Model Provider Canalyst Unveils Broader Product Ambitions

By Sanford Bragg April 28, 2021

Canalyst, a Vancouver-based platform offering financial models, announced the addition of a veteran data professional, Jeremy Payne, as Chief Product Officer.  The move signals that Canalyst will no longer be content to be a niche model provider as it seeks to offer a broader fundamental data platform.

From models to data

Jeremy Payne, who held senior product roles at Capital IQ before and after its purchase by S&P and previously managed Bloomberg’s foundational data, plans to reposition Canalyst from being a model provider into a key provider of fundamental data. “There hasn’t been a truly new fundamentals product in over 15 years,” said Payne.  “Canalyst is uniquely poised to deliver one that finally addresses how modern investment research is performed.”

In an interview with Integrity Research, the new Chief Product Officer outlined the vision for Canalyst as a data platform.  “Through its existing library of models, Canalyst already offers the cleanest, richest, best structured fundamental data today,” he said.  “Our goal is to augment our core offering to make it even easier for our clients to uncover more, higher-conviction investment opportunities.”  By layering in additional sources such as market data, consensus estimates, and alternative data, Payne plans to build a state-of-the-art workflow solution for buy-side analysts. 

International expansion

The other product priority is to grow coverage globally.  Canalyst currently offers models and data on over 4,000 public companies, the majority based in the US and Canada.  The firm has notified clients that it intends to expand coverage to over 10,000 companies.

The firm is also planning to cover global IPOs.  Its current new issue coverage focuses on revenue-generating US domestic IPOs, and SPACs with announced deals post-S4 filing.

Background

Since completing a $20 million capital raise last year, Canalyst has been aggressively recruiting new staff, including over 25 entry level equity research associates who build and maintain the company’s financial models.  LinkedIn registrations of employees have grown 45% over the last twelve months.  Current staff totals around 150 full-time employees based in Vancouver and New York, up from just over 100 as of January 2020.        

The company said its customer base now totals over 400 clients, primarily buy-side firms including asset managers, hedge funds, and family offices.  Eight of the ten largest asset managers by AUM are customers.  Clients are fairly evenly split between long-only firms and hedge funds, according to company sources.

The firm was founded in February 2015 by James Rife. a former Fidelity Investments analyst, and Damir Hot, a former software salesperson.  Model development is overseen by Rife, who worked for Fidelity Canada for four years before leaving to be an assistant portfolio manager for a wealth management firm started by the ex-CIO of Fidelity Canada.

Our Take

We previously considered Canalyst’s main competitor to be Visible Alpha, a platform for distributing broker models which launched a couple of months before Canalyst with $30 million in seed funding from five bulge bracket firms.  However, Canalyst views Visible Alpha as mainly complementary, used by clients as a source of consensus estimates. 

Another proximate provider would be Sentieo, especially as Canalyst focuses on the buy-side analyst workflow.  Sentieo has been aggressively leveraging artificial intelligence to quickly extract data and sentiment from earnings calls, among other applications.  After a $10.5 million venture raise in 2019, Sentieo appears to have begun shedding staff, culminating in a CEO change the end of last year. 

With the hire of Jeremy Payne, Canalyst appears to have even broader ambitions, challenging the cornerstone fundamental data offerings of major market data providers such as Bloomberg, FactSet and S&P.  We had speculated that the unnamed strategic investor which led Canalyst’s latest $20 million funding round might be an existing player in the fundamental data space, but that no longer seems likely.  Given Canalyst’s new ambitions, the firm’s strategic investor might be a firm proximate to the market data space such as Moody’s, Morningstar or MSCI.

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