Would You Pay $1,000 For Each Equity Research Piece You Read? Autonomous Research Thinks You Will

Tyler Durden's picture

Would you pay $1,000 for each piece of equity research you read throughout the day?  How about $5,000 for an industry piece? 

Well, Autonomous Research, which was founded in 2009 by former Merrill Lynch analysts, is really hoping you'll agree that those are appropriate clearing prices for their daily market wisdom.  According to Bloomberg, as equity research providers in the Europe continue to figure out how exactly to best comply with upcoming MiFID II rules, Autonomous thinks that a piecemeal approach will allow them to reach smaller funds that lack the resources to purchase more expensive annual contracts for bulge bracket research.

Autonomous Research LLP is offering a pay-as-you-go model for its European equity product in the run-up to the MiFID II rules, which are set to shake up the way money managers pay for analyst reports, people with knowledge of the matter said.

 

The prices for the new service start at $1,000 for a single stock report and climb to $5,000 for high-end industry research, the people said, asking not to be identified because the information is private. Autonomous Research, which specializes in analysis of financial companies, also charges a single user $5,000 for access to its daily round-up of news and analysis, with the price per client falling as more sign up, the people said.

 

“We have been transparent with our clients on pricing for research since inception eight years ago,” said Chief Financial Officer Jonathan Firkins. “We have a clear and transparent pricing menu which we discuss proactively with existing and prospective clients.”

ER

Of course, as we recently pointed out, bigger firms like Barclays have opted for larger 1x, all-you-can-eat packages priced at the bargain basement rate of just $455,000 per year...it's hard to imagine how hedgies won't be knocking down their doors to gain access.

The firm is proposing three levels of service -- bronze, silver and gold -- with the premium package comprising unlimited reports, field trips and “occasional” one-on-one meetings with analysts and corporate executives, according to a pricing document seen by Bloomberg News. At the bottom end of the scale, read-only access to European research will start at 30,000 pounds.

 

At Barclays, even if clients stump up 350,000 pounds for the gold “trans-Atlantic” package, they could still end up spending more. “Bespoke” analyst work and corporate access is priced separately, according to the document. Field trips, industry events and company management meetings are also at the bank’s discretion, and analyst one-on-ones are “capped,” it shows.

 

Prices in the document may not apply to all clients, have been in flux and could still be subject to change, a person familiar with the process said, asking not to be identified discussing the matter. A Barclays spokesman declined to comment.

 

Banks are scrambling as they enter the last six months before the decades-old practice of sending out free analyst reports as a courtesy and marketing strategy comes to an end. The European Union’s MiFID II regulations, enforced from Jan. 3, require money managers to separate the trading commissions they pay from investment-research fees. This means banks in turn have to be more transparent, providing specific charges for their analysts’ time and work in order to comply.

Of course, the logical takeaway from these exorbitant offering prices, if they hold, is that institutional clients will ultimately be forced to consolidate their vendors...translation, so long to the small independent research shops.  Meanwhile, investment banks will be forced to control costs by trying to focus on writing reports that people actually read (vs. the 1% hit rate they have today).  All of which means that those shrinking analysts pools are about to completely collapse.

 

In fact, as McKinsey recently noted, up to 30% of research analysts could be at risk of losing their cushy banking jobs as result of Europe's new regulations.

Europe’s impending ban on free research will cost hundreds of analysts their jobs with banks set to cut about $1.2 billion of investment on the area, according to a report by McKinsey & Co.

 

The consultancy estimates the $4 billion that the top-10 sell-side banks currently spend on research annually is likely to fall by 30 percent as clients become pickier about what they pay for, McKinsey Partner Roger Rudisuli said in an interview. Investment banks’ cash equity research headcount has fallen 12 percent to 3,900 since 2011 compared with as much as 40 percent in sales and trading, leaving the area facing “big cuts” to catch up, he said.

 

“Two to three global banking players will preserve their status in the new era, winning the execution arms race and dominating trading in equities around the globe,” McKinsey said in a report Wednesday, which Rudisuli helped write. “Over the coming five years, banks will need to make hard choices and play to their strengths. Not only will the top ranks be thinned out, there will be shakeouts in regional markets.”

Of course, as we've said before, almost any amount of money seems, at least to us, to be too much to have the same people give you the same advice over and over again, namely "buy more stocks, faster."

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UncleChopChop's picture

hahahahhahahh    

EDIT - realized i had rehashed all same themes everyone knows. one word i think sums it up best.

