My Research Franchise as the Disruptive Archetype

My Sell-Side Franchise as the Disruptive Archetype

The majority of sell-side equity research is pretty benign and typically varies little across analysts.

Once in a while, an independent thinker comes along, and an analyst with unique, differentiated research appears, adding value to investors.

My franchise was unique and differentiated because I focused on disruptive innovation, when no one cared about disruptive innovation.

The following two compliments illustrate the disruptiveness of my research franchise:

1.     Subscribers read everything I wrote

2.     Competing analysts wanted to be on my distribution list

My research franchise ended up being quite differentiated due to the following:

Lack of Banking Relationships: The stalwart Healthcare IT companies were not going to bank my franchise. Therefore, I was able to take a risk and be more independent and challenge management narrative and the status quo.

Focus on Differentiated Research: My primary focus was on generating proprietary, differentiated, and value-add research. That meant challenging the status quo and digging deeper, not taking management at face value. Investors had to seek out my views.

Internet / eCommerce Background vs. Healthcare: Growing up in the Internet / eCommerce vertical on Wall Street allowed me to bring a unique perspective to the Healthcare IT vertical. I brought a technology focused view to a technology vertical that only cared about healthcare policy.

Intellectual Curiosity: The ability to pursue independent thought and dig deeper on management narrative and estimates.

These traits combined with the four traits that drive a Sell call, allowed me to have several epic Short calls:

EHTH: $22 to $10

CERN: $72 to $48

WBMD: $26 to $13, and then calling the turnaround

Pair Trade from my September 2013 Digital Healthcare whitepaper: Long DXCM in the $20s, and short WTW.

Remember, always be careful of that analyst that has a unique and independent way of looking at things. You should listen to them, because they are probably right!