Forward View has decided to end our Sporting Goods Monitor equity research service. After much thought and, frankly, much prayer, the elimination of our sell-side coverage is clearly the best path forward. We are, after all, Forward View Consulting, and traditional sell-side research is a niche that is stranded in the past. Instead of looking ahead, the sell-side business model fights against innovation and change with a backward-looking perspective. Sell-side coverage is but a vestige of days gone by… days before BitCoin, Big Data, AI, social media, crowdsourced analysis, and so many other facets of modern business life. Most sell-side firms still cling to Buy/Hold/Sell ratings (even us), price targets that shift with the breezes, and earnings estimates tied to the guidance issued by covered companies. Forecasts that stray from the consensus are likely to be questioned heavily, thus leading to a philosophy that being wrong is okay… as long as everybody else is equally incorrect. We ultimately view the investment research sector as an industry in desperate need of modernization. MiFID II will certainly affect the sector in 2018, and preparations for the regulations are already trickling through research firms, especially in Europe.
Initially, Forward View attempted to disrupt the research business from the inside, but that effort was unsuccessful. From research distributors that wouldn’t publish out-of-consensus work to potential clients who asked why our research didn’t look traditional, we kept hitting obstacles. As our own analyses were pushed into “commodity” territory, it became impossible to differentiate ourselves. Potential clients would ask for differentiated research and then tell us that our analyses were too untraditional to fit into any investment process. “Give us unique ideas that don’t look unique or cause us to disrupt our comfortable methodology” became the implicit message we heard over and over again. Due to the commoditization of research, it’s no surprise that only 1% of the 40K research reports produced each week by brokers will be read by PMs. The supply and demand mismatch is utterly breathtaking.
Our Director of Research will freely admit to his own management errors, too. #1 error: He failed to retain a quality Sales Director. The only true Sales Director for the Sporting Goods Monitor left us for private equity (and much better pay). An intended Sales Director, plucked from our team, was vetoed by clients because of her untraditional background. Another internal Sales Director candidate was verbally abused by a client and thus returned to research. (That was most upsetting since our colleague is a wonderful person.) Our Director of Research proved to possess no research sales skills and performed very poorly in the sales function. Due to his inability to focus on research, our win-rate suffered, and our analytical success waned toward the end of the Sporting Goods Monitor. Our Director of Research accepts all of the blame for the failure of the Sporting Goods Monitor. The rest of the research team performed admirably and with tremendous dedication to success.
So, what’s next for Forward View? Most importantly, our firm isn’t closing. Forward View will refocus on our consulting services and will hopefully increase our offerings next year. We’re currently accepting a limited number of financial consulting clients who need external equity research support, too. (Retail industry analysis is our only research consulting service.) Outside of these special engagements, Forward View will be centered around website design and digital marketing, with special expertise in the finance sector. We invite you to visit www.forwardviewconsulting.com to learn more about our consulting services. Follow @FVConsult on Twitter, too. 2018 will be a fresh beginning for our firm, and we look forward to the New Year!
 Quinlan & Associates