Thanks, Integrity!

Yesterday, Integrity Research blogged about the current state and future of independent research and how the Wall Street woes are affecting analysts.

Integrity touches on some sobering truths regarding the industry, mentioning that ‘grim days’ are ahead. That might sound bleak, but StreetBrains wants you to know that not all’s lost! While analysts may be suffering and the future looks ‘grim’, we’re providing an answer. StreetBrains is a solution to your research needs. By improving our technology and adding more research providers on a weekly basis, we’re leaving our mark on the industry.

We may be in desperate times but there’s always a way to rise above. If you’re making scrupulous decisions and doing right by the people you serve, then you’re already one step ahead of the curve.

We thank Integrity Research for pointing out that StreetBrains has been making moves and adapting to the Wall Street woes. We appreciate being noted as one of the few research providers who are ramping up their offering in response to the poor economy.

StreetBrains has decided not to be a victim. We’re choosing to rise above the problems of the industry and strive for something better. Downsizing our offering would only hurt us; we’ve chosen to upgrade. With the imminent launch of StreetBrains 2.0, we’re proving, day in and day out, that we are here to compete and show the buy-side how good research really gets.

Young But Seasoned

Earlier this week, during a call with potential client, we were asked, "Why StreetBrains?"

We noted the best-of-breed research portal, the enterprise search, the dynamic list of research providers, and all the other benefits our content and technology have to offer. But somehow, that wasn't enough. This client needed more. They were concerned that StreetBrains might be too young, too inexperienced, too new.

We are a young company. There's no denying that. Those concerned with the age of our business have every right to ask, "Why StreetBrains?" If you're an investor looking for research or investment strategies, you want to be sure that the source is stable and well versed in the language and history of the business.

As Barack Obama mentioned in his inauguration speech, we are a young nation but we must choose our better history. At StreetBrains, we do just that. While still a young organization, we have decades of Wall Street experience under our belt. Our analysts are well aged in the industry, some working in their field since they were teenagers.

The platform is new, but the content is seasoned.

We have built the StreetBrains platform around a large and strong group of independent providers who tackle their covered industries with a voice of experience and professionalism. Their work is second to none and we are proud to offer them an outlet that appropriately markets their value.

Though young, we choose our better history. We choose the pedigree of excellence that our content provides. We see ourselves as a very seasoned company and we are proud of the many analysts and research providers who have allowed us to offer the best information money can buy. We will be called too young, too inexperienced, too new, but we won't blink an eye because we are confident in the content that defines us.

More Providers Every Week

With over 80 providers in our pipeline, StreetBrains is dedicated to delivering the best, most diverse, and widest selection of independent research providers to our clients. We understand that investors deserve information exactly the way they want it. Probe Financial Associates and EMEA Research are just two of our newest research providers offering expert hours, reports and investment updates. Check back with StreetBrains.com for more on these new products as we launch our new research portal.

Probe Financial Associates, Inc. (PFA) provides research expertise in telecommunications and relative IT sectors. PFA is the leading source of independent, unbiased research in the telecommunications/IT industry. Probe assesses the complexity and change that characterizes these industries. Our experts have extensive industry experience and the finest record for correctly forecasting major changes.

PFA offers coverage of a wide array of industry topics and companies, including these primary areas of expertise:

• IP Networking and Services (VoIP, IPTV and other areas)
• Wireless (mobile, broadband and other aspects)
• Cable and Satellite (broadcast, content and communications)
• Established Telecom (carriers, competition and M&A, equipment cos.)
• PFA's Client Programs and Services

Probe Financial Associates offers an extremely attractive value proposition to a wide variety of investment management firms. We cover the complete range of companies, from mega-sized industry giants to mid-to-large cap companies, down to small and emerging players.

Our level of expertise is unparalleled and unchallenged. We are prolific in producing written reports that are always geared to important issues and developments or to relevant industry companies.

EMEA Research provides research focused on country allocation in Eastern Europe, the Middle East & Africa. EMEA Research discovers value by examining the intersection of political risk and investment opportunity.

EMEA Research offers risk-adjusted strategies focusing on country allocation, sector allocation and stock selection. With the exception of South Africa, equity markets in EMEA, trade in reaction to investor’s assessment of how news impacts a nation’s economic prospects and political risks. EMEA Research has observed that – even in the most liquid markets – if one sector makes an independent move, the entire market will follow; the best/worst stocks in their own universe trade up and down with the overall market regardless of fundamentals.

Stacia Hachem works with a team of independent consultants focusing on in-country investment opportunities & quantitative research.

An extensive rolodex, based primarily in EMEA countries, is put to use to obtain in-country opinions on companies, industries, sectors and countries.

Looking Forward: StreetBrains '09

While we try to forget about '08, is there something to be learned? Maybe a few things, but let's not dwell on the disappointments. The TARP, Lehman Brothers, Bernie Madoff, bad markets... the list goes on.

'09 should be better, right? It has to be.

At StreetBrains, we're not going to focus on the negative news. '08 has taught us that our industry isn't perfect no matter what paper you print it on. So what?

