Presentation on theme: "The Need for Independent Research Coverage"— Presentation transcript:
1The Need for Independent Research Coverage How research & analyst coverage affect valuation and increase investors’ interest
2Facts:Investors & money managers face abundant information. They often perceive that stocks with little or no analyst coverage are simply unworthy of attention.The absence of research coverage has significant effect on the valuation of companies.> if there is research, companies gain considerably more investor interests, liquidity improves and the spread between the bid & offer price narrows so the shares become more attractive to buyers.> the absence of research shares can be expected to trade % lower than if they had even one analyst following & the spread in the price would narrow by 50%.(According to a study conducted by Equity Development research firm.)Over 4,000 publicly traded companies have no discernable analyst coverage. About 25% of stocks traded on the NYSE have no coverage.(According to Reuters)
3A Large Pool of Companies are ignored by Wall Street Research Departments Wall Street FirmNumber ofCompanies CoveredIndustries CoveredCompany's AverageSize Decile*1Salomon Smith Barney2,595598.22Merrill Lynch2,299588.33Credit Suisse First Boston2,080578.54Morgan Stanley1,9805Lehman Brothers1,891558.46Goldman Sachs1,8888.67Banc of America Securities1,7478.18UBS Warburg1,7399CIBC World Markets1,6778.010Bear Stearns1,6345411JP Morgan1,62712Deutsche Banc Alex Brown1,49313Prudential Securities1,40914Dain Rauscher Wessels1,168527.715AG Edwards1,159*Company's Average Size Decile is a mean measured of company's size (CRSP decile, 10 is the largest)*IBES Detail Recommendation file compiled between
4Where is the Attention? The number of companies without analyst coverage is significant! Research GroupsNumber ofCompanies CoveredInvestment Banks2,074Independent Research Firms1,117Brokerage Only Firms670Total3,861*IBES database for periodOf the 9,000 publicly traded companies shown on Reuters’ database, about 1/2 of the stocks have any analyst coverage & only 1/3 are monitored by more than 6 analysts
5Sizing the difference: Market CapitalizationNumber of CompaniesPercentage of IndexMarket Cap > $1 Billion1,31725%Market Cap < $1 Billion3,92575%Market Cap < $0.5 Billion3,27662%
6The need for independent research coverage Many institutional and hedge fund investors rarely get their ideas from Wall Street research coverageInvestors & money managers are yearning to get back to the fundamentals of analysis and proprietary studies. They want independent, unbiased, untainted research—proprietary informationData from Investars (independent service tracking performance of analysts’ stock picks) shows that stock picks by six of the better known independent research firms, on average, have outperformed a half-dozen Wall Street firms over the last 5 yearsWall Street analysts are dropping away from covering small caps and focusing more on large caps, according to Majestic Research. Since late 2003, the number of smaller companies with any following at all has plunged
7About our Research?Our team of analysts are highly-qualified and credentialed CFA’s (Chartered Financial Analyst) or MBAsOur analysts focus purely on research and are absolutely independent and indifferent to any other investment services, including investor relations & investment banking. They also do not take any positions in the stocks they coverResearch is focused on providing insights and proprietary assumptions and interpretations—NOT storytelling
8Our Value-added Services: We offer the complete 3-in-1 package: Investment Research, Marketing, & Investor relations.Our analysts provide the investment researchOur marketing and sales team handles the institutional marketing calls and presentation; including handling press releases, making capital raising introductions, and providing strategic inputs to managementOur portfolio managers and analysts will field incoming calls for management from potential and existing investors.Our approach is efficient & affordable while allowing management to focus on what they do best—run their company & make money for their shareholders.
9Value & EfficiencyInvestment research provided by credentialed analysts.Highly trained marketing and sales team has direct access with reputable hedge funds, brokers, and media groups; including Forbes.com, Fox, CNN, Bloomberg, USA Today & Investor’s Business Daily, etc.Our website Stockjock.com has sponsorships with the likes of Forbes.com & Yahoo! to provide excellent opportunity to leverage exposure and get the company’s story out to smaller investorsOur portfolio managers and department heads have proven track records in INVESTMENT ANALYSIS, MARKETING, & PUBLIC RELATIONS
10Fees from Investment Deals AffordabilityWe offer our companies INVESTMENT ANALYSIS, MARKETING, & PUBLIC RELATIONS services as one package for a fraction of what the competition charges.Cost (Range)Investment Research Reports$25,000 to $35,000Public Relations$100,000 to $120,000Marketing Specialists$75,000 to $125,000Total Package$200,000 to $280,000Fees from Investment DealsRegional Investment/Brokerage$500,000 to $700,000**Typical cost in banking fees for $10M deal.