By Joshua Maxey, co-founder, Third Bridge
Primary research’s evolution from bespoke to syndicated content
Investors have a number of options when it comes to their primary research. Expert networks have been foundational to the category, designed to react to investors’ needs and serve a unique purpose in the research process. Expert networks connect investors with industry experts or individuals with deep experience at a company. In a private setting, the investor asks the expert questions, helping them to understand the key drivers of a company or industry, or get under the bonnet of a specific issue or topic.
While this remains a core approach, investors across sectors and asset classes are showing an increasing appetite for primary research content too, with the interview transcript category growing and evolving rapidly. These interviews are conducted for the benefit of as many investors that wish to read them, as they are subsequently transcribed and made available to other subscribers.
Rather than conducting private calls or face-to-face interviews at the point of need, interview transcripts facilitate early-stage research and enable investors to understand company fundamentals or get a read on recent trends much faster. As interview transcripts also enable investors to rapidly orient themselves around topics, investors who use them may benefit from being able to use other research tools, including private consultations, more precisely and effectively by refining their question set ahead of time.
The availability and expansion of interview transcripts is transforming investment workflows as investors integrate content more holistically. The famous phrase, “content is king”, is seemingly coming to life in primary research as investors seek more flexible ways to consume expert insights. As we highlight below, various models are available.
Why investors are enhancing their research with interview transcripts
Generating market-beating returns in a hyper-competitive market requires an investment research approach that is effective and reliable. Investors also need differentiated information that is quick to access and easy to digest, as pricing discrepancies do not last long. Interview transcript repositories represent a treasure trove of knowledge and insight – in one transcript alone, there could be several sparks of information that make or break an investment decision.
Early-stage research is where interview transcripts bring the most value to investors as they start looking at a company or theme – but they can also be used in other parts of the research process. They are ideal for exploring new industries and companies, unpacking trends, and following companies going through rapid change.
Investors are also relying on interview transcripts for actionable insights at a time when the market has become saturated with information and data. As we know, conventional sell-side research often leaves questions unanswered and can be prone to bias and consensus thinking.
So, what are the key ingredients for a good interview transcript?
The interview transcript category started with the company-led interview model, but investor-led interviews, where content is generated from discussions between investors and industry experts, are also gaining traction in some segments.
With the former, it should go without saying that the interview topic must be chosen with a specific audience in mind and the interviewer must have a strong contextual understanding of the company or theme in focus. Asking the right questions at the right time and with the requisite level of detail is not as easy as it seems. One hour can go by incredibly fast, so it is imperative that the interviewer makes the most of the time by crafting their questions carefully.
A high-quality interview will be the culmination of extensive underlying research and industry knowledge to ascertain what is already widely known and in turn focus on the areas where first-hand experiences will offer the most compelling and unique insights. The interview may unearth fast-growing companies investors do not yet know about, identify the nuances in trends, or ask the difficult or pressing questions that few have thought of hitherto.
The questions will be open-ended in their nature, but also carefully tailored to the expert’s experiences and expertise. Above all, the interviewer will remain unbiased, but, at the same time, they will not hesitate to ask why an expert thinks a certain way, and offer follow-up questions where suitable. Ideally, the interview will have a long shelf life and the interviewer will continue to monitor the topic or company to keep investors abreast of future developments.
A successful and meaningful interview will also acknowledge differing or even contrarian views on a subject or company and be almost journalistic in style. Depending on the company, theme or sector, the expert may have a more varied background or, conversely, deep expertise in one area. Importantly, the expert does not necessarily have to be a C-level executive in order to offer quality insights – what is crucial is that the person with the most relevant and timely perspectives to offer is selected for the task.
With investor-led interviews, where investors plan their own questions and pose them to an industry expert directly, many of the fundamentals apply as above – but there are some additional considerations.
Ultimately, many investors are seeking a competitive edge, and this can only be gained if they extract insights and perspectives that are not available elsewhere. Firstly, investors need to do enough background research to be able to write questions that elicit the answers they need. Having a good understanding of the expert’s background and knowledge is also critical to be able to shape the narrative and contextualise their answers. Another consideration is they must be aware of any confidentiality restrictions and stay well away from any questions that could lead to them obtaining material non-public information (MNPI).
Most importantly, all interview transcripts must be 100% compliant, having followed stringent legal and compliance processes – from when the expert is first onboarded to the publication of the interview.
Which interview transcript model is right for you?
The interview transcript category has evolved significantly since launching over a decade ago by Third Bridge. With several options now available, investors must consider their specific investment goals and workflows when selecting a model or choosing a provider.
- Substantial analyst training on interview techniques allows for deeper insights to be extracted
- Provider oversees the compliance process and choosing experts, meaning investors do not have to worry about any potential breaches of confidentiality or MNPI
- Moderators are completely unbiased, as demonstrated by their prohibition from trading
- As many analysts have extensive buy-side experience, they understand the investor mindset
- Moderators are able to draw out the key insights from the interview. Interviews are also structured to cover the basics for those getting up to speed and digging deeper for those looking for more niche viewpoints
- Consistent interview style and therefore quality
- Substantial volume on a sector or company gained from ongoing coverage
- Coverage is broad as well as deep, spanning the equity, private equity and credit asset classes, as well as key and niche sectors and regions
- The moderator is one step removed from investing and therefore may overlook an important angle
- They must also balance their need for content with a long shelf life vs investors’ often shorter-term requirements
- The moderator retains full control over follow-up coverage
- The interview may only cover a portion of the investor’s research scope
- Interviews are led by buy-side firms, which have deep experience making investment recommendations and are therefore immersed in the industry. This gives investors an authentic insight into the investor’s mindset and agenda
- Seeing the types of questions investors have asked is inherently interesting, and can help to gauge investor sentiment
- Compliance is more complicated – the provider must have capabilities to scan for potential issues including MNPI, confidentiality breaches and defamation
- Buy-side interviewers may not have as strong interview techniques as in-house moderators, meaning overall quality can vary
- Some analysts will naturally be biassed given their position in a stock or company, which could impact the way they frame the interview questions
- Content will be more reactive to clients’ needs, and thus there may not be as rich content already available for PE investors looking at new deals. However, there is likely to be more content on secondary opportunities in the library from existing coverage
- Coverage, broadly speaking, may be patchy, as it is based on the client base’s interests and not necessarily suitable for a broad spectrum of investors
Roundtable (group discussions with multiple investors and no designated moderator)
- The one-to-many format means investors get the opportunity to hear different viewpoints and the kinds of questions being asked by their peers
- Investors can enjoy a passive role in the discussion and discover new angles they may not have considered hitherto
- Sets the tone for an engaging dynamic with high energy and more flexible in terms of the questions that can be asked
- Discussions can stray from the investor’s area of focus/interest
- Can be disorientating for the expert, as they may be bombarded by analysts asking different questions in a random order
- One investor can end up dominating the agenda
In summary, the primary research landscape is evolving rapidly, with content now playing a leading role in early-stage investment research. The interview transcript category is growing fast and is now as important to investors as expert networks. However, with several approaches available, investors need to choose the model that best fits their needs. Other considerations include a provider’s geographic reach, sector expertise and interview features, such as “Key Insights” summaries and audio replay.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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