ABR’s Value Add

We identify the most important themes first (secular adoption, product cycles, regulatory change, etc), then identify winners/ losers and investment vehicles. This is the starting point for our research resource allocation. Another way to say this: focus on what matters most.

Collaboration as a culture – we are building a team with diverse sector expertise that all work together on the firm’s recommendations. Individuals with diverse expertise working together is more effective than an individual with a specialized/ narrow viewpoint

A siloed approach is limiting – the II-defined categories/ coverage universe for a traditional sell-side analyst is an inherently narrow structure for idea-generation. Our analysts look across a very broad range of companies to identify actionable long and short opportunities.

No maintenance work – many activities forced on a sell-side analyst add no value to clients. We insist that our analysts frequently ask themselves “is this activity adding value?” If the answer is no, start doing something else. Earnings reviews, previews without a conviction call, whitepapers, Neutral-rated stocks, marketing for II-votes, etc. consume an enormous amount of time but add little-to-no value to investors.

Datapoints by themselves are noise – money managers need context. A single datapoint is a small part of a large mosaic. Unfortunately it seems that a lot of the sell-side has reverted to chasing any/ every datapoint.

A penny or two on a quarter is irrelevant – earnings power is what matters. If our work leads us to a conviction call, we make it with conviction. But the sell-side seems to have become obsessed with “calling the quarter”. Quarterly results do matter, but sustainable periods of business momentum are what create large value to investors.

The need to transact biases the sell-side. We designed our firm without an internal trading desk. We can share inputs/ insights and truly collaborate with our clients without the conflict of needing to generate trades to monetize our work.

The game has changed. Through regulation, technology, industry maturity and other factors, the business of money management has changed. The sell-side has not kept pace. There is no need for another “me-too” sell-side firm with the same research structure/ process, focused on the same flawed activities.

We see enormous opportunity. The buldge bracket model is under structural pressure. Medium-sized firms are going away. Most independent start-ups emulating the platforms they left with no differentiation. The sell-side lacks leadership and innovation to re-invent. While the industry sees a shrinking pie, we are gaining significant share.