'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.

He Who Stands Alone....

Henrik Ibsen once said, “The Strongest Man in the World is He Who Stands Most Alone.”


The same can be said for investment research – the strongest research is that which sets itself apart entirely from its peers.

In a story in this week’s Barron’s, one of the Street’s brightest, most well respected investment columnists, Michael Santoli, pointed to insights from StreetBrains’ analysts, Photizo Group, to support the idea that LXK (Lexmark International) is a BUY - despite the fact that 13 of 14 analysts on the Street have a SELL or HOLD rating on the company.

Photizo Group – the leaders in imaging industry research – are the sole analysts rating LXK as a BUY.

StreetBrains clients who read Photizo Group research have been privy to these insights about LXK for months. This Barron’s story underscores the value of StreetBrains research: Our analysts are experts on niche industries, companies and sectors, and we provide insights that our clients aren’t hearing anywhere else.

In addition to the Barron's placement, DebtVisions - also part of StreetBrains research consortium - was featured in the Financial Times this weekend, discussing the unlikelihood of the Alltel deal getting done. (click here to read the full story.)