Earning Quality Analytics

Earnings Quality Website

Research Purpose: Idea Generation and Monitoring

Company Description: (EQA) delivers to investment managers comprehensive forensic accounting and corporate governance analysis of widely held public companies. Leveraging the latest academic research, as well as our proprietary quantitative models, our highly-qualified and credentialed analyst team employs a rigorous two-step research process. This process objectively identifies companies with improving or deteriorating earnings quality characteristics before they are fully manifested in stock prices.

The first step in our research process is an on-going quantitative measurement of earnings quality of 5,500 companies (5,000 largest by market cap domestic and 500 largest by market cap ADR's). Once our quantitative models identify companies with improving or deteriorating earnings quality characteristics, the second step is an analyst-driven, qualitative assessment of a firm's financial statements, filings and management statements. Our analysis manifests itself in a series of company-specific Detailed and Brief Reports, Alerts and Bulletins, as well as in our Greatest Concerns List, Watch List and Standouts List. Thematic accounting issues pertinent to multiple companies or sectors are covered in our Issue Commentary reports.

Product Features
- Searchable archive by company ticker. This is an area that could use some improvement as you are limited in your ability to search past research.
- Portfolio set-up. You can set-up portfolios that allows you to filter out the reports that you are looking for.
- Allows you to filter out ideas based on the publication date, sector, Mkt Cap. and PE Ratio.
- Daily emails with updates to new research added to the Library.

Personal Evaluation
The content of the site is very good and informative and our analysts are finding it very beneficial. It offers information in a very palletable way. Our analysts have been using it as a way to monitor stocks from a Quantitative perspective. The one draw back I found is that the user interface of the website is not very user friendly. It just seems like they felt that this was a way to present the information but I think some advanced search options might be more appropriate to sceen ideas. I can see how this tool is useful as a way of checking ideas opposed to generating ideas. I would also complain that there is no email customization. Currently you are sent a default email with the stocks that are expected to out/under perform the market based on the system. I would prefer to have only emails sent based on sector or portfolios that you can set-up in the system.

Contact
Kurt Van Houghton
Client Relationship Manager
480.237.3189
kvanhoughton@gradientanalytics.com

InsiderScore

https://www.insiderscore.com/

Product Description: (from website) The InsiderScore service provides real-time access to insider trading data and gives investors like you the tools they need to efficiently organize and decipher insider stock transaction activity. Our proprietary filtering and scoring algorithms provide you with a new edge on insider trading data, and hones in on "timely, telling, and actionable insider trading moves."

Each insider filing is "scored" using our software. Our scoring algorithm takes into account many variables, including the type of transaction, the insider's position, the size of the transaction, and the performance of the stock before the transaction, among other factors. We also score the overall insider trading "healthiness" of a company based on its insider filing history. The result: you see the most important and influential insider transactions first, both from within and outside of your coverage realm. InsiderScore is a great source for timely, telling, and actionable new ideas, as well as an instant time saver and productivity booster.

Potential Research Purpose: To track and monitor Insider Trading amongst stocks that are currently in your Portfolio and also stocks that you might be interested in purchasing.

According to Insider Score they have proven that there is a statistically significant correlation between Insider Buying and positive returns as well as Insider Selling and negative returns. This just seems like another tool that might be effective in monitoring your portfolio as InsiderScore utilizes a unique algorithm to Score every Insider Buy/Sell based on variables, including the type of transaction, the insider's position, the size of the transaction, and the performance of the stock before the transaction, among other factors. Based on the way Insiders are buying or selling it could help you determine how these Inside Investors view the potential for that particular company in the future.

Another potential use of the product would be to utilize it as a screening tool for picking stocks for your portfolio. For instance you could develop a screen for Companies involved in different Commodities and monitor when management is purchasing significant shares which would be a good indicator that management is expecting a turnaround in their industry and subsequently their companies stock price. InsiderScore provides a CSV which can easily be integrated into a tool like FactSet that you can utilize for screening potential ideas.

InsiderScore is also in the process of developing a module of there product that looks specifically at Institutional Investors that own 10% of a company which as I understand it would be unique to any other product out there.

Pricing (Estimate based on original conversation)
The pricing is based on a tiered schedule by assets that are under management. Based on his estimates it would cost my firm (16 Billion under management)......

• $12,500 for the first 3 Users and an additional $2,500 for each additional user. This would allow you access to the InsiderScore Portal along with daily emails about significant Buy/Sell activity and an email for an alert set-up by the user.
• An additional $15,000 for the Data Files to be utilized in FactSet for screening and integration purposes.

There will be an additional cost for the Institutional Investor Module when it comes out of beta.

Contact Person

Derek Syphrett -Sr. Researcher & Sales Rep.

Phone: 609-497-0076 - Email: derek@insiderscore.com - IM: 344-891-019 (ICQ Service)

Integrity Research

Potential Research Pain Eleviation: Provide a resource to help in the procurement of research from firms directly involved with certain Researh themes of interest to your analysts. For example, Integrity Research will help you find the research providers intimately involved in the research of Diagnostic companies. With Sell-side firms steadily reducing their coverage this would be a good tool to identify and screen independent research providers who are filling in these areas.

Company Description: Initially founded in 2000, Integrity Research Associates, LLC offers leading edge research, insightful analysis, objective ratings, and customized consulting to help meet the business needs of senior executives at investment banks and brokerage firms, portfolio managers at buy-side institutions, and hedge fund managers. A few of the company's primary services includes:

• Syndicated Research and Ratings
  
• Customized Research Selection and Monitoring Services
  
• Related Research Industry Analysis and Publications
  

Personal Evaluation: My understanding of the service is that it has two components that might be of use to the Research Department. The first service offered by Integrity Research is there Research Evaluation Database (RED). The Database provides a quick analysis of over 400 Research Providers in the form of a single page report on each research provider that presents a snapshot of the company based on a limited number of key indicators like number of clients, headcount, key management, research methodology, coverage universe, sector coverage, headquarters and offices, contact information, and website URL. The database also offers ratings for the research providers in several categories that will help analysts evaluate whether they should subscribe to their research. Another intriguing part of the database are the Converage Universe Reports. These reports will showcase research providers who excel in certain coverage areas and would allow our analysts to focus in on the research providers that might best serve their research needs based on a Theme or Industry that they are focusing on. This product would be ideal for firms involved in Global Equities to evaluate research providers outside of the US that have a better knowledge of the themes, industries, and companies that will be able to provide a more unique insight than traditional research on the street.

Another part of the service is a consulting component. Integrity Research works with the consumers of the research to develop a program to find the best Research Providers for a firm based on that firm's investment style, analytical approach, and portfolio makeup. Essentially they will take a look at your firm and than search a larger database with more companies than the one's listed in the RED to find the Research Providers that fit the way you perform research and evaluate stocks to be put in your portfolio.

Pricing: An annual subscription to Inegrity Research is $36,000 which includes the use of the database and 50 hours of analysts' time to conduct ResearchSelects. They could essentially be used as a resource for all of your portfolio managers as they looked for unique, value-added sources of ideas and information. They also do "one-off" ResearchSelect for a particular analyst or portfolio team for $10,000 which includes a thorough analysis of one sector or investment controversy. The Coverage Universe Reports are generic reports available to all subscribers of Integrity Research which covers the best Research Providers in a particular broad industry (ex. Small Cap Research providers) and are $5,000 a piece for non-subscribers. The difference between the two is the level of customization involved in building the reports.

All costs can be soft-dollared and the subcription is for four seats. This would allow multiple sector groups to utilize the resource with one person responsible in identifying the research providers that will best suit their groups research needs.

Related Articles

Buy Side Firms Expected to Keep Hiring Research Analysts

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Breaking out of the "herd" on Wall Street

GLG News

GLG News is a new product being offered by Gerson Lehrman that allows Analysts to tap into Gerson's network of consultants without using the phone. The product works in three different ways.

1.) The consultants that are part of their network will find an article on the Internet that they think would be relevant to the investment community. They than write there own analysis of the topic that pertains to the article. The analysis offers a link to the article so you can reference what they are speaking about.

2.) Research analysts can submit an article that they would like to have a consultant comment on. The analyst is asked to include a link to the article that they are submitting and then the consultants read the article and provide their expertise whenever they think they can add information.

3.) Using the GLG News platform you are able to set-up a phone consultation with analysts that comment on certain articles. Essentially, you can qualify subject experts through their writings in GLG news and then you can easily set-up a consultation by using a link in the system.


Relevant Features

• A fully searchable database of past consultants postings. You can easily search over 7,500 different entries to find information that consultants have already posted on. This is expected to increase rapidly in the future as Gerson starts to tap into more of their network to add posts
• An organized Subject Taxonomy. Consultants tag their articles based on a taxonomy that has been developed over time. You can easily find articles that pertain to a subject area that you would like to monitor. They also tag their entries based on the companies that are referenced in the articles that they are reviewing. Currently this only relates to companies traded on the American exchanges but they are expanding into international exchanges in 4 to 6 months.
• Subject, company, and consultant watchlists. The technology allows you to easily set-up a watch list for any of these three areas. If a new article is posted that is any part of your watchlist you will receive an email with a link to the article posted by the consultant.
  Email capabilities. GLG News allows you to email the full content of an analysis on GLG News. If you find an article that you think is relevant to other members of your sector group you can easily send their review to other members of the Research Staff.

Ease of Use

I found this technology pretty simple to use. I think the Watchlist feature is especially creative and could be of benefit to analysts interested in monitoring different subject matter. The one drawback is that they do not offer 'Keyword' search watchlists which would be of benefit for more obscure topics that an analyst might want to monitor.

Street Brains - an independent research platform that is oh so expensive but oh so interesting!

http://www.streetbrains.com

Street Brains is a company that brings together research from Independent Research Analysts and offer it in one smooth platform. It is a product that I am having my Research Team evaluate. The whole concept of the product is to offer a medium for these independent analysts to provide there unbiased research. Street Brains is simply the mechanism used to intrigue clients and to package different independent research companies based on what you as a money manager are looking for. Essentially the way they are selling the product to investment managers is that the resesearch being offered is completely independent of the street. They pride themselves on their independence and the analysts picked to be part of the platform are able to offer a completely non-biased point of view. They do not have a trading desk and are simply a way of promoting these free independent analysts and the brands that the researchers create for the Street Brains platform.

They currently only have a few products available but they have been producing a NEW product on the 15th of every month and hope to keep on that pace for a period of time. Below is a list of their current products that they have on the website:


Products (from their website)

InMotion aims to deliver actionable investment ideas in the global aerospace and defense sectors. Our research focuses on sector and company fundamentals and the forces shaping them: global growth and the demand for aircraft, along with the geopolitics and threats driving the rate of growth and the composition of defense spending. More info...

The Sterling Account is written exclusively for institutional investors including traders, fund and portfolio managers, executives of entities planning acquisitions, takeovers, turnarounds, workouts, and LBOs of an energy related company. The goal is to provide the necessary information for short-term and long-term financings, investments, and trades to enable the client to make the best benefit to cost and risk decisions. More info...

MediValu is an improved and simplified system of calculating valuations in the biotechnology and healthcare industries. MediValu uses proprietary techniques and models developed by our experienced industry analysts. More info...

Real Consumption is the product of a strategic partnership with a boutique niche specialty financial consulting organization, Market Service, with offices in New York, Ohio, and Florida was established in 1993. Through its principal subsidiaries it is considered the preeminent authority on 17 retail channels with respect to financial analyses of fundamental operating metrics as well as market position and competitive advantage/disadvantage evaluations. Market Service maintains a direct relationship with over 500 manufacturers and service providers selling to the retail channels covered. More info...

PatternWatch provides a short-term and long-term outlook for 17 markets, including stocks, bonds, US dollar, gold, crude oil and real estate. PatternWatch utilizes a combination of Elliot Wave Theory, Gann Theory, Cyclical Analysis and Classical Charting methods to analyze the various markets. In addition to this unique combination of analytical techniques, PatternWatch technicians add a keen intuition and sense of the "big picture", which has enabled them to identify fundamental and economic trends well before their peers. More Info...

Gotham Research conducts independent equity research for institutional investors and professional money managers... We have been developing our system and report designs for many years and have been delighted by the positive reaction from the institutional investment community. As an additional service to our clients, we now provide a collection of web-based dynamic research tools. These tools allow monitoring of our recommendations as well as permit one to research and investigate new trade ideas. More Info...

Picking Analysts and Products

Street Brains also prides itself on the way that they choose their analysts to create the brands that they promote on the platform. Before a product is offered in the Street Brains catalog, the researcher(s) have to go through a thorough screening process. They look for the analysts that provide a completely independent view of the street. Another feature that I thought was interesting is the fact that this research can only be viewed by firms that subscribe to StreetBrains and will not be available to anyone else like you would get with a Reuters Multex or Thomson One. Also, they limit the number of firms that are able to subscribe to one of their products so only 40 or 50 Money Managers will have access to the information.

As new products come online members of Street Brains get access to the Research to evaluate whether they would be interested in purchasing the product.

Pricing

The one draw back concerning Street Brains is the price of the different products. You purchase individual licenses for the different products based on which ones you want to order. Each license comes with 5 seats which would be ideal for the different sector we have at our firm . The prices can range from $40,000-$100,000 (no exact figures as of yet) per year per license. There are cost breaks based on the number of different products that you subscribe too. All costs are able to be soft-dollared.

Samples

Street Brains has offered to supply us with Samples of the Research that is already on the platform. We are going to have our analyst's evaluate the research and decide it it would be worth the cost.

Tamale vs. CodeRed

Tamale - http://www.tamalerms.com/
CodeRed - http://www.coderedinc.com/
Tamale and CodeRed are products dedicated to the collection, maintenance, and categorization of research (both external and internal) for buy-side firms. Both are server based products that integrate with just about everything that an analyst would use to perform research about a ticker or investment theme (IE, Adobe, Email etc.). Both user interfaces are set-up to look like Outlook mailboxes and the functionality of the systems are similar to using any Microsoft product.

A user example for both products.....
Lets say for instance during the course of research an analyst finds a piece of research that they think may be relevant in Reuters Knowledge for creating a Buy Reccomendation or for monitoring a security. All they would have to is simply click on a button that is installed on Adobe to send it to the product's server. The article is automatically tagged by the system as long as there are tickers in the title and added to the database. An anlayst can than add notes to the content to be saved by the system as well.

Althought the products are very similar there are definitely some unique differences between the products.

Tamale - during the Tamale demo I was very impressed with the way that you can input data into the system. From my perspective this was where Tamale was superior to CodeRed. Tamale makes it very easy to classify information and input in the system from any electronic media you are using. I found that this differed from CodeRed in that it was a little more difficult to get a PDF in the system and you really have to customize the input to get it to the area that you want. Although CodeRed allows greater customability, it seemed to me from an input perspective, Tamale offered a superior experience.

CodeRed- during my CodeRed experience, they really stressed the customability of the product. CodeRed can incorporate all kinds of internal data into the system. You can take all the information from your trading system and have it implemented into the system. From my perspective, I understand the possibilities with having a more customizable product, but in the end I could not forsee our analysts going above and beyond what is offered standard in the Tamale project. It also seemed that there would have to be a ton of interaction between us (Research, IT, Trading, Compliance) and Code Red to really get the full value out of the product.

One of the other reasons I was looking into these products was for the possibility of finding a product that can help organize and reduce the amount of broker research are analysts recieve. Tamale was definitely superior to Code Red in organizing this information in the way it categorizes and distributes it into the system.

There were two features that were part of Code Red that were noticably missing from Tamale. The first was a calendar function and the second an RSS aggregator. The calendar function integrated Street Events which was kind of cool. Essentially it took information from Street Events and added it to the calendar in the Code Red system. You could than easily have it added to your personal calendar in Outlook. The RSS aggregator was also interesting but looked like a weak aggregator opposed to other available systems that are out there.

As for pricing Tamale costs more than CodeRed but that difference is reduced if you have more users.

Conclusion - Based on my analysis of the products I would consider both great alternatives for any research department. Functionally there is not too much of a difference but I think that the customization possibilities and the integration of internal data that comes with CodeRed might be the difference maker.

YouDevise VS. FirstCoverage

Recently I was asked to demo products concerning handling the vast amount of broker research our analysts get and also allow the ability to evaluate brokers for the content and recommendations that they provide.

During my preliminary research I demoed two products YouDevise and FirstCoverage. After the demos I was convinced that the best of these two products was YouDevise. While the products offered the same features my preference for YouDevise boiled down to two reasons.....

1.) YouDevise is free to Buy-Side firms while charging Sell-Side firms while FirstCoverage charges the Buy-Side and provides the technology free to the Sell-Side. Although FirstCoverage price is very affordable why pay for a very similar service when you don't have to. The way it was explained to me by YouDevise is that it only makes since that you would charge the Sell-Side considering that by the Buy-Side using the product they will be rewarded for the results of their research.

2.) A more customizable, friendly user interface. During my demo and free trial of FirstCoverage it became very apparent that it was difficult to get around and the amount of information provided was mind boggling. I felt this was a sharp contrast to YouDevise which I felt was much easier to navigate and get around. I also felt that YouDevise was more focused on allowing you to customize the information that you can sort by which I felt would be very beneficial to the way we trade.

The one draw-back that I could find when it came to You-Devise was the fact that the company is based in the United Kingdom. Due to this fact they do not have established relationships with all the US Research houses. According the gentleman who gave the demo they have had no trouble implementing the system in the brokers that they have dealt with in the states though.