One More, One Less


Today there were two news stories concerning independent research that were just too good not to mention in this edition of ResearchWatch.  The two don’t have anything directly in common with each other but do give a broader picture of the always changing alternative research landscape.

Whitney Leaves Oppenheimer

The first story deals with well-known Oppenheimer research analyst Meredith Whitney leaving to start her own firm, Meredith Whitney Advisory Group LLC.  The new advisory group will reportedly open in early March with ten employees.  Whitney gained acclaim recently for her bearish calls in financials, particularly her late October 2007 call on Citigroup which turned out to be largely on the money.  Her new advisory firm may also branch out into investment banking at some point.    Initial reactions on the news of Ms. Whitney’s new venture seem to be centered on the timing of her departure from Oppenheimer.  Some feel that Ms. Whitney’s striking out on her own would signal a bottom in the market, while others have expressed the opinion that her new venture will be lucrative simply because of the likely restricting set to take place in the financial industry.  Either way, Ms. Whitney’s plans to start her own advisory group continue the trend we have seen of prominent analysts feeling more and more comfortable navigating on their own, without the backdrop of a large well established firm behind them.

RiskMetrics Acquires Innovest

While Meredith Whitney is adding another company to the research space, other developments in the industry will soon contrive to make one less.  RiskMetrics today announced that they have agreed to acquire Innovest Strategic Value Advisors.  The general idea of the acquisition is to be able to keep the majority of the capabilities and analysts from both firms in order to create a more complete picture for the company’s clients.  The acquisition will combine RiskMetrics capabilities in risk management and corporate governance with Innovest’s ESG research.  RiskMetrics already had some ESG capabilities however the new acquisition will provide clients with access to a team of 50+ ESG research analysts and a suite of research and compliance-focused services.  According to Stephen Harvey, head of the Governance business at RiskMetrics Group, “A myriad of long-term sustainability factors, particularly around climate change, are playing an increasingly important role in the way funds invest and view their portfolio risk”.   Dr. Matthew Kiernan, co-founder of Innovest, chimed in with a similar opinion, saying that “today’s turbulent market environment is placing an unprecedented premium on understanding the entire spectrum of investment risks – both traditional and non-traditional.”  This premium in turn helped RiskMetrics and Innovest to see the need for a combination of their services.  The transaction is expected to close on March 2nd of this year.

The combination of Innovest’s skills with RiskMetrics offerings seems to create the ability for formidable analysis, while Meredith Whitney’s firm will undoubtedly have its share of clients interested in her views of the current financial situation. With this in mind, both of these developments, while somewhat opposite in terms of their structure will serve to strengthen the independent research landscape, something everyone likes to see.


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