Let’s talk about independent research vs. traditional equity research. In recent years, equity research has become a cost center for banks and sell-side analysts. As a result, coverage has dropped, and more Independent Research Providers (IRPs) have sprung up. They’re often founded by former sell-side or buy-side analysts.
The resulting IRP research is freer from the biases inherent in coverage of companies that have an investment banking relationship.
IRP Sentiment Signal by ExtractAlpha
The IRP Sentiment Signal – developed by our team of quants uses proprietary aggregation of IRP research and intelligently combines the most useful IRP content from the best providers to derive actionable sentiment data for developed Asian market equities.
The sentiment signal is derived from structured data such as the research provider’s recommendation, and the historical track record of the provider. We apply natural language processing (NLP) to the text of the research itself.
Stocks score highest with 1) many recent, positive research reports; 2) the highest NLP sentiment scoring rationales, and 3) from contributors with the best track records.
The Signal covers developed Asian market equities, including Japan, Hong kong, Australia, Taiwan, Singapore, and New Zealand. In recent years, total coverage has increased to 800 – 1,000 stocks.
Our standard backtest methodology is designed to measure the signal’s value as a standalone factor: long/short top/bottom decile portfolio, equally weighted, daily rebalanced, before transaction costs.
IRP Report data from Smartkarma
The data behind this signal is from Smartkarma. They are Asia’s largest independent network of investment research providers with a growing community of over 200 vetted and unbiased experts, including analysts from large independent research houses, boutique research operation founders, as well as individual analysts, data scientists, consultants, and academics.
Contact us to start a free trial, read our white papers, and begin backtesting!