End of an era in stock research?

May 10, 2009 | By Jim Kim

What to make of the independent research movement? Whether you think it has altered the research landscape profoundly or not, it is about to morph again. Business Week reports that the "trend of shrinking coverage is expected to continue for two reasons: The financial woes of Wall Street firms and the end of a five-year settlement to fund independent research."

At the same time, we're seeing more big-name analysts set up their own shops; a good example might be Meredith Whitney. Morningstar and S&P became big independent players the last few years, and both say they will continue to provide such research. But in the end, the bulge bracket firms still draw the most attention, even as their value in-house has plunged. Many top firms, like Goldman Sachs and Merrill Lynch, set up independent research outfits that certainly benefited their institutional clients. It remains to be seen whether they will continue to invest. We'll see if independent research ends up a victim of the credit crunch.

For more:
- here's the article