Research 2.0

Research 2.0 is a content publishing platform integrated into the iiXnet.

One of the features of Research 2.0 is the ability to make fundamental research and insights more dynamic and flexible, increasing the utility of the information to the consumers of the product. In the 21st century equity research hasn't really changed all that much since the invention of the printing press by Johannes Gutenberg in 1440. Even though the content is now sent around in electronic form, via email or on research distribution platforms such as FistCall or Bloomberg, the reality is that the content is still presented to the reader (regardless of how sophisticated the delivery method) in the pretty much the same format as a reader of research would have seen it coming off those early printing presses.

The Research 2.0 platform attempts to change this. What Research 2.0 does is breaks down the research content into its component parts, and allows the user (say investor) to re-assemble the research in the way that has the greatest utility to them. Using the Research 2.0 platform, a publisher (say sell side analyst who is publishing stock specific research) will provide significant meta-data alongside the traditional pdf version of the research, which will enable investors to de-construct and re-construct research content in the way that best suits them.

This metadata can be thought of as the tagging of the key research conclusions, using a combination of descriptive data (text describing the content and conclusions), quantitative data (describing the directional impact the content is likely to have on an investment view), taxonomy (which categorises the content into pre-defined types) and folksonomy (which enables open ended user generated free text tagging of each content component). In a practical sense, what this means is that when the analyst uploads his research into the Research 2.0 platform for distribution, he is also breaking out and tagging the key conclusions in a way that can be re-organised by the user of the research, rather than being statically presented in the order in which the publisher of the research thinks is most important.

An example will make this clearer.
Lets say that an investor has an interest in Newscorp. Let us also assume that this particular investor has a specific interest in a) the revenue performance of the business, b) any news on acquisitions, c) an update on the previously announced management succession planning and d) any news on their Internet business that comes out of a quarterly report by Newscorp to the market. As it stands today, the investor would have to open all of the post result research notes from say 6 different brokers and search through the pdf or email to find any mention by each broker on the four items in which he has specific interest.

Within the Research 2.0 platform, the analysts uploading their post results notes for Newscorp would be describing, noting directional changes, categorising and tagging the key conclusions that are contained within the full research note itself. Because of the metadata that now accompanies each research report, the investor can more effectively see across providers their thoughts on each of the specific areas in which he has an interest.

Going back to our example, the investor could group all of the analyst research conclusions not by broker, but instead say by revenue growth (specific interest a) and immediately see the conclusions across all brokers for this specific variable. He could then drill down for more detail on any specifc analyst conclusions, right the way through to opening the original pdf file. This process of sorting by specific interest could be repeated for the other three areas within the business in which the investor had specific interest. With all of the research broken into components and metatagged, the utility for the investor (or any consumer of the research including listed companies or the relevant brokerage research sales force) increases materially, as research content can be filtered, searched and re-assembled to enable much more transparent and faster information discovery.

Not just for analysts
The Research 2.0 platform also recognises that analysis and insight are not only confined to sellside equity research analysts. As such, other sellside iiXnet members (such as research salespeople or sales traders) can also submit comments, observations and analysis into the system, and have it tagged in a way that consumers of these comments (say short term trading views, sales desk opinions from company visits etc) can view them in the proper context.

The Economics of Research 2.0
A criticism of the approach of this platform may be the extra time and effort required by the publisher to detail the metadata as part of the publishing process. This is true, as the value added here cannot be automated - it is for the publisher themselves to select the most important conclusions and provide the correct tagging and directional conclusions so investors can maximise the utility of the data. But countering this is the potential for the value add to be rewarded.

For publishers who take the time to add more value to their research output to gain greater market share of their audience, as they are increasing the utility of their clients through the time investment in providing the metadata, and perhaps differentiating their product from those who are not willing to make the metadata investment. It is after all a free market, and if the value added from the Research 2.0 publishing platform is real, then there should be a commensurate return for engaging in the activity. In addition, an offset to the effort for metatagging traditional pdf based equity research reports is the ability to use the platform as a flexible and powerful distribution mechanism for ad-hoc comments, such as feedback from a company visit, to send through analysis that is only marginally more time intensive to compose than an email, but significantly more targeted (via the iiXnet stock match engine) and will be more easily consumed and referenced by the user base than an email could ever hope to be.

Indeed, if other users fail to adopt the Research 2.0 platform due to the effort barrier, it is worth remembering that those who do publish will have access to prime real estate on the my summary screen of every buyside member, which shows them the latest Research 2.0 content that stock matches to their profile.

For more details on using Research 2.0, please refer to the online instructions within the iiXnet.