Drop in analyst coverage

Analyst coverage continues to decline in the US. Wells Fargo closing its research department could inidcate a trend. Can investment banks do away with research departments completely? I don't think so. Having analysts on the sell-side helps in maintaining an efficient market. A lot of people think that sell-side research shops cannot produce unbiased research. I don't completely agree with this statement. There are a lot of good analysts providing good value to investors. Yes, bias issue needs to be addressed but there is more to it. I think the key question that needs to be answered is - can sell-side produce quality research in a cost effective way? I think it is possible - but the processes and tools sell-side analysts use have to change. They need smart technology. I think time has come to move beyond using spreadsheet models. We, at finEye, believe that analysts can produce great research, efficiently and effectively, using our flagship product, Insight. It is the first software solution focused specifically on helping investment professionals in evaluating the true performance of a company. We use advanced technology that ferrets out early warning signs and provides invaluable insights.

Paid for Research - Another flawed model

Would an analyst or fund manager trust any research that has been paid for by corporations? I just don't get it. There are two such initiatives - National Research Exchange and Independent Research Network.

Please read the following lines carefully - "38% of all NASDAQ-listed companies and approximately 17% of NYSE companies have no analyst coverage. Over 50% of all publicly listed U.S. companies have two or fewer analysts covering them. These numbers reflect a growing intelligence deficit that affects public companies on all markets. Independent Research Network will offer a viable solution, not only by extending analyst coverage, which may improve liquidity and lower the cost of capital for listed companies, but also by making available to the investment community credible, actionable research on an unprecedented range of companies."

Whose interest is being served here - "improve liquidity and lower cost of capital" - clearly the corporations. Yes, the problem is correctly identified. But this is no solution. Don't we all know the basics - loyalty is to the person who pays the bill. Who pays the bill? The corporations who want analyst coverage. I don't see how fund managers will derive value from this. It is a known fact that the investment community is willing to pay and pay big for quality research. The challenge is to produce quality research efficiently. finEye is striving to be the solution. Stay tuned!

Secular India

President of India: A.P.J.Abdul.Kalam is a Muslim
Prime Minister of India: Manmohan Singh is a Sikh
Chief Justice of Supreme Court: B.A.Khan a Muslim from Kashmir
Majority religion: Hindu (almost 75%)

You decide if you ever want to hear an argument that India is a not a secular country. These individuals have achieved the highest positions in the government not because their religious affiliations but who they are - extremely competent people.

There is lot of discussion in the US media about appointment of justices to the supreme court. I don't know much about Judge Roberts whom President Bush appointed as his nominee. But a lot of people believe that he is very conservative and will pursue a right wing agenda. I hope an "advance" nation like United States learns something from India on what it means to be secular.