Overall Research Performance - Q2 2007
New York - An important part of research evaluation is performance. Each quarter Integrity teams up with Investars to present the performance of research providers within the Investars equity research performance measurement system. Over the course of the next several days, Integrity will be tabulating the research recommendation accuracy using a number of formulations, including overall performance, performance based on the number of stocks covered by the research provider, the tops in each sector, batting averages and stock sorting ability.
The most robust measure of long term consistency is the performance over a 3-year period, since being the best performer in this group require skill and consistency. The table below details the 3-Year performance data for the Investars universe of companies. Investars top level performance metric is the performance of the buy portfolio minus the performance of the sell portfolio.
Research Recommendation Accuracy (Buy - Sell) Over 3 Years
Three Years Ended June 30, 2007
Basis Points per Day
| Rank | Company
| 3 Year
|
1
| Jefferies
| 9.2
|
2
| Zacks Investment Research
| 8.0
|
3
| Raymond James
| 7.8
|
4
| Columbine Capital Services
| 7.3
|
5
| Price Target Research
| 6.7
|
6
| Ford Equity Research
| 6.4
|
7
| Audit Integrity
| 5.7
|
8
| TheStreet.com Ratings
| 5.5
|
9
| KeyBanc Capital Markets
| 4.5
|
10
| <Merrill Lynch
| 4.4
|
Some familiar faces emerge in the three-year analysis, with many of the quantitative firms putting up excellent results. Within the top ten, there is an equal balance of quantitative and qualitative research approachs, while six of the top ten are alternative research providers and four are investment banks. Of interest, is the presence of Audit Integrity, which is a Forensic shop.
Research Recommendation Accuracy (Buy - Sell) Over 2 Years
Two Years Ended June 30, 2007
Basis points per day
Rank
| Company
| 2 Year
|
| 1 | B. Riley & Co.
| 61.8
|
| 2 | Taglich Brothers
| 28.2
|
| 3 | Ladenburg Thalmann & Co.
| 22.7
|
| 4 | Morgan Joseph & Co.
| 21.0
|
| 5 | American Microcap Institute
| 19.1
|
| 6 | Rodman & Renshaw
| 17.1
|
| 7 | The Zephrin Group
| 12.5
|
| 8 | Cohen Brothers & Co.
| 11.8
|
| 9 | Merriman Curhan Ford & Co.
| 11.5
|
| 9 | Northland Securities
| 11.5
|
The two year analysis is dominated by investment banks. With the top ten RPs all posting performance equal to or above the 11.5 basis point level.
Research Recommendation Accuracy (Buy - Sell) Over 1 Year
Year Ended June 30, 2007
| Rank | Company
| 1 Year
|
1
| Taglich Brothers
| 24.7
|
| 1 | Morgan Joseph & Co.
| 24.7
|
| 1 | ICAP
| 24.7
|
| 4 | American Microcap Institute
| 24.3
|
| 5 | MDB Capital Group
| 18.9
|
| 6 | Rodman & Renshaw
| 17.0
|
| 7 | Hilliard Lyons
| 16.0
|
| 8 | Merriman Curhan Ford & Co.
| 15.7
|
| 9 | Dougherty & Co.
| 14.9
|
| 10 | Fundamental Research Group
| 14.6
|
For the one-year returns, the investment banks again overpowered the alternative research providers, with all of the top ten firms posting gains of close to 15 basis points.
The returns for the 2- and 1-year timeframes favor boutique investment banks. Over the next several days, we will probe the data further to find out the reason for this and many other questions.
Note: The data is derived from the Investars Equity Research Performance measurement system. The analysis, presentation and some calculations are those of Integrity Research Associates.
Posted at 07:13 am by Thomas Hutchinson
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