Innovative Ways to Uncover Investment Research
A decade ago, investment research was the centerpiece of any sell-side firm. Firms showcased their top analysts, using them as a draw for lucrative investment banking business and to strengthen relationships with buy-side clients. Then came the burst of the dot-com bubble and the ultimate fallout on the sell-side. The Spitzer settlement reinforced what had previously been a fuzzy Chinese wall between research and banking, and changed the economics of investment research.
Fast-forward ten years and investment research is a shadow of what it once was. While there were once more than 9,000 U.S. companies with analyst coverage, today it’s barely a third that many. Goldman Sachs recently dropped research coverage of the banking industry, a move that was perhaps most notable for the lack of reaction that it generated.
So, who is filling the void left by the sell-side? One group that has emerged are the independent research analysts. Ed Wolfe, who left Bear, Stearns upon its acquisition by JP Morgan last year, has formed a research boutique, serving the same buy-side customers he once worked with at Bear. In just several months, he has grown his firm to 15 employees. At the same time, we have seen the rise of the Professional Blogger. Business Insider (formerly Silicon Alley Insider) was formed by Doubleclick alumni Kevin Ryan and Dwight Merriman along with former Merrill Lynch tech analyst Henry Blodget. Sites such as BloggingStocks and Seeking Alpha have sprung forth to aggregate and host blogs from various industry professionals. And, today, we have new services emerging, such as StockTwits which aggregates company-specific tweets for active traders.
The decentralization of investment research has been both a boon and a bane for consumers of financial information.
There have never been more quality sources for insights, including many which are freely available on the web. One result of this has been a dramatic increase in the velocity of information. Periodic research reports, augmented by interim notes no longer seem adequate in a market where news breaks throughout the day.
While the choices create opportunities, they also make it more difficult than ever for users to know where to turn for credible information. Traditional research tended to produce homogeneous results, but at least most people knew where to find it. Identifying quality sources among the myriad of options is increasingly complex.
Street Pulse launched today by Alacra, Research Recap’s parent, aims to to help users navigate this complex research environment. Street Pulse uses the new Alacra Pulse platform to find, filter and package web-based content to provide instant access to relevant, important information about a company. Street Pulse aggregates comments from sell-side, industry and credit research analysts, along with those of selected bloggers.
Street Pulse is a freemium application and can be accessed at http://pulse.alacra.com.
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