NEW YORK: With the future of equity research looking shakier than ever, one boutique US firm is betting its turnaround on getting paid by a different customer: the company being covered.
As analyst budgets get slashed amid new regulations designed to reduce conflicts of interest, Peter Sidoti hopes that laying those conflicts out in the open with company-sponsored research can bolster his small-cap focused firm, Sidoti & Co. “The wheels came off” Sidoti’s trading-pays-for-research model about a year ago amid shrinking fees and the rise of passive investing, he said. Bring in new rules requiring direct payment for research, “and all hell breaks loose.”
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