New York, NY – Integrity Research Associates has commented numerous times about the buy-side’s declining reliance on the sell-side to generate an edge in their investment research process. As a result, many buy-side firms have hired their own analytical staff, turned to alternative research providers, and leveraged non-traditional information sources including online news feeds, web-based data sources, and blogs to fill this void. This trend has also led to an increased use of web monitoring services like FirstRain, Connotate, InfoNgen, and now Alacra as institutional investors have tried to harvest meaningful information from the sea of content available on the internet.
Alacra Gets a Pulse
Last week, Alacra Inc., an established aggregator of research and online databases, launched a web-based monitoring service called Alacra Pulse. This new service filters a relatively narrow list of 2,000 handpicked RSS feeds published by mainstream newspapers, magazines, trade publications, and blogs to identify and highlight meaningful web-based content for investors.
Alacra’s first in its “Pulse” line of products is Street Pulse which looks for mentions of company names in the comments of thousands of identified “analysts”. An analyst can be a sell-side research analyst, a rating agency analyst, a well known industry analyst, or a blogger with the credentials, experience and expertise that makes him or her, in Alacra’s view an “opinion leader”.
In addition to Street Pulse, Alacra is planning to roll out three new Pulse products including the following:
- Deal Pulse: Mentions of various Mergers and Acquisition transactions;
- Weak Pulse: Mentions of distressed companies and restructurings;
- Credit Pulse: Comments by rating agencies or credit analysts about an issuer’s credit rating; and,
- Legal Pulse: Mentions of law firms.
The Alacra Difference
There are a number of companies striving to address the issue of making web content manageable and accessible to investors and business users. These range from general blog search engines to specialized services aiming to harvest the web to find market intelligence. Depending on what type of content you are talking about (text versus numeric data), Integrity has identified over 30 specialist firms that filter and collect different types of content from the web.
The challenge for most of the text oriented web monitoring services like FirstRain, ClearForest, Collective Intellect, and InfoNgen is that they attempt to “boil the ocean”, reading through millions of web pages or RSS feeds. One problem with this approach is that it is difficult to build a financially viable business if your value proposition is based on filtering the entire internet universe — a fact that Monitor 110 discovered last year forcing the firm to shut its doors. However, another issue with many of the current models is that the volume of information provided in answer to specific searches can often be overwhelming, making it difficult for users to discern “trusted sources” from random blogs. Alacra Pulse has addressed this issue by focusing on a limited universe of sources (currently 2,000 RSS feeds) which have all been vetted and hand-selected by the firm. Alacra believes that this targeted approach will reveal more signals and less noise.
The Alacra Pulse business model is also different from its competition. Many of the high-end specialized services used by the buy-side adopt a high user-based pricing model. In comparison, Alacra’s Pulse Platform has two offerings – a free service which is an advertising based product; and Pulse Professional, a premium service which offers enhanced functionality, and which is priced on an enterprise or department-wide basis.
Integrity’s Initial Thoughts
While Integrity has not had an opportunity to use the Alacra Pulse product very much (an issue we plan to rectify shortly), we have some initial thoughts on the product. First, Alacra’s focus on filtering a limited number of RSS feeds and focusing its search engine on a set of identified analysts and thought leaders means the product probably won’t be a source of new ideas. For example, you probably won’t discover any market-changing news about Google that is broken on a random blog run by an ex- employee, or a disgruntled customer who starts a Facebook petition, or an open-source competitor who announces a new product on a discussion forum. Alacra’s gate keeping function would work against discovering these potentially important stories from less well-known sources before they hit the mainstream.
However, we do think that Alacra’s use of human intervention to tag and vet sources will decrease the amount of noise created by most search engines. In addition, we think Alacra’s free offering will lower the barrier for some buy-side analysts to try this new service instead of some of the more expensive “specialist web monitoring services” – particularly in the financially difficult market environment facing the entire financial services industry. Regardless, we think the Alacra Pulse service is an interesting productivity tool that could help the declining number of buy-side analysts save time and money as they are forced to cover a surging number of industries and companies.
To learn more about the Alacra Pulse service, or to try the product out, click on http://pulse.alacra.com.