Apologies for the delay publishing. We were celebrating our freedom from further Blagojevich shakedowns. Ah, poor taste, but we couldn't resist!
TARP Special: Sign up this month for Equity Analysis and we'll give you a month free. Since we don't do contracts, it means you can try us at no obligation. And we don't give much away, having observed that giving stuff away isn't a good long-term business model.
A word on our service, the only direct "sales" word this year: We're trying to change the way IR folks practice their profession, because the old rules have gone away and the old tools don't deliver the goods. For instance, we compared surveillance data for a big client this past week with their overall trading data. The surveillance ownership changes represented not even 10% of total weekly volume.
If you're basing IR decisions, strategies and answers on data so radically incomplete…well, you might need to redefine "essential service." I mean no offense to our many fine friends in surveillance. We capture the whole picture, provide the reasons for price changes, and charge a fraction of that old traditional cost. And no contracts. That makes pretty good sense in troubled times like these. By the way, our clients range from $100 million to $100 billion in market cap. Approaching our fourth anniversary, we still have our very first client and we've only ever lost two, both to budget cutbacks.
Anyway, speaking of cutbacks, former Lazard chairman Michel David-Weill has the quote of the week: "Every now and then we have a bad decade."
A good and inexpensive source of comfort – no, not cheap booze – for IR folks when trading is chaotic and fundamental holders are skittish is your equity trader down at the local sellside desk. For instance, one client of ours visiting New York this week (half the IR world is there right now) shared some observations from their trader at a large prime broker. We're keeping confidential the identities, but the observations highlight how to learn from your traders:
Our NYSE client asked about their volume trading off the NYSE. The trader said, "I have access to 15 different ECNs and dark pools which are more efficient then the primary exchange. I can put an order into our algorithmic trading platform and tap all of those venues."
On whether this big broker matches up order flow internally, the trader said, "We do have an internal crossing network. Every order I enter into our electronic platform will pass through this internal network first, then out to other venues…There is a significant hit ratio."
Asked if liquidity was an issue, the trader replied, "It's definitely an issue and can move these names dramatically. When significant moves do happen the dedicated players take advantage of the dislocation to the index."
What he means by "dislocation to the index" is the divergence of a given equity from the index representing the group. And good news, the names that know the industry are actually buying.
Bottom line: get to know a trader or two or three! Your analysts can make introductions. Like anybody else, traders like sharing what they know. Hint: be courteous and don't call them during trading hours. And keep your calls brief.
Margaret E. Wyrwas - Knight Capital Group, Inc. (Nasdaq: NITE)
Senior Managing Director, Corporate Communications & Investor Relations
Equity Analysis™ subscriber since March 2007
"In global markets driven by automation, changing market structure regulation and dynamic investment objectives, today's investor relations professionals require new data points in order to remain relevant and add value in their company's quest to reduce its cost of capital."
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