The answer is to move on. Keep going. Do the right thing. Think and act positively.

Information Matchmaker

It's a new year. StreetBrains loves a new year. We love staying fresh, we love changing it up and we want you to benefit from our embrace of change.

Our new website, StreetBrains 2.0, will soon be launching. With our new research hub, we will be your information matchmaker. Have a research need? No problem. We make it simple and easy to get the insight you need to make trading decisions. We are opening the door to an information portal that will match your profile with the right research. Looking for research on the Middle East? Want to know when to buy energy related stocks? All of our research is at your fingertips. We have a research pipeline of 76 providers representing over 170 analysts - one of the largest teams on Wall Street, independent or otherwise.

StreetBrains has been working very hard to make '09 a very exciting year. We want you to share the excitement with us.

Calling All Analysts!

Unfortunately, the markets are a mess and it’s causing some panic at bulge bracket research desks all across the industry. If you’re a Wall Street analyst that hasn’t been laid off yet, then you’re probably sitting in your office wondering what’s next.

In uncertain times, you have to do what right for you. At StreetBrains, we empower analysts to do just that. No matter what happens, the buyside needs to maintain coverage and access to talented analysts. We deliver targeted research to powerful clients. Our operation proves that you don’t need put limits on investment insight. The analysts write research on their terms – we do the heavy lifting.

Street Brains values the diversity of talent in the industry and is looking for new research providers to join our platform. In an effort to court those whose security in the bulge brackets may be a bit doubtful, Street Brains will be hitting the road with a billboard truck that will be touring Manhattan. Keep an eye out for our sign, and if you would like any more information about who we are or what we do, or if you’re an analyst looking for details about joining our platform, feel free to contact us at 212.430.3000.














Key Messages of the Campaign

• Street Brains offers Wall Street analysts the opportunity to write valuable investment research on their own terms and cover markets the way they want to, with more freedom than ever before. If they go independent, they have more choices. Through our partnership with InfoEx, we enhance the delivery of information to our buyside clients, offering seamless navigation of research.
  


• Street Brains analysts draw outside the lines. In our view, duplication of analysts is a good thing. We empower individuals to work outside the restrictions of bulge bracket firms.
  


• Street Brains is a trusted research partner, providing services that help the buyside during this harsh time of consolidation and change. We offer continuity. With InfoEx, we provide relevance in information gathering – content directed the way you want it.
  


• The buyside needs to maintain coverage and access to talented analysts. With the appropriate exposure, our analysts attract the attention of many powerful clients.
  


• Ours is a “virtual” world. If an analyst loses his infrastructure, does that mean the buy-side should suffer decreased coverage? Street Brains provides a new kind of infrastructure where research and targeted distribution operates hand-in-hand.
  


• Street Brains provides a conduit for virtualization of research departments. Street Brains helps with the heavy lifting – marketing, sales and distribution. Our partner, InfoEx, helps maximize the distribution channels and caters to the client through methods that best serve their needs.

A Time to Vet

We do it every day, whether we realize it or not - when we meet and greet, when we dine, when we work, when we watch TV. We are vetting everything in increments. We are judging people, situations, events, products, even ourselves, almost every hour of the day. We quickly roll questions around in our heads like laundry in a dryer until we can make a decision on whether or not we want to accept someone or something into our lives.

Sarah Palin had to overcome a few obstacles this past week. She proved that no matter who you are, what you look like or how you speak, someone will always be asking, “How’d you get here?”

Who is she? What’s her background? Why Palin? Why a governor from Alaska? What has she done?

On the heels of her VP announcement and the unfolding of her teen daughter’s pregnancy, the republican vetting process was called into question. Everyone wanted to know how much exploration went in to her nomination. Many were confused as to what a vetting process even looks like. In the end, no one really knows what went into the vetting of Governor Palin, but if you’ve ever stringently vetted someone before, you might know that its not like finding a good cup of coffee – it’s so much more.

Interestingly, the StreetBrains website enjoyed a spike in web traffic this week with many visitors viewing our vetting process page. Many seemed to want to know more about the process and what it meant. Were they looking for answers as to how Sarah Palin was evaluated to be McCain’s running mate?

At the core of the StreetBrains vetting process is a meticulous examination of value. Before an analyst joins our platform, we want to know exactly what he or she has to offer our clients. We assess their professional history, methodology, points of differentiation, and the unique value their research provides. What can this research provider deliver? Do they have credibility? What do they do and what is the advantage?

Vetting is not a simple procedure. It takes a good amount of time and requires our undivided attention – we know because we do this every day. Essentially, the process necessitates a series of pointed questions that should challenge whatever or whomever you are vetting.

The days of plastering a pretty face on the screen and assuming your audience will bite are long gone. The recent interest in vetting proves that your audience needs and expects more. Vetting is a process that should be taken seriously. Our analysts are put through it, our leaders are put through it – perhaps accountability isn’t lost on our society quite yet.

Quattrone's State of the Union?

