Equity Research: Losing Money, But Trying To Make it Up on Volume

Apparently independent equity researchers, which have struggled in recent years (despite Federal regulatory support), is now following the time-dishonored strategy of losing money on ever sale, but trying to make it up on volume.

Among the more than 1,000 buy-side equity analysts interviewed by Greenwich Associates as part of its 2007 U.S. Equity Analysts Research Study, almost 40% say they expect to increase their use of products and services from independent or “boutique” research providers in the next 12 months. However, commission payments to independent research providers do not appear to be increasing in absolute dollar terms. “When looked at in light of the increasing usage reported by buy-side analysts, we have to wonder if some non-broker/dealer independent research providers are having trouble getting paid for their products,” says Greenwich Associates consultant Jay Bennett.

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  3. Countrywide, VTB, and the Trouble with Equity Research
  4. Equity Derivatives Uber Alles
  5. Free Equity Research at Morningstar

Comments

  1. reynoldswrap says:

    i’m thinking a lot of interest is driven by 130/30s coming to market. something the non-boutique sell-side isn’t particularly good at. well actually they are good at it, but not in the way you’d want to be good at it. :)

  2. brian says:

    Paul, the problem is because all Wall Street analysts go through the same training program supported by the bulge bracket firms, they are hardwired to produce the same mediocre research and financial projections. What buy-side firms want is truly unique insights and ideas, not rehashed output any analyst trainee could put out.