Mamun Rashid, Managing DirectorA pure independent investment research house based in the U.S. and Australia, IIR provides high-quality commissioned research for brokers, family offices and fund managers. It specializes in analyzing equity, as well as listed and unlisted managed investments. The research services are broad-ranged, covering research for initial public offerings (IPOs) and stocks that need more coverage.
“We commit to objectivity by refraining from participating in stock dealing and corporate or capital raising activities. We maintain a clear separation from securities dealing, investor relations and corporate advisory, solely focusing on providing research services to issuers, wealth managers and institutional clients,” says Mamun Rashid, managing director of IIR.
This approach ensures the research is free from the inherent biases often associated with these undertakings and is more widely accessible to institutions worldwide. IIR provides a research website to clients and subscribers that covers listed and unlisted managed investments, resource companies, structured related products and IPOs. The firm’s price targets are lower than those provided by sell-side research due to the lack of incentive to promote stock sales or engage in capital-raising activities. IIR is quite conservative in its outcome, so fund managers place their trust in its research as it remains truly independent.
Your Trusted Partner for Quality Equity Research
IIR offers various services, including equity research coverage, company profile reporting, and listed and unlisted managed investments.
In listed managed investments, a continuous stream of research is consistently delivered, encompassing Listed Investment Companies (LICs), Exchange Traded Managed Funds (ETMFs), and Listed Investment Trusts (LITs). IIR renders research across a range of asset classes for retail and wholesale investors in unlisted managed investments. The coverage includes an initiation report and annual reviews.
The firm operates on the foundation of its equity research, refraining from providing buy, sell or hold recommendations. Clients are offered fundamental analysis that includes a comprehensive price target valuation and insightful commentary on all marketsensitive announcements. IIR conducts an extensive and in-depth analysis of the companies it covers, offering a holistic qualitative assessment. The firm goes to great lengths to ensure the credibility of its research, engaging with experts, such as geologists, mining engineers, finance experts and medical professionals, to prepare detailed write-ups.
IIR provides a narrative around the company's strategy and management competency when the valuation isn’t feasible, due to legal, accounting or financial ambiguity. This method is also used for companies in the early stages of development that do not qualify for valuation. The coverage typically spans 12 months, akin to the style one would anticipate from a brokerage.
This industry-centered approach gives IIR a deep understanding of the sectors it studies, fostering high quality and accuracy in its research.
IIR’s procedures are underpinned by specific rules of engagement. It assumes complete editorial control and responsibility for the research process. The firm emphasizes independence and establishes clear mandate agreements upfront, after which clients can determine whether to proceed with publishing. They also reserve the right not to publish the research if there is a disagreement regarding the valuation target.
Its commitment to accommodating client needs and concerns is evident as clients often return once they recognize the value its analysts provide. After the collaborative process, they can revisit the evaluation to address the identified issues and potential gaps, which could pertain to market insights, the company, governance, management, or strategic aspects. Consequently, research reports are often not immediately published. When clients re-engage with the research, an accurate and improved analysis is released, usually after four to six months. This approach underscores IIR's commitment to a flexible, respectful and client-oriented approach to research.
IIR’s operational model does not compete with brokers or sell-side research, but strategically complements them.
Respecting the fundamental differences between the firm’s research and that of brokers, this approach has proven successful in Australia, supporting retail brokers in delivering tailored advice to their clients. IIR views a similar opportunity in the U.S., especially for small and micro-cap stocks with limited coverage.
It's worth noting that truly independent research firms can be a rarity in the U.S. Many entities have ties to stock trading or investor relations activities, which starkly contrasts with IIR’s practices.
The firm adheres to its core values and maintains the brand integrity it has built over the years by committing to unbiased, non-promotional research. By offering reports free from any hidden agenda, IIR fosters an environment of transparency and objectivity, easing the pressure on analysts and securing the faith of its valued clientele.
IIR’s commitment to preserving these principles is the cornerstone of its success, allowing the firm to stand strong since 1999.
Multi-Faceted Investment Review Framework
IIR has established review frameworks to evaluate investment offerings, considering various qualitative and quantitative factors. Examined factors include product management and construction, investment management and team performance. The evaluation also considers the CEO and management team’s track record in executing strategies.
The sector is then evaluated based on performance and dynamics. Peer reviews gauge where clients stand within their niche, identifying whether they lead or lag behind their counterparts. All research reports are subjected to review by IIR’s investment committee. Once approved, the report is made available to clients, who are welcome to discuss any factual discrepancies with the team, ensuring the integrity and quality of research.
