Let’s Have an Adult Conversation About Sponsored Research for 3000+ Uncovered & Invisible Public Companies in 2013-Part 1
Chuck Jaffe, a very reasonable MarketWatch.com columnist with whom I have at least a 10 year working relationship, posted a reasonably negative column this week on our business of sponsored research for uncovered emerging growth companies…specifically Petrosonic (PSON). The gist of his article is his issue with the conflicts of interest with sponsored research…and generally why such a nice guy like me would sully himself in the world of emerging growth stocks and have the audacity to be paid for research by a public company.
So let’s talk about the business and necessity of sponsored research…and why I am VERY comfortable with this research model for the 3000+ public companies listed on the NYSE/Market/ Nasdaq and OTC markets with ZERO buy side or sell side equity analyst research coverage.
#1 For the record, my last contributor agreement with Fox News did NOT include any exclusion from me or my company sponsored research. But that is water under the bridge…I am no longer a Fox contributor. I thank them for a 14 year run…but all good things come to an end.
#2 I of course NEVER EVER mentioned Petrosonic on ANY appearance on Fox News or Fox Business News…strict policy against talking about <$500M companies.
#3 The direct mailer discussed in the article is an advertisement for our new paid newsletter Next Big Thing Investor PRO which features Petrosonic as the next big thing in heavy oil refining technology. Syndicating the cost of a $million direct mailer with investors in PSON is a business decision for NBT Group, Inc.…my publishing company.
#4 Our fee for sponsored research covers one year of equity research and updates…due diligence costs time and money. It also included list rentals and other awareness raising strategies.
But the bigger issue on the table for emerging growth companies and the public capital markets is: WHERE do promising emerging growth companies GO when they don’t have a “VC” fundable company…which is about 98% of emerging growth companies?
Research in ANY model is a COST center that must be funded by transactions, commissions or sponsored coverage. The facts are that capital formation in the emerging growth space has cratered since 2001.
The Death of small IPO’s in America since April 2012 –less than $3 billion raised for just 53 small companies vs. $19 billion in 1997
3000+ NYSE/Market/ NASDAQ and OTC listed companies ORPHANED by zero Wall Street research due to the 70% reduction of analysts and research on under $1 billion companies post 2000 and 2008 market crashes from sell-side investment banks
Virtually ZERO IPO’s for less than $50 million in the last 12 months – See Here
NBT Equities Research LLC was started to help DESERVING emerging growth companies find an investor audience…and we are proud of the work we have done on behalf of our portfolio companies.
HOW does an emerging growth company with ZERO hope for Wall Street analyst coverage get their story out to retail investors, let alone institutional investors?
We’ll get to that story NEXT week…
Founder and Editor-in-Chief for NBTEquitiesResearch.com. Contributor and Anchor for the Fox News Channel and Fox Business Network 2000-2013. Chairman & CEO of NBT Group, Inc., a boutique private capital investment bank and investor relations organization.