Still Waiting For Consolidation


New York – We’ve been calling for consolidation in the number of alternative research providers for so long that we start to sound like Nouriel Roubini, without the vindicating market collapse. So we looked in our database for firms which have gone away to see if there is any evidence of a trend toward fewer research boutiques. The result doesn’t vindicate us, but it doesn’t shut us up either.

Excluding M&A transactions, there were six alternative research providers that we de-activated from our database over the last six months. Most of these were fundamental boutiques – one or two person shops. The largest was Cathay Financial LLC, which specialized in following the financial sector. Cathay was primarily institutionally oriented, but also received some revenues from the Global Research Settlement, which may have played a role in its demise. The settlement will expire in August of this year.




Aperion Group

Fundamental: Sector Specialist

Energy/Business Services

Belmont Harbor Capital

Fundamental: Sector Specialist


Cathay Financial LLC

Fundamental: Sector Specialist


Channel Mark Capital

Fundamental: Sector Specialist

IT/ Internet & Digital Media


Fundamental: Credit Analysis

High Yield


Specialized: Other


The founder of Belmont Harbor moved to more steady employment as an analyst at Avondale Partners. The founder of Channel Mark gave up research altogether. His message to us: “I am (thankfully) no longer doing sellside research.” Marty Fridson of FridsonVision is now managing money, and given values in the debt markets should do well.

Two of the firms were affiliated with Soleil Securities Group, which has been doing some recent housekeeping. Soleil added ten new research firms to its platform during 2008 and, a few weeks ago, cut a few from its roster. Two of the firms, Belmont and Channel Mark, closed as the proprietors moved on. A few others are in transition and are not included in our list, yet.

Six firms out of 800+ alternative research firms is not a very compelling number, so we can hardly claim that we are in the grip of consolidation. But then again the brute realities of declining commission pools and shrinking research payments haven’t fully kicked in. In 2008, high volatility artificially inflated commissions, postponing the days of reckoning. Our fear is that that day is upon us, but, then again, we’ve been wrong before.


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