Definition of Stock Screening
Stock screening is the process of using predetermined metrics to arrive at a cluster of stocks that a purchaser might be interested in. This cluster is arrived at through the elimination of, or filtering out of all stocks that do not fall within the specific criterion (Trinks & Scholtens, 2017) . The potential investor will come up with minimum conditions for investment based on parameters such as stock price, market capitalization or geographical location. These conditions will be used to make a stock screener to be used to eliminate undesirable stocks. Under Activist Stock Screening, an investor uses stock screening as an instrument of social justice (Trinks & Scholtens, 2017) .
Five Criteria for Activist Stock Screening
Political Affiliation
Many companies in America today are benefiting while others are getting adversely affected by their political affiliation. This is premised on the current extremely divisive political environment in the USA. For example, there are companies whose CEOs left a federal council in protest against some actions by the president. Some of these companies are publicly traded. Ardent supporters of the president can use stock screening to eliminate such companies. Opponents of the president can use the same to screen out corporations considered to be pro-presidency
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Sexual Harassment
Many companies have been involved in massive scandals relating to sexual harassment. Whereas any company can suffer the misfortune of having a rogue employee, it becomes a mark on the corporate culture of a company if the incidences happen repeatedly or when the organization was informed and did not take the requisite steps. This can be a good ground for screening the stock of a company as an act of activism.
Poor Labor Relations
Most companies have excellent labor and industrial relation regimens in the USA because the laws are formidable on the subject. The very same companies will run slave camps and sweatshops in third world countries. Among the issues involved would include child labor, underpayment and poor living conditions. Such a company can have its stocks screened under protest.
Gender and Racial Discrimination
This is a common problem in the USA despite the existence of the Civil Rights Act of 1963 and its various amendments. Whereas it is not mandatory for the staff members of a company to be demographically balanced, a publicly traded company owes its shareholders an obligation to uphold social justice. Where potential employees are turned away or workers are denied promotions purely based on their gender or racial affiliation, such a company is guilty of gender or racial discrimination and can have its stocks screened as a form of activism.
Environmental Degradation
Each American makes some contribution towards environmental degradation mainly through energy consumption. There are, however, some companies whose activities inordinately cause environmental degradation in the pursuit of better profits. Such companies can also have their stocks screened in protest.
The Stock Screening Procedure
An overwhelming majority of stock purchases are undertaken online so is the process of stock screening. Numerous and mostly free software programs have been developed to assist investors with their stock screening (Trinks & Scholtens, 2017) . There are two major options for undertaking the same. The first is customized screening and the second is specialized screening. For customized screening, the investor will use the graphic user interphase of the preferred screener to select the specific category preferred. This will screen all the stocks that do not fall under that category leaving the investor with choices that suit the preferred category. With specialized stock screening, an investor, more so one who wants to undertake activist stock screening will select preferred specifications to make a specialized stock screener. Once the screener is set up, it can screen out all stocks that fall under the eliminated specifications leaving the desired cluster (The American Association of Individual Investors, 2017) .
References
The American Association of Individual Investors. (2017). Guide to stock screening. Retrieved October 23, 2017, from http://www.aaii.com/stock-screens/guidetostockscreening
Trinks, P. J., & Scholtens, B. (2017). The opportunity cost of negative screening in socially responsible investing. Journal of Business Ethics , 140 (2), 193-208
