Hudson Street Widening for Goldman
December 15, 2008
Since Goldman Sachs launched Hudson Street Services in early 2007, the unit has carved out a comfortable niche in the alternative research space by supporting and offering access to a host of content and technology providers.
Hudson Street makes strategic investments in its research partners--there are currently 11--and actively markets their products and services to Goldman's institutional clients. Among the companies that have signed distribution agreements are Naperville, Ill.-based Quantitative Services Group, a consulting firm and provider of equity analytics; Connotate Technologies of New Brunswick, N.J., a provider of intelligent agent technology for searching and extracting data from the Web; and Boulder, Colo.'s Wall Street On Demand, which delivers research over the Internet that is private-labeled for firms' individual investor clients.
In July, JL McGregor & Co., a Beijing-based provider of Chinese financial research, became the latest company to partner with Hudson Street. Tom Conigliaro, managing director and head of Hudson Street, said that JL McGregor, which has offices in Shanghai and New York, offers a "combination of powerful data collection tools, primary research capabilities, and comprehensive analysis [that] is uniquely positioned to help our clients develop China investment strategies."
The JL McGregor investment plays into the Goldman division's steady global expansion. Available initially in the U.S., Hudson Street in the fourth quarter last year expanded its services to Europe and in June to Asia. "We are currently looking at other jurisdictions around the world for expansion," said Conigliaro.
Goldman established Hudson Street because "we started to see a secular growth trend emerge" where clients are "looking to procure third-party research products," said Conigliaro, who spent 16 years in Merrill Lynch & Co.'s sales and trading division before joining Goldman in 2003. "It became clear to us that we ought to further invest in the business." In an interview with Securities Industry News senior editor Alexa Jaworski, Conigliaro laid out the platform's growth strategy.
Do you expect to add more research providers in the near future? We don't have any immediate plans to add another firm to the platform. We're always seeking out and analyzing potential opportunities and there are several companies with whom conversations are active at various stages, but nothing that will be consummated imminently.
What is Hudson Street's role in the evolution of alternative research? We are a conduit. I don't think we're really driving specific changes in the marketplace, but our clients certainly are doing so. We have recognized a fundamental need of our clients and we've proactively developed a business centered around these needs. Our goal is to provide a service that our clients value.
What regions are you moving into? We're up and running in the U.S., Europe and Asia. We are still reviewing other markets such as the Middle East and Brazil. We are determining whether it will make sense to enter these markets and in some cases we have begun the legal and compliance review.
How has the service been received in Europe? How does that market differ from the U.S.? Investors all over the globe are all looking for an edge. ... They're looking for alpha. The underlying fundamental needs of managers are not that different from place to place. What is different is the level of comfort clients experience when utilizing alternative research. The third-party research business is the most developed in the U.S. It's been around longer and clients are more familiar with using those types of products and services. The European market tends to vary from country to country. In Asia, the alternative research market is growing but is still more nascent. ... When we introduce the concept of alternative research to clients outside the U.S., it generally requires a focus on education about the alternative research market-who the players are and what's available.
