NEW YORK (HedgeWorld.com)–At a time when Wall Street banks are cutting back on in-house research, I.A. Englander & Co. is planning to come out with a service tailored to the research needs of hedge funds and institutional investors.
The operation, almost ready to be rolled out, is headed by Seth Novatt, who was previously at CIBC Oppenheimer. There he ran the U.S. private client division. Earlier he was responsible for sales at Oppenheimer.
“The idea is to create portfolio manager-driven research,” he said. To this end, the team being assembled is expected to take a buy-side perspective and provide short as well as long recommendations. It primarily will specialize in less-followed companies.
Englander Research is to have seven to eight analysts by the end of the first quarter. Most of them will do conventional industry research, focusing on segments such as telecommunications equipment, security software and storage and retailing.
Feet to Fire
They are to come up with succinct buy and sell recommendations. “We’ll be holding everybody’s feet to the fire, in terms of the performance of their stocks,” said Mr. Novatt.
These analysts will trace links between various sub-sectors in generating trade ideas. Englander is trying to hire people with good industry connections.
Another part of the team will track Initial Public Offerings in certain sectors. One analyst is already at work on technology offerings and related IPOs. Mr. Novatt expects to hire two more people to study IPOs, one in health care and another in consumer products. They will follow offerings as developments occur and try to get reports out early in the game.
Another Englander research area is of particular interest to managers in event-driven arbitrage strategies. An analyst studies company restructurings, including liquidations, spin-offs, and businesses coming out of bankruptcy. “Once there is an equity to trade, we’ll be looking at it,” Mr. Novatt says about this field.
I.A. Englander is a brokerage that specializes in derivatives and the research unit will draw on that expertise. If there are options on a stock, market intelligence from those instruments will be used in issuing trading calls.
The firm has been expanding in certain areas. It recently partnered with SunGard Global Execution Services LLC to provide clients with direct access to New York Stock Exchange floor trading .