DWD-MOVIE's picture

I’m making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do… http://disq.us/url?url=http%3A%2F%2Fwww.jobproplan.com%3A68UoF1LgzM-Yo3S...

jcaz's picture

That's precious......  Hey kids, let's make a business!

I'll be right over here, selling my $100K/cups of Kool-Aid........

dark fiber's picture

If their analysis is so good why don't they use it to invest themselves instead of trying to sell it to others?

Pernicious Gold Phallusy's picture

We pay a hell of a lot more for each study telling us we need to assuage our carbon guilt by shipping our money to 3rd world countries that hated hate and will hate us no matter what we do.

Rebelrebel7's picture

The EU must have a strategy to end investment banking. I guess that they want everything for themselves.

I would like to end central banks.  They've outdone me!

Or, maybe they just want the European  central bank to own everything, I'm guessing that that is the case.

DetectiveStern's picture

I'll do bespoke reports on any stock for a mere £50 a pop!

secretargentman's picture

Upvoted for your excellent vocabulary. You must not be from around here....

mkkby's picture

Fundamentals don't matter unless you are doing a buyout.  In that case, spending $1k for a report is peanuts, assuming they actually do anything.

For hedge/mutual/pension funds all they do is follow the momentum crowd.  Looking at fundamentals is a delusion, because the books are cooked.

Once had a broker cold call me, then send a blurry photocopy of a year old research report.  He wasn't even smart enough to white out the date.  Then he had the nerve to whine that I accepted a valuable service and didn't give him business.  Learn to run your own money and don't be scammed by these snake oil salesmen.

Librarian's picture

How much will they pay me for a white board diagram using all of the markers in the four marker set?

I can do a nice muli-colored piece with an impressive-looking graph that is actually a hidden "dick-butt" caricature if you look at it closely.

fritskrach's picture

Research is ecoporn. Instant satisfaction. 

And thus, I only pay for books. To be able to make up my own mind.  

whatisthat's picture

I would observe this post refers to fake equity research data...

CRM114's picture

Yet more wasteful regulations which one wastefully pays to criminally sidestep.

Any of the LIBOR fixers wearing orange and getting to know Bubba in the showers yet? Thought not.

BritBob's picture

You need to investigate the facts before investing.

Falklands oil - By a ruling of the UN, Argentina will extend its maritime platform (Politica Argentina) ; New map of the maritime platform reaffirms the sovereignty of Malvinas with UN endorsement (ElCronista); Argentina enlarges its territory 35%, with a UN endorsement ...(La Capital). To add to this euphoric atmosphere the Argentine Foreign Minister stated, ''This is a historic opportunity for Argentina. We have taken a great step in the demarcation of the outer limit of our continental shelf; the most extensive boundary of Argentina and our border with humanity,'' Foreign Minister Susana Malcorra told La Nacion...

But what is the truth?

Argentina's Continental Shelf Claims and The UN CLCA Commission (1 page):-

 

https://www.academia.edu/33898951/Argentinas_Continental_Shelf_Claims_-The_UN_CLCS_Commission

Cluster_Frak's picture

as a former equity analyst - i say fuck no!

fattail's picture

You get what you pay for, or probably not.  

If your research is so great and insightful, why don't you use it to get rich?

Come to my seminar and let me tell you how to get rich in the Canadian real estate market, its so easy. 

Last of the Middle Class's picture

If their research is so enlightened, why in the hell don't they use it to invest and avoid the process of having to sell it to the middle man? There's a fool born every day.

passerby's picture

Would you pay a warden for his research on your prison conditions?

Hurricane Baby's picture

Paying a monkey to throw darts is much cheaper and more rewarding.

roddy6667's picture

Years ago I was at a family Xmas party back in the Eighties and I asked my wife's cousin, upcoming in the investment world, about this. I asked if monkeys with darts and the WSJ could beat most fund managers. He laughed and agreed. Now he is a very wealthy, very respected fund manager. With no more smarts than monkeys with darts.

roddy6667's picture

People doing equity research are looking in the wrong direction. They would be better off studying the behavior of stupid people in large groups. The market runs on emotions-greed and fear. The true particulars of any stock or fund are worthless compared to the beliefs and emotions of the crowd.

Look at Tesla, Amazon, Snapchat, etc. I rest my case.

BTW, that will be $1000 for this report. Wire it to my account in Abu Dabi.

Blazing in BC's picture

People have absolutely minimal control how their money is invested, algos do it all for you

EX-floor hedger's picture

....concise research...BTFD.....

Sanity Bear's picture

If and only if the information is of greater value than the price, it's a viable product.