New York – As buy- and sell-side research products continue to feel duress, investors have been seeking alternative sources of information from third party sources. This content might be a key piece of the information puzzle such as a channel check, or it might be a deeply focused fundamental approach to assessing the prospects for a corporation. For the latter, the third party provider needs to have done deep-dive due diligence on the company and have summarized and packaged this information in concise, no-nonsense language for it to have value to the client. One such research provider is Disclosure Insight.
Disclosure Insight rates the risk of individual public companies across a number of risk factors. To do this, the firm uses a labor-intensive process to gather and analyze data on 100 separate risk factors covering 5-years of data for each company assessed. The end result is a two-page D.I. Report that efficiently summarizes the risks identified in the analysis and assigns a rating of Low-, Medium-, or High Risk.
The real value from the investor’s or money manager’s perspective is time savings. The process of boiling down vast amounts of data to its bare components and then highlighting those essential elements in a short, focused report can cut days off of the analyst’s or portfolio manager’s time in assessing a particular stock. For those seeking greater detail, Disclosure Insight can also make available its in-depth analyst notes used in the production each report to its clients.
The process used by Disclosure Insight is consistent across the companies it rates. The rated company is assessed across six major categories including, but not limited to: undisclosed SEC activity; accounting/auditor problems; unusual capital markets events; and, stability of the board and executive suite. In addition, Disclosure Insight files 2,500 Freedom of Information Act requests with the SEC each year to identify and alert clients of those companies involved in undisclosed SEC investigations.
What brings home the value of the D.I. Report can be seen readily in the actual report. For reference we include a redacted quote from a D.I. Report. The following is the first sentence from that 2 page report.
“Ongoing and protracted SEC and grand jury investigations, 3 CEOs, 3 CFOs; 16 acquisitions; and significant board turnover ALL in the past 5 years; plus, a Chairman who controls 44% of the voting shares leave us little choice but to assign XXX our High Risk rating.”
Despite the deep dive and analyst intensive approach of the analysis, Disclosure Insight has the ability to scale very quickly. In fact the firm foresees one of its strengths in being able to turn around a D.I. Report on an on-demand basis generally 24 hours and sometimes 48 hours, depending on the complexity of the firm. The firm foresees offering D.I. Reports on as many as 1500 stocks in the near term.