On Sunday, Integrity Research blogged about the consolidation they continue to anticipate amongst the 1,735 alternative research providers (ARPs) in their database. The blog got us thinking about the future. We certainly agree with Integrity that a consolidation period is coming, and it’s not a matter of if – but when.
We would anticipate that mid-2009 (if not sooner), when the global settlement ends, there will be an enormous shake up in the industry – the effects starting to occur now, as many struggling and mid-tier ARPs are looking to anchor onto larger entities in anticipation of losing settlement dollars.
The actual settlement dollars are fairly confined to a select few beneficiaries, but the demand for alternative research that came about as a result of the global settlement will still be threatened when the ‘cease and desist’ order ends in 2009.
The end of the global settlement will probably be a lot like Y2K – something that will drive a lot of buzz, but other than that, will be much ado about nothing.
Still, the attention that will be placed on independent research as a result of the pending ‘end’ to the settlement will drive many firms to reassess their research needs, and to consolidate accordingly.
The Consequences of Consolidation
Consolidation in the research industry is not necessarily a bad thing, as long as there are independent entities that band together and remain independent in their thoughts, ideas and transparency, and they remain entirely separated from their influential investment banking and trading brethren. Once that pendulum swings too far back in the other direction, investment information could end up back at square one.
The risk that lies ahead is if research becomes too consolidated, and those entities eventually become larger, more ‘groupthink’ type delivery models, much like the pre-’03 research that came out of Wall Street. The danger of ‘consolidated’ ideas is that it creates an unhealthy imbalance to the financial markets when many investors are making their moves based on commoditized information. As we all know too well from both the current credit crunch as well as the ’01 bubble burst, irresponsible investment research consumed by the masses can lead to fatal consequences for our financial markets and economy.
Consolidation in the research world is likely inevitable over the course of the next year. However, providers of independent/alternative research would be wise to band together in the name of independence, and to continue to push the envelope by delivering a diverse offering of products through a variety of channels to limited audiences.
Tuesday, April 22, 2008
Tuesday, April 15, 2008
'Best' Can Get Better
Information is all about the source. Can brokerage-house analysts offer conflict-free insights? Even if so, is commoditized investment information ever great?
Navigating information is an art – having vision, critical. David McCullough shouldn’t need to travel through time to know what the air smelled like in Philadelphia in 1776. McCullough, a titan in his field, relies on the scripts of yesterday to produce truly great texts filled with unique, personal knowledge – information with vision. McCullough doesn’t want to write about something that most people already feel or understand. He doesn’t want his unique insight to be compromised or labeled inconsequential. Who would? Breadth and depth require the kind of independence and personality that is in short supply.
As indicated in a recent Barron’s article by Robin Goldwyn Blumenthal, “Sell-Side Story: Analyst Calls Ring Up Best Returns,” a new study from Goizueta Business School at Emory University showed that investors using brokerage-house research are likely to see higher returns than if they were to follow institutional and mutual funds. This sounds counterintuitive when you look at some of the year-end reports from ’07 that show Wall Street research had only 7% ‘Sell’ ratings, collectively, in a down market.
Are these analysts providing the ‘edge’ that investors want? Are investors outperforming their peers based on this commoditized and sanitized information?
‘Conflict-free’ and ‘exclusivity’: two terms which are not parts of a brokerage-house analyst’s vision. Yet, these two characteristics are the very traits that set great information apart from good information, ultimately providing the edge.
Investors can, and should, expect to receive actionable insights that provide them with an advantage over their competitors. The best information is surely not the kind that is universally accessible. There is a better way than the best way; the greater value is in preferred value. Institutional investors need to separate themselves from the masses to gain an edge in the marketplace. Limited distribution of information should be an integral part of the process for investors looking for that edge.
Most models are tragically flawed, leaving investors with more questions than actionable trade ideas. Street Brains offers the edge that investors are looking for – exclusive, unfettered, uncompromised insights. With the right vision, the best returns mean edging out your competitors. While an interesting barometer for the marketplace, the findings of the Goizueta study are a bellwether for mediocrity, not greatness. Valuable investment insight must conquer two key goals: beat market/sector averages and set investors apart from the pack.
Navigating information is an art – having vision, critical. David McCullough shouldn’t need to travel through time to know what the air smelled like in Philadelphia in 1776. McCullough, a titan in his field, relies on the scripts of yesterday to produce truly great texts filled with unique, personal knowledge – information with vision. McCullough doesn’t want to write about something that most people already feel or understand. He doesn’t want his unique insight to be compromised or labeled inconsequential. Who would? Breadth and depth require the kind of independence and personality that is in short supply.
