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Atlantic Atlantic Equity Research, LLC is an independent financial research firm. The mission of the firm is to provide actionable buy and sell recommendations to hedge fund companies and broker -dealers. We aim to provide in -depth information and analysis, while at the same time only focus on an idea in which a money making opportunity is within a 6 to 9 month time frame. The research methodology of the firm is to combine earnings quality analysis techniques and primary research. Atlantic Equity Research’s main focus is on but not limited to the technology, healthcare and retail industries. Atlantic Equity Research, LLC is an independent financial research firm. The mission of the firm is to provide actionable buy and sell recommendations to hedge fund companies and broker -dealers. We aim to provide in -depth information and analysis, while at the same time only focus on an idea in which a money making opportunity is within a 6 to 9 month time frame. The research methodology of the firm is to combine earnings quality analysis techniques and primary research. Atlantic Equity Research’s main focus is on but not limited to the technology, healthcare and retail industries. Atlantic Equity Research’s research methodology is set up to take advantage of the ongoing realties of Wall St., in which the “game” is set up so that inevitably many stocks become very overvalued, and in some cases undervalued. A loop of information about the fundamentals of the business travels amongst analysts, investment bankers and company management that becomes consensus opinion. Often this consensus opinion, “the story”, is wrong, but the stock goes up because the story is being told well. In many cases, earnings quality analysis techniques will show that there are divergences in the true earnings of the company and what is being reported. And stocks will climb despite this divergence. Customers, consultants or distributors can have vastly different opinions of the company, and its underlying stock, than investors, but the stock will still go up. And stocks can go up for months, and some times even years, despite evidence to the contrary. Stocks become undervalued when all sales efforts are being put into driving the stocks of a particular sector at the expense of other sectors, and then momentum takes over, and the stocks of other sectors are left behind. The rise of technology stocks during the late nineties at the expense of many other sectors is a classic example of this phenomenon. The research methodology of Atlantic Equity Research from a short perspective is to identify specific situations in which the underlying fundamentals of the business, and its true earnings and cash flow are at their maximum divergence point from the stock price, and what is being told about the business by management, and what is being reported for earnings. When we make a short recommendation we want to make sure the company’s stock has made a significant run, so that it is as stretched as possible. We will not issue a short recommendation solely based on a poor business model or deteriorating fundamentals. We must see a combination of bad fundamentals and a stock that has made a considerable run based on aggressive public relations tactics. We make calls to customers, distributors, ex- employees, government agencies, resellers and competitors as well as to management, and then combine the information with a thorough forensic accounting analysis of the financial statements. This in- depth analysis allows us to know when the time is right, and the underlying stock has become fully removed from reality. Conversely speaking, we will only issue a buy recommendation unless there is a combination of great fundamentals with a stock price that has been unfairly punished or ignored. Because we spend so much time on each idea, and are extremely selective before issuing a recommendation, we assume that each sell or buy recommendation will fall or rise by at least 40 %, with an up or downside risk of a maximum of 15%. We are aiming to hit home runs and not singles and doubles.
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November 2006
Phone:
508.548.9200 |
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