The New York Times published an article yesterday by Andrew Ross Sorkin (“Analyzing Wall Street’s Research”) detailing Frank P. Quattrone’s statements at the AlwaysOn conference in California. At the conference, Quattrone offered his distaste for Eliot Spitzer’s Global Settlement, making the argument that it has hurt small cap business and dulled the competitiveness of these companies in the US financial markets.

In the end, Quattrone would like a repeal of the settlement but would still expect to see disclosure of banking / research conflict.

Quattrone’s argument is quite compelling (and self-serving). After all, it doesn’t really matter if research and investment banking sleep under the same roof – the key to keeping it rewarding to the industry is through disclosure. Even with the Global Settlement, we are not working in a conflict-free world, thus the purpose of the settlement remains terribly unresolved even though its aftermath is still being felt by the small cap. The fact remains that there is still enough space in the market for everyone – independent research providers continue to clearly add value.

Better disclosure at investment banks benefits the industry greatly, and might be the answer we’ve been looking for. In our opinion, if you want to distribute conflicted research, it should run with an asterisk that discloses that conflict. Certainly, this would be more conducive than putting asterisks next to Barry Bonds’ home run record. If you want to play ball, play by set of rules.

That would be fair, right? Investment banks should be held to such expectations. Disclose your conflict, play ball; in a park with rules where disclosure terms are fair, there’s enough room for all the players.

There will always be an audience for independent research. If the investment banks distribute research with proper disclosure, then Quattrone’s right – there’s no reason not to tear down the wall.

Seems Like Old Times

It’s déjà vu all over again!

The Financial Times published an article on their website yesterday detailing the apparent plan by Citigroup to shift its equity research operations into its institutional securities division. The Global Research Settlement encouraged Citi to keep these two entities separate, but this news indicates that Citi is looking to cut costs and perhaps fold research back into banking.

Mom always said…

… If you don’t have anything nice to say, don’t say it at all. Ironically, that’s the problem.

The reality is that the research coming out of investment banks has never been conflict-free. No legislation imaginable could force Citi, or anyone, to write truly unfavorable recommendations for a given company. When such a high percentage of investment bank (IB) research is positive, it’s difficult to say that the insight is uncontaminated. Investment banks don’t want to make enemies.

Therein lies the problem. There is a significant difference between the research churned out by Wall Street and that which is delivered through alternative providers. No legislation could possibly curb the inherently lopsided predisposition of IB research. This new plan by Citigroup is just one indication that any concession made by the investment banks is probably on the way out the door. Seems like old times, indeed!

Making Sense

Citigroup wants to turn a cost center into a profit center; the only way to do it is to fold equity research back into institutional securities. It makes sense, but at what expense?

This is likely just the tip of the iceberg. There’s no real incentive for investment banks to continue dividing these segments of their business. The last decade was just a dream – we saw attempts to make research more unbiased, but the world where IB research is infallible never really existed.

But what will this mean for the future? Once the research settlement ends in 2009, there’s no telling what will happen. If the IBs go back to doing business the way they’ve always been, then independent research providers will be even more attractive. Conflict-free, unbiased research will always have a place in our market considering that the IBs will likely revert back to their old ways.

Bugs, Quirks and Hiccups

Apple’s new 3G iPhone launched last week greeting the market with fresh applications, cheaper prices, and faster speeds. Enter, hiccups.

Since last Friday, iPhone users have encountered several issues ranging from poor MobileMe functionality to complete iPhone black-out. If you change things up, there’s always the possibility that any well-laid plan will meet setbacks, especially when launching a high-tech product like this.

Should Apple lovers be shocked? If you’ve bought an apple product, you’re probably in the majority of consumers who have found most of their devices flawless and their compatibility seamless. You would expect the quirks to be minimal, perhaps non-existent. However, the reality is that nothing is perfect; Apple customers understand that problems may arise. Everyone is still buying iPhones, right? Apple’s brand is still in tact – they can afford to have hiccups.

Would You Still Buy Research?

Regardless of the offering, a product must add value upon its release. Apple wouldn’t launch an iPhone the size of a Kindle with a fatal flaw in its wireless technology – Apple knows better than that. There would have to be an incentive to buy, adding value to your work or your life. Hiccups or not, iPhones will still be flying off shelves because of the value offered.

Wall Street is a different world, and a research product is far different from an iPhone. When held to an investor’s high expectations, research providers are not given leverage – there is no room for error. Research providers must be resilient, precise and completely entrenched in their work. Every part of the process must add value. There isn’t a research provider anywhere who would hand-write their insights on scroll paper, seal it with wax and then send it to a client via horse courier – at least not in this century.

The same is true for the content. What adds more value: the analyst who walks the factory floor, or the analyst who makes phone calls asking what the factory floor looks like? The standards of a research provider must be high, as it should be assumed that someone is always paying attention to quality. At StreetBrains, we’ve identified realistic strategies and goals that enhance our products and their distribution invaluably. Our clients demand the best and we pride ourselves on delivering just that.

Whatever you offer must beat expectations, so as to never raise doubt about your value. In this world, you can’t afford to deliver bugs or duds; unless, of course, you have the iPhone 5G.