Friday, October 29, 2004

Morgan, Merrill and J.P. - meet Andy, Om and Martin

Yesterday afternoon I had my first conference call with a certain institutional investor who just happened to stumble across the blog, the third such contact I have made in this manner. Very early in the conversation, he made the following remark:

"I find I increasingly get a lot more out of reading blogs than sell-side
research. I am doing more and more primary research myself, and blogs form
a very important part of that process."

Readers of this blog will know that I strongly believe this to be yet another very important angle to the disruptive technology theme, and one I have explored previously ( - the hardcopy version contains an annex with more pretty damning stuff in it). What follows is not a charm offensive or mutual admiration society - I read something like 45 blogs with regularity and all of them are good in their way.

I select these three [Andy (, Om (, and Martin (] because they, to my mind, demonstrate the highly individual qualities of blogs which collectively deliver what brokers' research typically lacks. All three have very sensitive BS meters, and are not afraid to court controversy. All three possess wide expertise and that rare quality of 360-degree, joined-up thinking, which allows them to consider the broader implications of what Company A is saying/doing, rather than the all-too-typical broker treatment: "Company A announced X. This is line with our expectations. STRONG BUY." The former quality is what good fund managers increasingly seek out, the latter is something they find oppressive (because their in-boxes are full of it) and irrelevant.

Individually, their styles, and the issues they focus on, are very different. Andy is very tightly focused on VoIP and its impacts, and never misses a story related to the theme, but is also adept at making connections and seeing implications which others might miss. Om writes about virtually everything, seemingly, and if I'm not mistaken, recently seems to be including more financial results coverage and investment strategy angles (e.g., if you want to play the VoIP revolution, forget the carriers, buy chipmakers - we like it!). Martin is a deep thinker, with some fascinating and challenging views from a high level strategy perspective. Taken as a cocktail (or tapas, if you prefer food metaphors), investors could certainly do worse than to make these three a daily supplement to their research diets.

Couple these three with all the other insightful blogs out there (I get a lot out of reading Get Real,, DigitalMusicNews, Slyck and a whole lot of others) and the message is pretty clear to me: eventually, and probably sooner than later, someone is going to pull together all these diverse angles on telecom/internet/media/hardware/applications/chips, incorporate some hard financial and technical analysis, and build a cross-sector investment research platform incorporating realtime tools (I mean blogging, IM, video conferencing and collaboration) rather than .pdfs and spam.

There is a business model here, and whether it's the financial media who seize upon it (Reuters and Bloomberg have the infrastructure and a lot of data, but are trapped in a walled garden mentality and put their journalists in the same sector-coverage silos that the brokers do), or the brokers (I'm skeptical, because I think they tend to be dismissive of alternative points of view, risk-averse, organized in sector and region silos, and anyway are focused on trying to kill one another), or a newcomer (CNET or something that doesn't currently exist), I feel certain that it is going to happen.

Investment banks: you have competition, whether you know/believe it or not. It behaves differently from you, uses different tools, and takes no prisoners. More importantly, its mindshare is growing, and you ought to be scared. What happens when one day your client base wakes up and feels confident enough to say they don't want your research?

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