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The Power of Consensus Analysis in the Age of Information Overload

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Stockholm (HedgeNordic) – In today’s fast-paced investment landscape, both Nordic and global investors face a daunting challenge: an overwhelming influx of information but limited time to process it. This information overload often leads to decision paralysis, where investors struggle to distinguish meaningful insights from the noise, impairing their ability to make informed choices. This is where consensus estimates providers, such as Visible Alpha, come into play.

“The challenges faced by Nordic managers are not fundamentally dissimilar from those experienced by global managers. The common denominator is that there is too much information and not enough time to digest it,” notes Conrad Rademan, Director of Sales – EMEA, from Visible Alpha. Rademan, who has been working with hedge funds and asset managers across the EMEA region to help them leverage the full depth of sell-side forecasts for fundamental company analysis, emphasizes that the workloads of managers and investors are increasing, yet their technological resources do not necessarily keep pace. “Managers and investors are getting busier every day and their technology stack usually doesn’t increase with the workload increase,” he argues.

“The common denominator is that there is too much information and not enough time to digest it.”

Visible Alpha has sought to be more than a consensus estimates provider by developing the most comprehensive company and industry analysis. Since 2015, Visible Alpha has set out on a mission to help managers and investors strike the right balance between too much information and the constraints of time. Visible Alpha sources raw working sell-side equity models directly from sell-side institutions and generates unique datasets of forecasts and actuals across a global set of publicly traded companies. For Nordic investors investing in international stocks, “Visible Alpha is helping investors analyze companies and industries faster, at scale, and with more accuracy than was previously possible,” says Markus Gronlund, Senior Sales Executive.

“Visible Alpha is helping investors analyze companies and industries faster, at scale, and with more accuracy than was previously possible.”

Visible Alpha “very much acts as a force multiplier” for Nordic investors investing globally, which is essential for them to stay competitive outside the Nordic region. “If you are investing globally, you need to leverage technology to do that,” emphasizes Gronlund. Visible Alpha plays a similar role for both local and global investors participating in Nordic equity markets. 

Ever-Increasing Broker Network

Visible Alpha originates from a 2011 project supported by a consortium of the world’s leading investment banks, which still maintain their backing. Visible Alpha was subsequently launched commercially in 2017. “We have more than 200 brokers contributing to our platform, including the banks invested in Visible Alpha, bulge bracket banks, international banks, and SMID Cap specialists, of which we have six in the Nordics,” explains Serena Le Bargy, Lead Contributor Relations Manager at Visible Alpha. “The Nordic brokers are particularly important because of their proximity to and knowledge of the companies they cover,” she elaborates.

“The Nordic brokers are particularly important because of their proximity to and knowledge of the companies they cover.”

The Nordic small- and mid-cap segment is characterized by substantially thinner sell-side coverage compared to larger caps. This disparity generally translates into increased alpha opportunities for investors exploring the small- and mid-cap space. As large-cap Nordic companies already enjoy robust sell-side coverage, investors tend to be more interested in obtaining information about smaller companies. In response to this demand, Visible Alpha has been actively engaged in onboarding regional sell-side firms onto its platform. Le Bargy notes that their coverage panel is continually expanding, reinforcing their consensus estimates for small- and mid-cap companies. “The coverage panel is getting stronger and stronger, and hence our consensus for the small- and mid-cap is getting stronger and stronger as well,” says Le Bargy.

“The coverage panel is getting stronger and stronger, and hence our consensus for the small- and mid-cap is getting stronger and stronger as well.”

Conrad Rademan underscores that while smaller companies may have fewer brokers providing coverage, the data that Visible Alpha standardizes remains highly valuable. “Even though there may be a smaller number of brokers covering a name in the small- and mid-cap space, that doesn’t make the data that we are standardizing any less valuable,” says Rademan. In Rademan’s view, even from a broader European perspective, small and mid-cap investors expect less coverage but still highly value the data. “They still value the data because it streamlines work that they would otherwise have to do manually. From a time-saving perspective, which is a key element, we are still saving an investor a ton of time with respect to ramping up on new names or just monitoring the existing portfolio.” According to a Visible Alpha study, 96 percent of users save eight hours per month by using Visible Alpha Insights.

Industry Analysis

Visible Alpha provides consensus estimates for more than 6,900 companies, allowing the platform to delve into industry analysis with greater depth and breadth. Investors, both Nordic and global, have expressed a keen interest in understanding how profit pools look within specific sectors and geographic regions, a resource-intensive task that Visible Alpha facilitates.

“We have added industry-level data to our company-specific forecasts, and this is proving popular with both the buy side and sell side,” says Le Bargy. “The level of granularity that we go into and the line items we display is quite spectacular,” she elaborates. This granularity extends to various industries, with a notable emphasis on pharmaceuticals, where Visible Alpha provides data down to individual drug-level pipelines.

“We have added industry-level data to our company-specific forecasts, and this is proving popular with both the buy side and sell side.”

Visible Alpha has recently launched a comprehensive drug data and financial information platform called Visible Alpha BioPharma, which offers granular insights into drug revenue estimates, including details like sales by indication or serviceable number of patients. This one-stop shop for biopharmaceutical data equips investment professionals with the tools they need to identify opportunities, evaluate market competitiveness, and conduct in-depth analysis at the drug level, all in a rapidly evolving healthcare landscape. “We have just released a new biopharma product which I believe would be flying off the shelves in the Nordic region given the focus on healthcare,” says Rademan.

“Our ultimate goal in the Nordics is to help investors, brokers, and corporate IR have a richer and more efficient conversation about the companies they’re focused on.”

In conclusion, Visible Alpha aims to mitigate the challenge of information overload that investors face by providing consolidated consensus estimates and comprehensive industry analysis. With a growing contributor network and innovative offerings like Visible Alpha BioPharma, Visible Alpha is steadfast in delivering consensus data and analytical tools to empower investors, both in the Nordic region and around the world. “We seek to provide the best-in-class model consensus data for around, on average, 200 line items,” concludes Le Bargy. “Our ultimate goal in the Nordics is to help investors, brokers, and corporate IR have a richer and more efficient conversation about the companies they’re focused on. We’re pleased with our impact so far, and looking forward to achieving more in this region.”

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Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

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