Guy Moszkowski’s decision to join Autonomous Research LLC illustrates that independent boutiques can attract top analysts. Moszkowski, a financial services analyst who has been voted onto Institutional Investor magazine’s “All-America Research Team” 18 times since 1992, will lead the London-based firm’s U.S. operations.
Autonomous Research was founded in 2009 by European bank analyst Stuart Graham who left Merrill Lynch taking his team with him. Since then Autonomous has grown to 31 employees covering 75 financial services companies. As we noted last year, Paul Myners, author of the Myners report which spurred the U.K.’s Financial Services Authority (FSA) to require greater commission transparency, joined London-based Autonomous Research LLP as chairman. We found it somewhat ironic that Lord Myners was heading a firm which was busy adding a trading desk so it could be paid with bundled commissions.
Nevertheless, having a trading desk is an excellent way to get paid, often at better rates than through commission sharing arrangements or cash payments. Autonomous’ revenues were £5.5m (approximately $8.8 million) for the period from September 2009 to March 31 2010. On an annualized basis, around $18 million for 2010. Reportedly, revenues are now $28 million. Expenses are now higher since the firm is in larger, swanker quarters, and has its own trading desk. But despite the higher expense base, most of the revenues go to profit, which is shared among the staff. 5% of profits is said to be set aside for charity.
During a period where bonuses are declining a for security analysts at investment banks, the appeal of a firm like Autonomous is obvious. Many top ranked analysts such as Graham have set up independent boutiques. Examples include Michelle Applebaum, Michael Goldstein, Dana Telsey, Ivy Zelman, Ed Wolfe, Satya Pradhuman, Jim Furey, Bill Pecoriello, Jeff Spague, and Jeff DeGraff, all of whom have established successful independent research firms.
Nevertheless, it is harder than it looks, and it is not uncommon for new boutiques to stumble before getting the sales, pricing, and execution options right.
Graham does not appear to have had these growing pains, and plans to add 16 staff in the U.S. under Moszkowski, with the possibility of growing to 30 or 40. Such optimism is refreshing here in the crowded, bloody trenches of U.S. equity research. Hopefully Autonomous can enjoy success in the hyper-competitive U.S. market, and with the addition of Moszkowski it is off to good start.