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January 1, 2004

Some Sellside Research Is Finding Opportunity

By Gregory Bresiger

At a time when many firms are cutting institutional sellside research coverage, partly in response to the recent global settlement, others are making renewed efforts to expand the business.

First Albany, expecting to become a mid-level growth stock power, is going to add four new analysts over the next six months. This will bring its analyst staff to 23 and beef up its consumer, healthcare, technology and energy stock coverage.

At Credit Suisse First Boston, four equity research analysts are going to be added. They will cover small and mid-cap stocks at a time when coverage of these kinds of issues has been reduced in many places.

The dedicated analysts team will use a partly automated research system, CSFB HOLT, which provides reports on some 600 companies. However, only about 10 percent of that can include human participation, a spokeswoman for the firm said. She said that this system of partly human, partly automated coverage can provide a more comprehensive service at a smaller price than just adding more analysts.

Price is a big concern of research providers these days because regulators have cut the ties between investment banking and research. This has led some firms, as a cost-cutting move, to force analysts to cover more companies.