Following a number of comments on various social media forums this week reference Align Research and its approach and, where it seems there are a number of misconceptions as to our business model, we hereby clarify our mandate to ensure that there is no misunderstanding within the market place.
First of all, Align’s mandate is very, very clear – that is we exist to make a profit for Align shareholders. The way we do that is by alighting upon companies that we believe are undervalued and we then take a position in these companies and write about them, hence the name “Align”. Our approach is, we believe, in complete contrast to almost all other research houses in that through our direct equity interest we are then aligned with both existing shareholders and new ones aswell as of course with the covered company’s management. We are thus not indifferent as to whether the stock goes up down left or right. Our vested interest is in being right in our research and seeing stock price appreciation. In short, we “eat our own cooking” and what’s more, we are 100% transparent in this. If we are right then those that act upon our research make a profit. If we are wrong we also lose. There is, we point out, zero charge to the readers of our site for this research production. No subscription fees, no research payment costs, nada.
It is our supposition that stock price appreciation comes from two aspects – delivery by management of a company’s plans and from this execution, the reaction by investors to that in creating demand for those shares. Align’s focus is simply on increasing the markets awareness of a company’s story and progress made and aiding in the market’s appreciation of this through the production of our research. Our remuneration therefore comes from the increase in the value of our own investment(s) in the covered companies and the receipt of stock from the specific company (with, in certain instances, a 6 months lock in from initial coverage – again in complete contrast to almost all other City houses). In receiving equity in a particular company, Align actually pays its analysts in hard cash to produce the reports and so there is an acute requirement to get more right than wrong. As is evidenced by this site, we have been very successful in this regard with a number of multi-baggers.
Our specialisation is in the sub £50m market cap arena where there is a dearth of independent commentary and the business was borne of this opportunity. We reiterate one of our USP’s – Align only takes on those companies where we believe there is upside as opposed to a company’s simple preparedness to pay for that research. If we did not adhere to this approach then we would (a) ultimately lose money in taking on sub investment grade opportunities where the equity position would fall below our analyst cash payment(s) and (b) have no following in the market place. Of course, at some point we will look to convert those equity positions into cash, not least in order to pay the usual company operational costs including taxation. It is at our our sole discretion with regards to when we monetise those positions and our primary consideration, aside from regulatory adherence, will be the profit maximisation for Align shareholders.
We have fielded questions from individual investors in a number of companies in recent months asking for specific advice ref their holdings. We wish to make our approach here very clear – we do not advise individual investors. What we do is produce thorough research. It is then up to each individual follower of Align whether they wish to react to that research and in what manner given their personal circumstances.
We trust this makes clear our business approach and focus.