When One Door Shuts…


New York – On an increasing basis questions are being asked about the direction of equity research in coming months. While the outlook is nasty for the overall industry, there are opportunities and niches that will do very well. The view from 30,000 feet is that the sell-side model will be getting much leaner, with a smaller number of analysts covering more stocks.

Classical fundamental analysts can cover between 10 and 15 stocks effectively. If they end up covering 50 stocks, for example, they will be providing a) inadequate coverage or, b) utilizing third party services to fill in the information gaps. We suspect the latter will continue to gain acceptance. As such, opportunities will exist for third party research providers which have particular abilities in these areas.

Beyond looking at the overall economy, typical fundamental research analysts look to a number of factors to help them assess the quality of individual securities, including, but not limited to, the following factors:



Third Party Sources


Macro and microeconomic analysis

Decision Economics, Dragonomics, Informa, Trend Macrolytics, RGE Monitor, Gavekal

Channel Checking

Verbatim Advisory, Merchant Forecast, Farmhouse, Retail Intelligence Group, OTA – OTR

Market Research

Pannel Intelligence, NPD Group

Patent analysis

1790 Analytics, Litigation Notes, The Patent Board


Supply chain analysis

Verbatim Advisory, Merchant Forecast, Farmhouse, Retail Intelligence Group, OTA – OTR


Competing products

Competitive Analysis Technologies, International Data Corp



Management CV, Liberum Research



The Corporate Library, Riskmetrics, Governance Metrics, Glass Lewis, Audit Analytics


Insider Activity

3D Analytics, Insider Insights, Muzea Insider



Numerous sources

Cash Flow

McLean Capital Management, StockDiagnostics

Economic Value Added

Rochdale, MatrixUSA, shareholder Value Management

Multifactor Models

Columbine Capital Services, Ativo Research, Quantitative Research Group


Policy analysis

Cypress Advisory, Washington Analysis,


Disclosure Insight, Audit Analytics


The table breaks down some of the major sell-side research elements that may be sourced from third party research providers. The third column is a list of competent providers in these areas—though one should not conclude that these are necessarily the best research providers. We would need to engage in much deeper analysis than can be accomplished in this blog to list the best of the best here. Indeed, Integrity’s ResearchFocus is dedicated to finding the key players within specific methodological disciplines, industries or sectors.

One major third party resource we have not covered in the above table is the expert networks. Expert networks can assist in any of the above categories, by finding qualified experts to confer on any number of topics. Rather than insert them into each category, we focused on firms that specialize in these areas.


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1 Comment

  1. The coverage points required for a comprehensive equity research are very correctly mentioned but in terms of providers the role of KPO’s (Knowledge process outsourcing companies) such as SG Analytics has not been mentioned. A large number of Investment research firms outsource the equity research to these firms and this is a fast growing industry.

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