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What is Company Sponsored Research (CSR)?

Markets
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CSR Provides More Clarity for Investors

Company Sponsored Research or CSR is research used by professional and individual investors to better understand stocks they are interested in. The companies covered by CSR are typically small or microcap stocks that want investors to have a clearer unbiased understanding of their company and its prospects.

Companies that fall into the category of small-cap or microcap often suffer from being overlooked because there is not much information available that evaluates their earnings, business model, and growth potential. Not surprisingly, investors are much more likely to take an interest in a company whose business they understand, especially if there is a knowledgeable third party providing insight and guidance on where it may be headed. 

Management from companies that would benefit from CSR will get in touch with a research firm that provides the service. Providers of high integrity may turn down the public company for various reasons. And it may give it a “thumbs down” in some categories, but this is considered better for the company than no qualified third-party information at all. In fact, investors know there is risk in everything they own, and that at times with more risk comes more reward. Investors just want to understand the risk and trust those helping them to assess it.

Investors also may find that with more interest in a stock (at the right price), it is easier to buy and sell when they want. In fact, if more transactions result from greater visibility and information, the stock is more likely to trade at its “fair” price, which could reduce price risk and, as important, increase liquidity.

Company-Sponsored Research, when done well, is never paid for marketing. Investors should determine who they trust in the business; they can do this by investigating to see the credentials held by the analysts writing the report. Analysts are not likely to jeopardize a designation such as a Chartered Financial Analyst (CFA) or those holding FINRA registrations. Investors may also want to take a look at track records provided by services like TipRanks. Lastly, a research firm that only writes glowing reports on companies, and doesn’t write at least four a year on the company you’re interested in (usually after earnings are released), can be viewed as suspect.

CSR can be found on paid-for platforms such as FactSet, Bloomberg, Capital IQ, and Refinitiv Eikon. Channelchek is unique in that it is a no-cost platform that offers Company-Sponsored Research written by the FINRA licensed research analysts at Noble Capital Markets.

Paul Hoffman

Managing Editor, Channelchek

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