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Corporate or Independent
research
Independent research comes in all
shapes and sizes but retains one key factor - it is
produced independently of traded companies or broking operations. However how the
independent research house gets remunerated is one of the sticking points for private investors
who receive the information.
There are two main ways of payment for independent research:
Company Sponsored Research paid for by companies and
Investor Sponsored Research where institutional investors will commission research on
individual stocks or sectors.
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The strength of independent research has over other forms of research
is the fact that the analysis is not tied to a corporate broker who will
employ in-house analysts. This should allow for a more objective
overview of the research subject and this is highlighted by the fact
that approximately 1% of corporate
brokerage research notes are sell
side compared to around 20% of all other forms of research.
So the benefit to the investors is the loss of bias.
Who else can benefit from research?
Companies that commission independent research have
been shown to
have slightly higher P/E ratios although
this may be that companies
who are
growing faster need more research conducted on them as they
are generally younger and less established. |
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Indeed it is vital for young companies to utilise independent research houses. Smaller
companies that are listed on AIM or PLUS have relatively low profiles. Independent research will or at
least should increase the public awareness of a company by distributing the research. The research house
has an important role in establishing the correct audience for stocks they are asked to do research on. The
end result of research for on a small company is to increase the liquidity of the stock and hopefully from
there the share price will increase or directors will find it easier to raise additional money when required.
Unfortunately there are still a couple of stumbling blocks. Firstly independent research
generally costs an arm and a leg. Typical fees range from £20,000-£30,000 for smaller
companies.
This is a lot of money for newly formed or small cap companies to afford and hence there is a
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lack of companies taking up these deals.
The other issue that arises is that many companies are not aware of independent research and do not really understand the impact that reports can have on a
company's share price.
Company EYE is giving an alternative to the expensive independent research that most firms supply. We will provide a basic research note for as little as £995 incl. VAT.
We feel that the research that we provide
is not only affordable but |
that it is aimed at the investor and will increase public awareness in stocks. Further to this
Company Eye research is becoming more popular with broking operations that see the
independence of the reports as an important tool in attracting investors.
For more information on the service please contact Company EYE Ltd by phoning
020 7373 8115 or email info@companyeye.co.uk.
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