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We have lower value valuation targets due to our conservative approach. This is one of the reasons why institutional audiences follow us. We provide more realistic perspectives
IIR's involvement in equity research covers various stages in a company's lifecycle. In the pre-IPO stage, the firm researches client investment thesis and other critical aspects. It does not provide price targets or valuations during this stage for established businesses, especially in the microcap space, and may withhold a valuation for newly listed companies until they have been public for three to four years. This ensures that assessments are more comprehensive and accurate.
The quantitative side of the research, involving mathematical valuation, is relatively easy. The challenging aspect lies in the qualitative assessment, where IIR determines if management's articulated strategies align with their actual execution and if it understands the risks associated with execution. After the initial reports are released, the research process entails monitoring client performance, based on which the valuation and coverage may be adjusted.
When dealing with industries like metals, mining and biotech, IIR refrains from conducting valuations at first and focuses on presenting an investment thesis instead. Before providing valuations, it takes a cautious and rigorous approach and looks for evidence of traction, assessing factors like cash flow, revenue streams and cost structures.
“We have lower value valuation targets due to our conservative approach. This is one of the reasons why institutional audiences follow us. We provide more realistic perspectives,” says Rashid.
He and his team staunchly believe good management is the key to success in the small and micro-cap space. A giant corporation can suffer from inadequate management, resulting in insolvency risks and making it a highstakes situation. When capable leaders run a business, it can weather storms and thrive even if the sector is facing challenges. While financial numbers hold importance, IIR pays equal attention to the tone and communication of CEOs. Their language and nonverbal cues can reflect the company's health and prospects. A negative or evasive tone may indicate underlying issues, whereas a positive and transparent one can instill confidence in the company's direction.
The Leaders Behind IIR
Great leaders emerge from the crucible of hard work and determination, and Rashid's journey is a testament to this principle.
Claire Aitchison, head of equities and funds research, has conducted over 100 equity-style reviews and oversees research outputs across the firm, with the exception of metals and mining. Research associated with the industry is handled by Gavin Wendt, executive director of metals and mining, who has been a senior resources analyst for the past 25 years.
We will form partnerships with investor relations firms, where we concentrate on independent research, and they conduct discretionary investment research and promote stocks
Under their leadership, IIR has carved a distinguished trajectory in the competitive research landscape, building a notable client portfolio that attests to its success. Its clientele in Australia includes prominent names like KKR and Neuberger Berman. In the U.S., the firm focuses on equity research, but it plans to grow into listed managed investments and ETFs within the next five years.
Charting a Path into the American Retail Market
IIR's operating model has proven effective, aligning with its mission to offer transparent and unbiased research. The firm has a strong presence in the institutional fund management industry in the U.S., which has garnered it a trusted reputation. However, an exciting transition awaits in the retail space and the overlooked small and microcap segment, where it is establishing distribution channels.
The retail industry is facing many challenges, primarily rooted in the lack of coverage and heightened compliance risks and governance associated with small and micro-cap stocks. Since broker-dealers have typically been hesitant to engage with these stocks, investor relations firms have taken charge, providing paid research and conducting roadshows. Here, IIR sees compliance risks as opportunities for independent research—an insightful perspective. In an environment where small-cap stocks often lack coverage, the firm’s efforts to provide valuable insights can be a game-changer for retail investors.
Rashid elaborates on his vision, stating, “IIR plans to focus on in-depth research rather than handling market awareness and industrial relations. We will form partnerships with investor relations firms, where we concentrate on independent research, and they conduct discretionary investment research and promote stocks.”
This strategic move will mark IIR’s entry into the American retail market. The goal is to establish partnerships with renowned platforms and brokers and become a trusted source of research, particularly in the small and micro-cap equity space. While the institutional model is well-established in the country, the next phase of IIR's evolution will cover the retail market gap. The team intends to thoroughly understand the market dynamics, study the landscape, and strategically align with brokerdealers who share a commitment to compliance and non-promotional practices.
“We focus on quality and integrity rather than haste since it is important to take the time to build a sustainable business in the U.S. market with the right partners. This way, IIR will make a lasting impact and deliver reliable, independent research to a larger audience,” says Rashid.
The firm will work with retail brokers in the U.S. using the same approach it has used successfully in Australia for over two decades.
There is no better experience than witnessing an independent investment research firm deliver unparalleled, objective and truly independent research, which IIR delivers in abundance. The firm will concentrate on the industrial and healthcare sectors—two significant markets with immense potential in the small and micro-cap space. It seeks to extend support and coverage to these sectors and provide access to the resources needed to succeed.
IIR’s clear vision to enter the retail sector enables it to move forward, recognizing the tremendous opportunity ahead. Its commitment and belief in this narrative are palpable, highlighting its dedication to helping clients grow and succeed in their business endeavors.
