New York – Yesterday, at the Fourth Annual Independent Research Conference, a panel of five professionals with backgrounds in the buy-side, the sell-side and in the independent research industry discussed the increasingly useful role that independent research is playing in the buy side’s investment research process. They also elaborated on the industry’s current challenges as well as its future possibilities. The panel was titled Building The Mosaic Using Independent and Alternative Research.
The mosaic approach refers to a method of gathering information about a company through the collection of various sources of public and non-public information. According to the panelists, independent research has become a crucial element in building the research mosaic since it has proven to be an effective and timely source of unbiased information.
The panelists agreed that focus, specialty, and independence are the most attractive characteristics of independent research for the buy-side. Nicholas Colas, Director of Research at BNY ConvergEX Group, remarked that there is an increasing diversity of and demand for research, to which independent research providers are responding in a quick manner with timely and accurate information.
“The increasing competition has dramatically improved the quality of independent research,” said Gregory DeSalvo, VP of Goldman Sachs Asset Management.
The panelists also discussed the issue of whether independent research can compete with sell-side research. They agreed that what clients are looking for is good quality research, regardless of where it is coming from. They all said that as long as independent shops are properly equipped to deliver unique information and services, they can successfully compete with sell-side research.
“Achieving good product quality, good service and good distribution creates a virtuous circle for independent shops,” said Richard Leggett, President and CEO of RiskMetrics Group.
Furthermore, the panelists mentioned that management teams acknowledge that independent shops are having an increasing influence on company stock prices. As a result, company managers have become more willing to cooperate with independent research firms, which has in turn enabled the research firms to offer better management access services to their clients.
Closing the discussion, the panelists commented on the metrics they consider the most valued by clients when hiring independent research. Gregory DeSalvo said that with so many independent shops in the market, it is not only the product itself, but also references that count. John Okray, Vice President of Investment Operations and Administration at Oppenheimer Funds, added that customization and outside-the-box research are key factors when choosing independent shops.