Dallas Texas-based independent research provider, Vision Research, recently announced the launch of a new research product called VR Fundamental – APAC Alerts to help buy-side clients identify stocks that are likely to drop in price over the coming 12 – 18 months.
Vision Research’s Newest Product Launch
Launched in recent weeks, Vision Research’s new VR Fundamental – APAC Alerts service will include in-depth research reports on 8+ short ideas listed primarily in Japan, Hong Kong, and Australia. Vision Research’s target market cap for these short ideas exceeds $1 bln, with an average daily volume of more than $5 mln. These stocks are primarily in the Consumer, Industrial, Materials, and TMT sectors. At present, the APAC Alerts service includes three open short ideas, two of which are from Japan, and one is from Hong Kong.
As is the case with all of Vision Research’s work, their analysis can include any of the following: a review of transcripts and filings of the individual equity and any of its public customers, competitors, and suppliers; contacting PE firms that own an investment in the same space and any other public or private customers, competitors, and suppliers; an analysis of industry trends; assessing foot and web traffic data; evaluating corporate governance data; assessment of management and the business or business model and competitive landscape; visiting stores and on-line product and price comparisons; an evaluation of the large holders and insider stock transactions; quality of earnings or forensic accounting analysis; and valuation work. The analysis included in their APAC Alerts will be fundamentally oriented and not include local accounting issues.
Vision Research expects to charge new subscribers between $12,000 to $18,000 per year for access to the APAC Alerts service, though existing subscribers to one or more of Vision Research’s other research services (US Alerts or European Alerts), will receive a significant discount for also subscribing to the new APAC Alerts service. Vision Research does not provide free trials of their research services, though they will offer prospective clients a discounted initial 6-month term to try out the service.
Our Take
Founded in 2004, Vision Research is a Dallas-based independent provider of short ideas, fundamental investment research, and consulting services to hedge funds, mutual funds, and family offices. Vision covers small, mid, and large cap US equities; a growing selection of non-US stocks; SPACS, and IPOs. Vision’s investment ideas are sourced from multiple angles, including quantitative screening, qualitative screening through key word screens of diverse types of documents, and daily reading, research, and observations.
Vision Research’s launch of its new VR Fundamental – APAC Alerts service is timely given the waning interest in its previously launched research product Voodoo SPAConomics (VS). Vision Research saw significant interest in this product when it was first launched in April 2021, but this interest declined in 2022 in line with SPAC volumes.
While interest in short ideas has traditionally been strong in the US and Europe, interest in Asia has been weaker, particularly as shorting has seen restrictions in several Asian markets. For example, last year Taiwan’s Financial Supervisory Commission rolled out a series of restrictions on short selling including cutting the limit on daily short sales to 10% of a stock’s average daily trading volume from 30% and barring short sales when a stock has already fallen by at least 3.5% from its closing price the previous day. In South Korea, short sales of stocks that are not included in either the KOSPI 200 or the Kosdaq 150 have been prohibited in South Korea for more than two years.
Despite these concerns about short selling in many Asian countries, several studies have shown that restricting short selling can have a chilling effect on overall market liquidity at times when it is needed most. Consequently, we suspect that long-term restrictions on short selling are not likely to last. It is also interesting to note that the availability of high-quality short ideas research on Asian Pacific companies has historically been limited — perhaps due to cultural concerns about short selling.
All these factors suggest that interest in a product like Vision Research’s APAC Alerts is likely to increase over time, particularly as restrictions to short selling loosen in Asia. Of course, this product is likely to be of most interest to global hedge funds, many of whom are already clients of Vision Research’s US Alerts and European Alerts products.