Within the investment landscape there are always conflicts of interest. Interests that can be at odds with each other. For example, within the research sphere, notes are typically produced by the house broker, the company’s Nomad, or are paid for (usually in cash) via so called “independent” research providers.
As industry professionals with decades of experience in the stock markets, headed up by highly qualified individuals from both fund management and analytical backgrounds, we have learnt the hard way just how each vested interest can work against the end investor’s interest.
For instance, where a note is produced by the broker to a company it is almost without exception that a “Sell” rating is never issued. In essence, parties are not going to bite the hand that feeds them. Regulation has tightened up in this area in recent years so that these inherent conflicts are disclosed. However, the universe of “tied” broker notes is generally questioned by fund managers and seasoned investors.
Similarly, traditional “paid for” research providers are being remunerated almost exclusively in cash and so the end result, post the production of the research note, is largely of little consequence to these firms. They still get paid.
It is from this background that ALIGN Research was borne. Our USP’s are 3 fold:
- We approach only those companies that we actually BELIEVE in. We don’t take all and sundry onto our books on the basis of preparedness to pay. Belief in the investment case is our sole criteria in selection.
- We actively look to take payment almost exclusively in the company’s equity or apply payment to purchasing the equity of the covered company. This of course ALIGNS us with both the company (existing shareholders and management) and new investors that act upon our research notes. If we are wrong in our analysis we suffer the same fate as the covered company's shareholders.
- We also propose “Conviction Sell” recommendations on certain companies where we feel the shares are a good short opportunity and, where applicable, openly disclose our position in such a candidate.
You can see just how the Align Research offering is a complete breath of fresh air on the investment landscape. At the time of launch (January 2016) we believed that the Natural Resources arena was ripe with opportunity with many sub £100 million market cap companies devoid of any meaningful independent research. It is for this reason that we sought out those companies where we believed their story deserved a wider audience and where we were more than prepared to “eat our own cooking”.