Battle Road Research, a Massachusetts-based independent boutique, announced a new service focused on small cap companies located in New England, with stock market valuations under $1 billion.
Battle Road Research currently covering about 40 stocks across four sectors: technology, health science, solar power and consumer. The firm’s research process is fundamental, with a heavy emphasis on channel checks, product tests and conversation with industry experts.
The new service, named Small Cap Snapshots, will be offered as an extension of Battle Road’s current service. Founder Ben Rose expects to add coverage of 2 small cap names per month across the sectors the firm follows. Emphasis is on under-covered companies and recent IPO’s that are under-covered, looking for firms that have upside potential. The service is paid for by investors utilizing the research, not by companies seeking coverage.
U.S. small cap research is dominated by regional broker dealers such as Robert W. Baird, Piper Jaffray and William Blair, as our studies of the segment have shown. Regional broker dealers provide coverage as an extension of their investment banking relationships, which favor the smaller companies not aggressively wooed by the bulge bracket investment banks. For independents not offering investment banking, small cap research is a tricky proposition. There are a limited number of investors sufficiently interested to pay for small cap coverage. Only a few independents, such as Sidoti & Company and Longbow Research, provide extensive small cap coverage.
For this reason there are dozens of paid-for research providers which provide coverage for companies, for a fee. Their research does not get much traction with institutional investors, however.
For Battle Road, their new service is a natural extension of the current offering, which is already oriented toward mid cap and small cap names. For this reason, the venture is lower risk, and hopefully sufficiently rewarding. There is no question the small cap sector needs more coverage.