Which Is the Best Way to Collect Information for Your Equity Research Report?

In my previous financial articles on this website, I have written extensively about various topics such as how to become a successful equity analyst, how to write a good equity research report, how to get a job in an equity research firm, how to prepare for it and so on.

I am sure you have read them and learnt a lot from them.

In fact I have been getting a lot of positive feedback and I am quite pleased about it.

I am happy to help you as much as possible.

Many of you have written to me with various questions and one of them was by an equity research analyst who had just got a job with a small equity research firm.

His question was very simple - Which is the best way to collect information for your equity research report?

He was facing the challenge of understanding how and from where to collect intelligence in the most optimal way and how to structure his data collection process.

The problem he was facing was that he was not able to prioritize his work flow and was going about it in a haphazard way.

Some seniors were telling him to go through various published data while others were advising him to talk to various participants with in the various sectors that he was covering while writing his equity research report.

He was getting really confused with all this varied advice and was not able to find his way through writing a good equity research report.

I know from my interaction with many young analysts that this is a quandary that many of you face in today’s world.

You have limited time to produce a quality equity research report and hence it is imperative that you have an optimal action plan to address this issue.

I am going to talk about exactly this issue in this article.

So please read it carefully and do use it like a check-list when you start to collect data or information from your equity research report.

One of the biggest challenges that most young equity research analysts today face is to decide how much information is enough, and when to decide whether he should go hunting for more information, and from where he can get this information.

Believe me when I say that this is one of the most important problems faced by most equity research analysts as we live in the era of unlimited information!

There is information everywhere around you.

There are thousands of websites dishing out information, there are thousands of company websites where a lot of information is available, and there are a lot of newspapers and magazines that you can refer.

Then you could also talk to various people within the industry or the sector that you are covering in your equity research report.

There could easily be an overload of information.

How do you make sure you don’t fall in this pitfall of running blindly behind information?

The easiest solution to this problem of is to create a process document for yourself wherein you create a detailed check-list for yourself that you can always follow when collecting information when you are writing your equity research report.

There are two main types of collecting information when you are researching various sectors or industries.

They are secondary research and primary research.

Primary and secondary data collection

Let’s try to understand these two types of research methods and their importance in collecting information for writing an equity research report.

Secondary Research

Secondary research is also known as desk research.

Secondary research is the most typical research methodology used in the world today by most equity research analysts.

Secondary research includes collecting or collating data that has already been accumulated and published by another entity.

In this type of research methodology, equity research analysts will typically refer to earlier studies and findings such as other reports, news articles and earlier market research studies in order to arrive at an inference.

In secondary research, typically no new research is required to be conducted by the research analyst.

However, the key drawback in secondary research is that the facts used in the secondary analysis could be out-dated or old and therefore could result in erroneous results.

Besides, earlier studies might not have targeted the exact issue that the present research necessitates.

Below I have mentioned some key techniques of collecting secondary data:

#1. Company websites

One of the key sources of collecting authentic data is the various company websites.

A lot of companies provide a lot of information about their company as well as the industry in their websites.

This should always be used as a starting point by an analyst when he starts the data collection process for writing an equity research report.

#2. Company financial statements

All public listed companies have to file their quarterly as well as annual financial statements with the registrar of companies regularly.

They provide all the relevant information about the company in these documents.

These documents can be used as an authentic source of information by analysts when they are writing their equity research report.

You can get these financial statements from either the company websites or you can also download them from the regulatory agencies such as:

USA - www.sec.gov

UK - www.companieshouse.gov.uk

France - www.total.com

India - www.bseindia.com

You can also find these financial statements in databases such as Bloomberg or Reuters.

#3. Company press releases

Most companies publish various press releases whenever a new event takes place or something of material importance happens.

You should always check such press releases for latest information.

These press releases can be downloaded from company websites.

#4. Published news articles        

Many newspapers and financial websites publish periodic information about various industries and sectors.

These news articles can contain a lot of interesting and current information that you can use in your equity research report.

#5. Magazines

Apart from online content I would request you to look at various hard copy publications.

There are many magazines and journals which come out with fantastic data which you can use in your equity research reports.

There are many exclusive magazines and journals for specific industries such as ‘Light India’ for the lighting industry, ‘Chemical weekly’ for the chemical industry, TV vyapaarjournal for the white good industry, ‘The mining journal’ for the mining industry, etc.

These magazines and journals are available at reasonable costs on annual subscriptions and can also be got hold of in various libraries.

Primary Research

Primary research is the type of research method where you go out and collect the data yourself.

You do not depend on any other earlier published sources of information.

Examples of primary research include different types of surveys, personal interviews (telephonic as well as face to face interviews), key observations, and different types of ethnographic research.

A good equity research analyst will quickly recognize how to use both types of research methodologies - primary and secondary research in his writing and how to assimilate them in an organized fashion.

Below I have listed down various types of primary research methods that one can use in his or her data collection methodology.

#1. Talking to company executives

The most common way to collect information through primary research is to talk to various company executives within the sector or the industry that you are covering in your equity research report.

You can get on the ground latest information by speaking to these industry participants.

Important thing for you here is to decide whom to actually talk to and what type of questions to ask.

Also another challenge here is to understand how much to believe a person when he is telling you something about the industry.

#2. Talking to associations

Talking to various industry associations can be a great source of collecting information for your equity research report.

These associations can be in possession of key information about the industry it looks after.

Some important industry associations in India are:

  • ELCOMA – Association for lighting industry
  • ACMA - Automotive Components Manufacturers Association of India
  • IDMA - Indian Drug Manufacturers Association
  • FHRAI- Federation of Hotel & Restaurant Association of India
  • FAI - The Fertiliser Association of India

#3. Talking to channel partners

Many times talking to various channel partners such as dealers, distributors, etc. can be a great idea when you are collecting information for your equity research report.

These are the people who are on the ground and in touch with the actual consumers.

They can provide a lot of real time on the ground information which can help you validate the point that you are trying to make in your equity research report.

#4. Talking to other equity research analysts

You can also talk to other equity research analysts as it will be a good idea to understand different opinions as well as different ways with which people look at the same information.

Sharing intelligence with other equity research analysts will help you improve your perspective as well as gather more intelligence.

#5. Talk to stock traders

Another good idea is to talk to equity stock traders or equity stock brokers to gauge their sentiment about a particular stock or a sector or industry.

Remember sentiment plays an extremely important role in today’s stock market or financial markets.

Many analysts miss this important step while collecting information for their equity research report.

#6. Surveys

Another method is to conduct surveys to collect opinions of key respondents.

Surveys can be conducted in various ways such as online or through quick interviews.

Surveys will allow you to get on the field information to augment your already available information.

They are not in any chronological order, but you can look at each one of them and figure out which one is best suited for you based on the current situation or circumstance.

It will also depend upon the resources that you have.

By resources, I mean time as well as funds.

If you have limited time and money you cannot go for techniques such as surveys or talking to various trade partners.

Then it would make sense to quickly talk to key industry participants to get their expert views on the industry.

But in case you have a decent budget in terms of time as well as funds, you can have an extensive survey, talk to various trade partners to substantiate your findings and add more value to your equity research report.

So once again I would like to reiterate the fact that it is extremely important for you to understand how much information is enough or sufficient.

Do not aim to get every piece of information or intelligence available in the world.

Try and figure out the final goal – what point do you want to make through your equity research report.

Collect that much information which is sufficient for you to prove your point and understand a situation.

Use this piece of intelligence to stress on that point that you want to make and explain it very nicely so that the reader understands it completely and is able to take an optimal decision about their stocks.

Difference between primary and secondary research

Please do understand that both secondary research as well as primary research are important for finding information which will help you create a good equity research report.

One can never be more important than the other.

One can never replace the other.

Secondary research and primary research are complementary to each other and should be used together to collect the best quality intelligence which will in turn enable you to dish out a very effective equity research report.

I hope you have read this article very carefully and understood the point I have really tried to make here.

If you still have any questions, please do feel free to shoot me a mail and as usual I will be more than happy to help you out.

Do let me know if you want me to write on any other issue which is bothering you or if you are stuck anywhere in your career.

I am sure I can use my experience to help you out.

So again all the very best in life and do keep the feedback flowing in!

Which Is the Best Way to Collect Information for Your Equity Research Report? 1
Which Is the Best Way to Collect Information for Your Equity Research Report? 2

2 thoughts on “Which Is the Best Way to Collect Information for Your Equity Research Report?”

  1. Hi, your articles are very nice and educational.
    Would like to know that while preparing research report based on Secondary Research method, which Database is reasonably priced and provides latest numbers. Also if there is a software which can work out ratios etc based on data in hand.

    • Hi Lalit,

      There are many. Prowess is a good one. There are some free screeners available online.


Leave a Comment