremely different across portfolios and it is important to read the first 2 steps in the Getting Started Instructions to build yourself an optimal portfolio mix for your own personal risk tolerance.
Introduction
This is a fundamental value study that offers two new forensic portfolio selections for 2026 to continue testing the top four forensic algorithms applied to detect bankruptcy risk, earnings manipulation, and financial irregularities. This forward testing study makes portfolio selections from the highest positive and highest negative scoring stocks across the U.S. stock exchanges to measure performance variances between portfolios and benchmark indexes.
Over the past 9 years from 2017 on Seeking Alpha, I have published 52 different forensic portfolios in one-year and two-year test periods. As a result of this long term analysis we are seeing strong differentiation in results between negative and positive forensic portfolios. Most notably, the delisting of stock symbols (merger, acquisition, leaving the exchange) are approximately 10x higher among negative forensic stock selections than for positive forensic stocks. We see that average price behavior for positive forensic stocks is more stable, but that greater individual returns are coming from the negative portfolios. Overall the negative forensic stocks are producing much higher returns, with larger variability and at a much higher rate of mergers/delisting.
Forensic Value Portfolios
Both the January 2025 Positive/Negative forensic portfolios are positive YTD. Only the January Positive Forensic portfolio +28.4% returns adjusted for dividends, beat the S&P 500 +18.8% through December 29th this year.
Last year both the positive and negative portfolios significantly beat the S&P 500. The cumulative 1-year charts and annual charts are shown below and none of the returns including Growth & Dividend portfolios are adjusted for dividends.
To try to answer questions about which is the best long term portfolio for you to consider, that is difficult to say. The biggest caution is that the negative forensic portfolio has seen by far the most delisted stocks for failing to meet exchange requirements or surprise acquisitions and the slack has been picked up by other stocks in the portfolio. A different long term portfolio has lead in nearly every year of the past 5 years. Cumulatively, they each continue to lead the S&P 500 in live forward testing since 2018. You can see some rotation in portfolio returns over the past 8 years with both or either of the Negative and Positive Forensic portfolios outperforming in most years.
