Thread by @bauhiniacapital

I've made this rant before.
1) Buy side has use for SS research. But not all SS content/datapoints are useful (price targets, out-years, etc)

2) One point FIGfluencer makes is that on B/S he/she can get access to all of S/S whereas S/S cannot. The complement of that is S/S gets

https://twitter.com/FIGfluencer/status/1413925102308270081

to access lots of the B/S whereas that is tougher for S/S.

3) Senior S/S probably has more experience seeing what cos do with their numbers when guiding/sandbagging/beating/kitchen-sinking. That is helpful at turns (it's also helpful for b/s to study).

4) SS conflicts effectively break the model of being truly useful.

5) But SS has its uses. It's a good way for BS to outsource some of its work.

6) if BS wants to improve the utility of what SS does, all it has to do is engage. The fact that BS engages very little about their

needs/wants w/r/t SS tells you BS is still at a denial stage.

7) The point about variety of SS clients is important. There are a LOT of different horizons out there; it is tough to please everyone.

8) The clients who pay the bulk of insto comms have horizons (in terms of both

price movement/timeframe) which would make your standard "I'm a long-term (buy side) compounder bro" pale (but yes, mo has many horizons too).

9) The conflicts - present, or perceived - on the sell side make it really, really difficult to present a differentiated narrative for

most stocks covered or for really good hard-hitting strategy.

10) SS management metrics of SS analyst 'worth' are screwed up. I expect for most BS it is the same, but a little less bad. But for SS, it is a key driver for the eventual complaints about SS research quality.

11) The FIGfluencer point about substack disruption potential is a little beside the point. Most of the fintwit substacks which are good are not replicable models on the SS. And most of the good models on the SS are not replicable by fintwit substackers - even good ones.

12) There are rare exceptions to this, and the cross-over is probably going to be in "desk analysis" ("sales opinion not research") which generates faster-cycle trade ideas suitable for alpha capture systems, etc, or stratechery or similar "strategy."

This can suit mass wealthy

who will pay for a substack or three, and could enable substantial learning. The main issue however is that few of the "strategy newsletters" on substack or on their own are good/connected enough to see the forest for the trees. Really good ones are former IB strategists who

walked out with a client list.

Substacks/newsletters CAN be great. Good writing can be seductive. Good logic with good writing even more so. But niche matters.

The best niches for substack are places where SS simply can't go and BS coverage is time-consuming and misses a lot.

That place is probably microcaps. There are a lot of stocks out there which trade $100-500k a day or which have $50mm of float where BS simply cannot go. If you are a $5bn active fund and are highly diversified, a 1% position is $50mm. For a concentrated fund, 5% is $250mm.

Either is probably in SS Research Land, and those shops which cover $2.5-10bn mktcap smallcaps have a niche for doing so. It's tougher for a substacker to compete.

So will substack disrupt SS? Not likely. Not yet. Content providers need to up their offering game/structure.

Totally happy to take flames on this.