Hedgeye Goes Retail


New York – Research Edge, a research firm which describes itself as a ‘virtual hedge fund’, announced that it is now targeting retail investors while changing its name to Hedgeye Risk Management LLC.  The move risks alienating the firm’s institutional clients, but, like hedge funds creating mutual fund spinoffs, helps to diversify the business.

Founded in 2008 by a former hedge fund manager, Hedgeye 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 addition, Research Edge has attracted a stable of six sector analysts from hedge funds and the sell side through its revenue sharing business model.

Keith McCullough runs his research product like an investment portfolio, putting out over a dozen “trades” on a typical day based on recommendations received from the sector analysts.  Brian McGough, an ex-Morgan Stanley analyst, covers the retail sector and serves as President and Director of Research. Howard Penney, formerly at Friedman Billings Ramsey, covers restaurants. Tom Tobin, an ex-portfolio manager from Dawson Herman Capital Management, a long/short hedge fund, covers healthcare. Todd Jordan, the gaming/lodging /leisure analyst, previously ran a consumer long/short fund at Jefferies Asset Manager.  Tech analyst Rebecca Runkle was, like McGough, previously at Morgan Stanley before joining a small hedge fund, Arience Capital Management.  Joshua Steiner, ex-Lehman before joining Amaranth Group and Millennium Partners, covers financials.

The renaming of the firm coincides with the publication of McCullough’s memoir of his buy side career, “Diary of a Hedge Fund Manager”.

For institutional clients, the firm has a restricted client business model for “white glove” analyst access.  Research from the sector analysts is reserved for institutional clients.  Retail investors can access the firm’s macro and sector commentary and intra-day trading recommendations for $225 per month.   Access to the macro commentary and the firm’s virtual portfolio is $75 per month.

The retail component of the business plan was part of the company’s business plan from the beginning, and does not represent a change in strategy.  The initial priority was to establish an institutional client base before marketing to individual investors.  It is challenging for research firms to serve both institutional and retail clients simultaneously.  Partly this is from perception–institutional clients are biased against broadly disseminated research and hedge funds in particular value research with limited distribution.  Hedgeye is reserving the research from its sector analysts for institutional clients, which is a viable strategy.

The other challenge of going retail is content–the requirements of institutional and retail investors are widely divergent.  We suspect that the retail segment that would be most receptive to Hedgeye will be the active trader segment.  If so, the firm’s intraday trading calls, and short-term orientation will be well suited to this community.  Nevertheless, balancing institutional and retail is a risky process.  McCullough has supreme confidence in his ability to manage market risk, but it will remain to be seen if managing business risk is part of his skill set.

The press release follows:

New Platform Tears Back the Curtain on Wall Street Insiders by

Offering Realtime Investment Research for Individual Investors

Former Hedge Fund Manager, Author and “Research Renegade” Keith McCullough

Launches a “Virtual Hedge Fund” to Deliver Unprecedented Access to World Class Analysis

January 19, 2010 (New Haven, Conn.) – Hedgeye Risk Management LLC, the leading real‐time investment research firm, today announced the launch of Hedgeye (www.hedgeye.com), a breakthrough online tool that empowers individual investors with realtime, actionable investment research based on a rigorous, transparent process. Developed by founder and CEO Keith McCullough, Hedgeye is essentially a “virtual hedge fund” that openly shares the investment moves of former hedge fund manager and Macro strategist McCullough and Hedgeye’s group of world class sector analysts, in real‐time “Investors are inundated with investing ideas and research options, from stock‐picking websites to on‐line brokerages to blustery TV personalities, but they simply don’t measure up,” McCullough says. “I started Hedgeye because the time has come to offer individual investors the ideas and insights that have historically been guarded by Wall Street insiders. Individual investors can now take control of their investing futures with equal access to this elite level of insight, provided with unprecedented transparency and


Hedgeye (www.hedgeye.com) presents a centrally accountable platform with sector‐specific research from world‐class analysts.  Users enjoy red (short call) and green (long call) real‐time position indicators along with date, time and price stamps on every call.  Investors can also track outcomes and investment activity around‐the‐clock without having to endlessly hunt for information.  As one beta subscriber noted, “I have learned more in the last several months [with Hedgeye] than I have in the last 20 years of investing,” said Jim Mauldin of Columbus, MS. “And I must add that I have also made more money.”

Hedgeye is the brainchild of global Macro strategist McCullough, who started Hedgeye Risk Management (formerly Research Edge LLC) in April 2008 in the wake of one of the darkest times in Wall Street history. He had been shown the door six months prior from one of the Street’s most elite, well‐respected firms just as his disciplined declarations about the impending economic crisis were becoming prophetic.

In September 2008, as Lehman filed for bankruptcy and AIG posted a $13 billion loss, McCullough’s firm announced to Wall Street that it was hiring and positioned for growth, thanks to his process‐based approach that led the company to an 84 percent cash position in anticipation of the crisis. His writing has become recognized for its unique, honest style coupled with bold demands for improvements in transparency, clever caricatures such as Ben “He Who Sees No Bubbles” Bernanke and the earliest calls for the resignation of Treasury Secretary Timothy Geithner in the wake of the government’s misguided bailout efforts.

“I admire Keith’s work ethic, [his] rigor behind the recommendations, his writings and his ability to admit when he has blown it,” added Mark Jones of Walla Walla, Washington, another Hedgeye subscriber. “Overall I get the sense that Keith’s number one priority is serving his subscribers, not his ego.”

The launch of Hedgeye (www.hedgeye.com) coincides with the debut of McCullough’s book, Diary of a Hedge Fund Manager (Wiley; January 2010; Hardcover; ISBN:9780470529720), which provides a captivating look at how this junior league hockey player from rural Canada went to the top of the hedge fund world with one of the premiere investment firms on Wall Street. But when it appeared that he was one of the few voices of reason in a financial industry gone mad, McCullough found himself out of a job and in search of a way to bring honesty and transparency back to the Street and into the hands of individual investors. It was at this time that Hedgeye was conceived.

About Hedgeye Risk Management LLC

Hedgeye Risk Management is the leading real‐time research firm, focused exclusively on generating and delivering actionable investment ideas by combining quantitative, bottoms‐up and macro analysis with an emphasis on timing. The Hedgeye team includes some of the world’s most regarded research analysts – united around a vision of independent, un‐compromised real‐time investment research as a service. You can check out Hedgeye videos on www.youtube.com/hedgeye and to learn more or subscribe to the exclusive research provided daily, please visit www.hedgeye.com.


About Author

Sandy Bragg is a principal at Integrity Research Associates. He has over thirty years experience as an investment research professional. Prior to joining Integrity in 2006, he was an Executive Managing Director at Standard & Poors, managing S&P’s equity research business and fund information properties. Sandy has an MBA from New York University and BA from Williams College. Email: Sanford.Bragg@integrity-research.com

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