As indicated in a recent Barron’s article by Robin Goldwyn Blumenthal, “Sell-Side Story: Analyst Calls Ring Up Best Returns,” a new study from Goizueta Business School at Emory University showed that investors using brokerage-house research are likely to see higher returns than if they were to follow institutional and mutual funds. This sounds counterintuitive when you look at some of the year-end reports from ’07 that show Wall Street research had only 7% ‘Sell’ ratings, collectively, in a down market.
Are these analysts providing the ‘edge’ that investors want? Are investors outperforming their peers based on this commoditized and sanitized information?
‘Conflict-free’ and ‘exclusivity’: two terms which are not parts of a brokerage-house analyst’s vision. Yet, these two characteristics are the very traits that set great information apart from good information, ultimately providing the edge.
Investors can, and should, expect to receive actionable insights that provide them with an advantage over their competitors. The best information is surely not the kind that is universally accessible. There is a better way than the best way; the greater value is in preferred value. Institutional investors need to separate themselves from the masses to gain an edge in the marketplace. Limited distribution of information should be an integral part of the process for investors looking for that edge.
Most models are tragically flawed, leaving investors with more questions than actionable trade ideas. Street Brains offers the edge that investors are looking for – exclusive, unfettered, uncompromised insights. With the right vision, the best returns mean edging out your competitors. While an interesting barometer for the marketplace, the findings of the Goizueta study are a bellwether for mediocrity, not greatness. Valuable investment insight must conquer two key goals: beat market/sector averages and set investors apart from the pack.
Friday, April 4, 2008
Former Bear Stearns Research Analyst Launches REITology on StreetBrains Platform
This week, StreetBrains announced the launch of REITology through an exclusive partnership with Amy Lauren Young, formerly of Bear Stearns’ II ranked real estate team. REITology offers insights focused on the global real estate sector with a primary focus on companies with retail exposure.
REITology marks the 10th independent research provider to join the StreetBrains Actionable Information eXchange (AIX).
Former Bear Stearns Research Analyst Launches
REITology on StreetBrains Platform
New York, NY, April 2, 2008 - StreetBrains, LLC, the Actionable Information eXchange (AIX), today announced that they have partnered with Amy Lauren Young, formerly of Bear Stearns, to launch REITology, a research product that will cover the $14 trillion global commercial real estate sector, with a focus on companies with retail exposure. REITology is the 10th independent research provider (IRP) to join StreetBrains’ AIX.
REITology will provide written research as well as expert hours through the StreetBrains AIX. From company reports, retailing perspectives and international trends, to sector overviews and thought pieces, REITology’s insights will be delivered through written reports as well as through webinars and client-only panel discussions. Each REITology license will also include 40 hours of expert access in which customers may speak directly with REITology senior analyst, Amy Lauren Young.
During the pre-launch phase, REITology hosted two webinar events for clients and prospects. The first covered “The Reality of Retail REITs: What Consumers Aren't Consuming” and the second, held after Ms. Young returned from the world’s largest real estate conference, MIPIM, in Cannes, France, discussed “U.S. versus International Real Estate: Where are the Recession-Proof Investments?” Qualified institutional investors may click here to be granted a free trial, as well as access to the REITology webinars.
Prior to launching REITology, Amy Lauren Young spent nearly 6 years covering real estate at Bear Stearns & Co. Inc. where her real estate research team was ranked 3rd in its category by Institutional Investor in October 2007. Ms. Young previously spent 3 years at Deutsche Bank (formerly Deutsche Banc Alex. Brown Inc.); and two years at Lehman Brothers covering Conglomerates. Prior to the sell-side, Amy worked on the buy-side for four years in Denver, Colorado at Wells Fargo.
Additionally, after eight years of studying Mandarin Chinese, Amy studied abroad in East Asia, spending six months in Hong Kong and China. Amy is also involved in the Young Executive Board of Camp Interactive, a non-profit organization. She is a sustainer of the New York Junior League, and also an Apollo Circle member of the Metropolitan Museum of Art.
"REITology offers a unique perspective on the international retail real estate market by factoring in investor psychology into its valuation model," says Lawrence Margolis, Managing Director of StreetBrains. "Their research fits into the StreetBrains platform by delivering information and perspectives that are actionable and offer clients an edge."
To learn more about REITology, please visit www.reitology.com.
To learn more about StreetBrains, please visit www.streetbrains.com or www.streetbrains.blogspot.com.
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StreetBrains LLC, the Actionable Information eXchange (AIX), provides limited distribution research and expert access to qualified institutional investors. Launched in May 2007, StreetBrains partners with unique independent research providers (IRPs) to bring exclusive analysis to hedge funds, proprietary trading desks, mutual fund managers and family offices via our proprietary research HUB. StreetBrains is not a broker/dealer, and operates free of any trading or investment banking conflict of interests and follows the Investment Protection Principles. To view StreetBrains' current AIX partners, please visit www.streetbrains.com.
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