A Foot on the Edge


Research Edge has added the SEC scrutinizing analysis of Michelle Leder and Footnoted.org to its research platform.  Michelle will work with the analysts at research Edge in order to help them generate ideas on their sectors and names on an exclusive basis but also states on her website that “for those footnoted.org readers who prefer the free content, my goal is to keep that content free”.  Keith McCullough, CEO of Research Edge stated that he is excited about the ability to combine “Michelle’s proprietary algorithms and expertise [with] Research Edge’s Macro and fundamental sector research.”

Footnoted.org was launched in 2003 and its main analysis takes the shape of a blog that looks into SEC filings to find relevant insights on companies. Each day the blog takes a closes look at the things companies try to bury in their routine SEC filings. Some posts are short and fun factoids while others focus on more serious issues, i.e. aggressive accounting, excessive compensation, etc. Clients of Footnoted.org included professional money managers, analysts, journalists and individual investors.

The initial alert that Footnoted.org helped to bring to Research Edge’s attention concerned Autodesk.  Footnoted.org’s systems identified change-of-control adjustments to insider employment contracts and Research Edge’s Macro team then used this information to identify cyclical mis-pricing based on a perception bottom for the construction industry globally.  Research Edge alerted its subscribers to this information on March 26th, 2009.

Research Edge was profiled in Integrity’s Investment Strategy ResearchFocus report and was mentioned as an interesting firm to consider.  Founded by a former hedge fund manager, Research Edge maintains a hedge fund perspective in its research outlook. Founder Keith McCullough, who was previously a portfolio manager at Magnetar Capital and Carlyle-Blue Wave, provides daily macro-oriented commentary in a blog format. The commentary is opinionated and grounded in a specific portfolio of recommendations. In addition, Research Edge has attracted a stable of analysts from hedge funds and the sell side through its revenue sharing business model. The firm does not maintain a specific coverage list, focusing on sector coverage instead. McCullough screens from the top down, and delivers to the analysts names to work on that fall within the sphere of their sector’s coverage. The firm has a restricted client business model for “white glove” analyst access, although distribution of research commentary is not restricted.

Also of note is the fact that Footnoted.org has a section on its site asking for donations, accompanied by the statement, “It’s proxy season here at footnoted and ad revenues are way down. Please consider supporting the site by making a donation so that we can continue providing original content on SEC filings.”  This partnership is clearly another way for Michelle Leder to continue to provide such content.  Integrity is not however suggesting that economic considerations were the only reason behind the partnership as Mrs. Leder comments on her website that she was “immediately drawn to [Research Edge’s] hard-charging Early Look morning notes by Chiefe Executive Officer Keith McCullough.” This is not the first time (and likely not the last either) a ResearchWatch article has addressed the combination of two research services, in fact the most recent example of ResearchWatch dealing with the topic occurred just this past Monday in discussing Morningstar’s acquisition of C.P.M.S.


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