Noble Capital Markets

 

A Research Driven Capital Markets Support Program
Credible and effective.

Emerging growth companies represent the best of American ingenuity. For almost two decades, that celebration of innovation has been systematically replaced with obscurity through the implementation of waves of regulatory controls…. caused by some very large companies doing some very wrong things.

But it’s the smallest companies that have suffered the most. Wall Street analysts are dropping equity research coverage of small / micro-cap names at alarming rates. According to Capital IQ, in the United States, more than 50% of companies with market caps of $250 million or below have no analyst coverage at all. And even if they do have coverage, that research is often only made available to institutions. Turn on the financial networks and you’ll hear about the companies that are already there, not the ones that may be on their way.

Noble has supported
emerging growth companies for 35 years.
Benefit from our experience and innovation.

Noble has focused on the support of emerging growth companies through the publishing of equity research, merchant and investment banking as well as securities trading activities. On the research side, we used to generate revenue by “selling” the research reports we produced to institutional investment firms (mutual funds, money managers, hedge funds, etc.) that were looking for investment ideas and outsourced the deep dive to “sell-side” firms like us.

Technology, excessive regulation, and the competition from ETF’s caused institutions to dramatically cut-back commission to the sell-side firms they paid. The first to go were the smaller ones (like us) that were issuing research on smaller companies (like you, if you represent a company with market capitalization of less than $1billion). We’re in business to stay in business. If they’re not paying, we’re not publishing. Not good for us or the companies who need us.

We changed the method of payment.
Not the research we publish.

It only makes sense. We need to be paid for the services we produce, and emerging growth companies need the research and capital markets support. But isn’t that a conflict of interest? Well, sure it is, if you let it be. We don’t. And we can’t for a variety of reasons. We’re an S.E.C. / FINRA registered broker-dealer, subject to regulations and rules governing the issuance of research. Unlicensed folks who offer “paid for research” can fly under the radar screen and publish promotional pieces.

Our analysts are seasoned, licensed professionals who make their living based solely upon their integrity. There’s nothing we could do, or would want to do, that will jeopardize their independence and reputation. The same goes for us; we’ve been in this business for 3 ½ decades and we plan to stay. So not a thing has changed in our approach to research. If anything, the product got better.

Does everyone qualify for our research coverage?
Nothing could be further from the fact.

We’ve got a very defined path to coverage. It starts with the analysts and the research department. When a company approaches us, it’s referred to the research department. When we approach a company, then it is on the recommendation of the analyst and approved by our Director of Research.

Here are the facts. There are more than 10,000 public companies that fit the category of emerging growth. It takes a tremendous amount of work to attempt to identify the “good” ones. That’s exactly the role of an analyst, so we rely on their judgment when it comes to initiating coverage. By the way, it’s such a daunting task, we don’t expect our coverage universe to exceed 300 companies. Admittedly a cliché, but it still works - quality trumps quantity.

Could a company that participates
in the research program get a poor rating?

The short, and long answer is yes. That’s not the goal here, because we never would have started the process if we thought that would be the outcome. We are looking for the best ideas to serve up to the investment community. But before we dig deep, there is no way for the analysts to be sure. Also, material changes in the company could occur between the engagement for research and the actual publishing date. And that’s the very reason for, and the importance of, independent equity research.

The companies are very aware of this possibility. They must sign-off that they agree and understand that the opinion of the analyst could vary from their own. Sometimes significantly. To get traction with investors, at any level, you’ve got to tell it like it is, or the research will not be taken seriously and disregarded.

Institutional-quality research

There’s only one way to publish research and that’s to do it right. Institutional-quality means that the reports contain all the research elements institutional investors expect. Noble reports include a valuation model, investment thesis, fundamental analysis rating, price target and a formal rating. Without all these components, a report would fall short of expectation.

It also takes analysts that are qualified and who are respected by institutions. And we have them. Our roster has, on average, more than 20 years’ experience. CFAs, Ph.Ds, and MBAs are the norm on our analysts’ credentials list, together with all of the required licenses to issue institutional-quality research.

For more information download our whitepaper: