Talking Stock

Folio: The Magazine for Magazine Management, July, 2001 by Susan Thea Posnock

A new magazine offers investment advice and research on the Street.

Not too long ago, when anyone on the street whispered "hot stock tip," just about everyone leaned in to listen. A turbulent market has since tossed out the casual and skittish investors, but the professionals need useful hints more than ever--or at least, that's what the publishers of Wall Street Research are banking on.

"The point of the magazine is to give professional investors--money managers, institutional investors and buy-side analysts--good stock ideas," says Jim Patrick, publisher and co-founder. The magazine, which launched in May, is positioned as a communications tool for sell-side companies that want to tell their stories to institutional investors, he says.

Patrick left his Buyside publisher position early this year to start the title with co-founder and chairman Gordon L. Holmes, who founded Buyside in 1994 and sold it to San Francisco-based Research Holdings in 1998.

The start-up is a return to publishing for Holmes, who was going to retire and grow grapes. "Although he's still growing grapes, retirement was too slow for him," Patrick says. The two remained friends and talked about how sell-side information could be packaged differently. "We decided to create a magazine that becomes the voice of the sell side and at the same time communicates great stock ideas to money managers."

Research ads up

Wall Street Research is acquiring most of its advertising dollars in a rather untraditional way: through the reproduction of Wall Street research. Public companies pay to have their research re-published, Patrick explains.

"Sell-side firms put out recommendations for their institutional clients. Traditionally, these have been reserved for just those clients, but because of our relationships with these firms and because we're going only to institutional investors, we can put an aggregate of a research report in the magazine," Patrick says. "This is the ultimate in third-party credibility and why the public companies like to advertise in our magazine."

The monthly magazine, with ad rates that range from $5,000 to $10,000, sold 33 advertising pages in its premier issue.

On the edit side, the 35,0000-controlled-circulation title includes interviews with top sell-side analysts and research directors, plus in-depth industry coverage pieces. The debut cover story featured investment ideas from genomics analyst Charles C. Duncan, and a look at the energy, medical technology and tobacco industries.

Peril or opportunity?

While the slumping economy has caused many other publishers to shelve their launch plans, Patrick is fearless. WSR is the right magazine at the right time, he says. "I think that in this marketplace, getting good stock ideas from professional investors is what it's all about."

Articles will help investors find the gems in a tough market. For instance, a future story will focus on specialty chemical stocks. The idea, Patrick says, is to point out stocks that are bucking the trend.

As for potential advertisers, Patrick admits that some are cutting budgets and taking a wait-and-see approach during the slump in the market. "But those companies that are performing well know this is a great time to get their stories out, because money managers still have cash to spend," he says. By launching in a down market, he adds, the magazine will be in an enviable position once things turn around: "If we can establish a strong foothold in this marketplace in this environment, we have nothing but great success ahead of us."

So far, the magazine has attracted advertisers like Phillips Petroleum Company, Beckman Coulter, Western Gas Resources, Questar Corporation and Meridian Medical Technologies.

"It's very difficult to reach portfolio managers and buy-side money managers through conventional media, and I like the concept of a targeted publication," says Curt Burnett, vice president of public affairs for Salt Lake City-based Questar, a diversified energy company. In addition to appreciating WSR as a targeted vehicle-much more so than publications like The Wall Street Journal or Institutional Investor--he says the company likes to be involved with new magazines. "There's a certain excitement and a certain natural curiosity. I generally look for opportunities like that," he says. At this point, Questar is committed to four issues of WSR.

Questar is also an advertising client at the new magazine's competitors-- Buyside, Research and On Wall Street's "Streetwise Stockbroker" section, which was started by Holmes.

Evan Cooper, editor in chief and associate publisher of On Wall Street, says Holmes has a solid track record when it comes to creating vehicles for companies that are trying to reach investors. "If they get enough investor-relations advertising, I guess it could work," he says. "A lot depends on the economy and the mood of the market."

The real question isn't whether investors need information, but whether the type of information Wall Street Research provides will fit the bill, says Jonathan Gage, CEO and publisher of Institutional Investor, who hasn't seen the magazine. In particular, he says, investors have become more skeptical of sell-side analyst research. "They're interested in what analysts have to say, but they're questioning very closely how impartial this analysis is," he says. Plus, a lot of research information is readily available on the Web and in print.