The Battle Road IPO Review
A Monthly Screen for New Ideas
October 13, 2014
Research on companies which have come public in the last several years is available mostly from the investment banks who were paid by the companies during the IPO process. This leads to a conflict of interest as the investment bank seeks to please the owners of the company, as well as provide an objective assessment of the company’s growth prospects to investors, the other group of clients whom the bank serves through its brokerage arm.
This conflict continues long after the IPO is complete, for once a company becomes public, investment bankers and analysts who played a role in the IPO may advise the company on future stock offerings, mergers and acquisitions, and customized plans for insiders to sell their stock.
As a research-only firm, Battle Road is focused on helping asset managers seek out stocks to buy and stocks to avoid, without the conflict presented by conducting business with the subject of its research. Since our founding in 2001, we have remained true to this principle.
The idea for the Battle Road IPO Review originated with one of our clients, a portfolio manager, who sought our help in seeking out solid companies with sustainable competitive advantages –and reasonable valuations—from among the many companies which have come public in recent years. Using quantitative and qualitative measures we developed a methodology for screening for new buy ideas.
The Battle Road IPO Review has become a monthly service that screens for new ideas from a uniquely designed universe of over 180 growth-oriented IPOs of the last seven years. The universe includes software, internet, computer hardware, cyber security, consumer, and business services companies. The median market cap. in the Battle Road IPO universe is $1.1 billion. The universe is rapidly growing with the addition of newly-minted IPOs on a regular basis.
We rank order the stocks by group each month and call out names for further exploration, based on our assessment of the company’s strengths and weaknesses, as well as other measures which include our interpretation of the company’s current valuation, balance sheet, quality of earnings, and other metrics. We draw upon these metrics, as well as qualitative factors to determine our monthly Exploration List, which is a sub-set of all stocks that we believe should out-perform the overall coverage universe. The Exploration List is therefore a screening tool for new ideas. We strive to develop a list that features both growth and value-oriented stocks. Our goal is for the median stock performance of the Exploration List to exceed the median stock performance of the coverage universe.
Our clients use the Battle Road IPO Review to:
- Screen for new stock ideas;
- Consult an independent source on growth-oriented IPOs, free from the influence of company management and investment bankers;
- Keep apprised of the Exploration List of long-oriented ideas selected by Battle Road;
- Stay abreast of the best and worst performing sectors, and best and worst performing stocks in each sector;
- Keep current on recently-minted IPOs;
- Identify broken IPOs which have fallen off Wall Street’s radar;
- Discover and track over-heated IPOs prior to their pull-backs;
- Screen for meetings with company management at investor conferences;
- Listen in on a monthly dial-in call to keep current on Battle Road’s research findings.
About Battle Road Research
Battle Road Research provides fund managers and analysts with an independent voice on technology and consumer stocks. Our research process combines rigorous financial analysis with insights gleaned from industry sources. We present our findings in straight-forward Buy, Hold, or Sell research reports. In addition, we publish The Battle Road IPO Review, a monthly screen for new ideas that examines the prospects of more than 180 growth-oriented IPOs of the last seven years. Since our founding in 2001 we have refrained from investment banking, company consulting, company-paid reports, and personal investment in the stocks we research.
Battle Road Research was one of the first eleven members of the Investorside Research Association, www.investorside.com, the only trade group that certifies its members are free of investment banking, consulting, and research for hire conflicts.