Quarterly Research Performance Analysis – Overall Performance


New York – Every quarter Integrity Research gets performance data from Investars, which tracks the synthetic returns of research companies. Investars has a full suite of services for portfolio managers, Analysts and traders that track research performance, estimate alpha capture, provider broker vote systems and CCA/CSA tracking and reconciliation services.

Overall performance, as defined by the system, is simply the addition of the buy returns and the sell returns assuming that all recommendations were followed. Returns are the percentage change in stock prices over the time the stock is held as a buy or a sell.  The results are expressed in basis points per day for all recommendations over a one year timeframe, which ended September 30, 2008.

Hence, the returns are limited to the unleveraged capital gains achievable and are exclusive of dividend yield. While the performance metric does not reflect what one might expect if one used a portfolio approach, it provides a relative ranking to the firms that participate.

The table below lists the top 20 research providers over the most recent year, sorted by overall performance. In the table the minus sign is bad for the buy portfolio, buy good for the sell portfolio, so that the actual equation for overall return is the buys minus the sells.

Overall Performance of Research Providers in the Year Ended September 30, 2008

Basis Points per Day

Research Provider Overall Buys Sells
B Riley & Co




Nollenberger Capital




Ladenburg Thalmann & Co. Inc.




Market Profile Theorems (MPT)




FutureAlpha.com – Russell 3000 stocks




Haugen Custom Financial Systems, Inc




Trading Central




GARP Research & Securities Co.




Sandler O`Neill




Brean Murray, Carret & Co.








Avondale Partners




Ford Equity Research




American Tech Research




MDB Capital Group




KeyBanc Capital Markets




Punk Ziegel & Co




Taglich Brothers








Hilliard Lyons




Source: Investars database

In light of the sharp declines on the broad market indices this year, it is not surprising that the buy recommendations are all underwater. Where the overall returns were boosted was in the sell category. For example, B Riley & Co earned an average of 83.75 basis points per day on its sells more than offsetting the 10.21 bp decline in its buys.  In all cases the contribution of the sell portfolio was greater than 100% of the overall return.

Those firms that had very strong returns on their sell portfolios probably have a low number of sell recommendations, making it more probable that these firms were lucky. Firms that had a significant number of buys and sells more appropriately approximate the average expected returns that could have been achieved and are less likely to be flukes.  In light of this, the firms which are outliers, such as B Riley and Nollenberger Capital are either brilliant or just plain lucky. We suspect that latter until proven different over a number of time periods.  As such, we feel that firms ranked from 3rd to 20th better reflect the kind of performance that investors might be seeking.

Note: The data comes from the Investars research performance measurement system. The presentation and interpretation of the data is that of Integrity Research Associates


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