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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.
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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
Where is the Attention? The number of companies without analyst coverage is significant! • 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
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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