The Need for Independent Research Coverage How research & analyst coverage affect valuation and increase investors’ interest

Facts: 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 32% 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)

A Large Pool of Companies are ignored by Wall Street Research Departments Wall Street Firm Number of Companies Covered Industries Covered Company's Average Size Decile* 1 Salomon Smith Barney 2,595 59 8.2 2 Merrill Lynch 2,299 58 8.3 3 Credit Suisse First Boston 2,080 57 8.5 4 Morgan Stanley 1,980 5 Lehman Brothers 1,891 55 8.4 6 Goldman Sachs 1,888 8.6 7 Banc of America Securities 1,747 8.1 8 UBS Warburg 1,739 9 CIBC World Markets 1,677 8.0 10 Bear Stearns 1,634 54 11 JP Morgan 1,627 12 Deutsche Banc Alex Brown 1,493 13 Prudential Securities 1,409 14 Dain Rauscher Wessels 1,168 52 7.7 15 AG Edwards 1,159 *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 1996-2002

Where is the Attention? The number of companies without analyst coverage is significant! Research Groups Number of Companies Covered Investment Banks 2,074 Independent Research Firms 1,117 Brokerage Only Firms 670 Total 3,861 *IBES database for period 1990-2000 Of 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

Sizing the difference: Market Capitalization Number of Companies Percentage of Index Market Cap > $1 Billion 1,317 25% Market Cap < $1 Billion 3,925 75% Market Cap < $0.5 Billion 3,276 62%

The need for independent research coverage Many institutional and hedge fund investors rarely get their ideas from Wall Street research coverage Investors & money managers are yearning to get back to the fundamentals of analysis and proprietary studies. They want independent, unbiased, untainted research—proprietary information Data 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 years Wall 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

About our Research? Our team of analysts are highly-qualified and credentialed CFA’s (Chartered Financial Analyst) or MBAs Our 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 cover Research is focused on providing insights and proprietary assumptions and interpretations—NOT storytelling

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