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April 30, 2001

New Day Ahead for Investment Analysis?

By John A. Byrne

A Web-based provider of independent

investment analysis for institutions and individual investors is hoping to score points in a controversial corner of the research industry.

Jaywalk contends that its new system will encourage growth in independent analysis, bring change in the price structure for investors, and streamline complex accounting in soft-dollar research arrangements.

That's a changed outlook for the research industry, according to some pros. Independent research has a hard time competing with Street analysis because of its corporate finance ties. More controversial: Sell recommendations from the Street were rare in the recent bull market.

Now Jaywalk is courting the independents whose marketing clout and distribution is weak compared to the Street providers. Jaywalk is promising more efficient payment methods for their work.

"We're getting calls from individuals at brokerages who want to leave and become independent," said Christian Ward, chief executive of the privately funded Atlanta, Ga.-based firm. "They can then say what they want and not have to do the dog and pony shows."

Online research is mostly dominated by providers of Street analysis. Jaywalk stresses, however, that it does not intend to displace the vital role played by the Street. John Rendinaro, head of trading at U.S. Trust, noted that the buyside must weigh up the full spectrum of research from the Street, institutions and independents. "There are some very talented analysts on the sellside," he added.

Jaywalk currently gives access to about 25 names, covering quantitative, fundamental, technical, sell strategies and other areas. These include Bullseye Investment Research; Alpha Equity Research and M-CAM. Users can purchase individual reports.

The service will facilitate soft-dollar arrangements with eight broker dealers including Robinson Humphrey; Bear Stearn's Research Conversion Corp.; Interstate Group; Paragon Financial and BNY ESI & Co. (The other names were not disclosed at press time). Institutions are charged an annual subscription of $6,000, which allows three users to access the system concurrently. Individual investors pay $2,500, which does not cover soft-dollar accessibility.