About the Battle Road IPO Review

Research on companies which have come public in the last several years is available mostly from the investment banks hired by the companies to take them public. This leads to a conflict of interest, as the investment bank seeks to please the owners of the company, while at the same time provide research to fund managers and analysts, who must determine whether the bank’s clients are at risk of underperforming the market. Thus, the investment bank and the fund manager have different goals, and it is easy to see how research from the very investment bank that has taken a company public might gloss over the company’s shortcomings.

This conflict of interest continues long after the IPO is complete, for once a company becomes public, investment bankers and analysts from the bank’s sell side division advise the company on follow on stock offerings, acquisitions, convertible debt, and customized plans for insiders to sell their stock—any one of which may dilute the interests of fund managers and analysts.

As a research-only firm, Battle Road focuses on helping fund managers and analysts seek out stocks to buy and stocks to avoid, without the conflict presented by conducting business with the subject of its research. For Battle Road, that means no investment banking, personal investment in the stocks that we research, and no company-paid reports. Since our founding in 2001, we have remained true to this principle by avoiding financial ties to any company that we research. And since we are not a broker dealer, we have no incentive to manufacture a daily trading call simply to drum up trading commissions.

The idea for the Battle Road IPO Review originated when one of our long-time clients, a well-respected portfolio manager, 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 an approach to screen for new buy ideas.

Since that time, The Battle Road IPO Review has become a monthly research service that screens for new ideas from a unique universe of over 200 growth-oriented IPOs of the last seven years. The universe includes software, internet, hardware, consumer, and business services companies. The median market cap. of The Battle Road IPO Review universe is $1.2 billion, and about 60 percent of the universe ranges in value from $500 million to $5 billion in market cap. The universe continues to grow each month with the addition of newly-minted IPOs.

We rank order the stocks in each group every 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, which it has in 30 of the last 45 months, or about two-thirds of the time.