Research Technology Provider FirstRain Adds Fixed-Income Service
February 23, 2009
FirstRain, a provider of Internet search technology, is announcing today that it has expanded its platform to include fixed-income research.
Investor interest in fixed income is on the rise, noted FirstRain CEO Penny Herscher, who said that as many as 20 percent of her company’s clients--more than 100 hedge funds, asset managers and corporate clients--have been shifting their focus from equities to corporate and municipal debt in response to unpredictable markets.
“Fixed-income investing has become more important than ever,” said Herscher. “At a time when equity markets are so volatile, investors are viewing such investments as easier to understand and more likely to result in positive returns.” As a result, San Mateo, Calif.-based FirstRain is offering an optional service that helps identify and analyze the leading indicators of defaults and downgrade risk.
FirstRain, whose platform uses algorithms, pattern recognition and natural language techniques to sift through approximately 35,000 Internet sources, says that it also hopes the service will attract professional fixed-income investors--closed-end fund managers, high-yield research analysts, government bond desks and short-term fund managers.
FirstRain marketing director Todd Enders cited an instance when executives at a manufacturing company spoke publicly, around the time of a bond offering, about its comfortable cash position and the ease with which it could sell factory holdings in China to quickly raise funds. However, said Enders, subscribers to the FirstRain service could see that similar companies were having problems selling unwanted manufacturing facilities in China. “For our clients, this sort of information allows them to identify the true risk or mispricing on an offering, based on local or on-the-ground data points,” he said.
FirstRain’s corporate debt research includes management turnover trends--announced and unannounced--and executive quotes; market demand for a company’s services and products, including comments from channel partners and information about emerging threats; and product progress, supply-chain costs and inputs, and corporate structure and financials, including elements that affect future debt and the long-term ability to pay.
The new municipal bond offering examines infrastructure spending plans, execution and analysis; government performance in managing municipal budgets; jobs and employment trends critical to the municipal tax base; and state-by-state analysis of trends and alternative research on the muni bond market.
Denise Valentine, senior analyst at Boston-based Aite Group, agreed that fixed income is “very hot” and that the FirstRain service makes sense for investors seeking alternative research for the sector. “By launching a pre-built fixed-income research service, they are saving their customers time and effort,” said Valentine, adding that as the market shifts, customers will be able to adjust the focus of the browser-based service. Customers currently receive information through personalized e-mails and user portals with query tools.
FirstRain competes with search-driven systems from AOL’s Relegence unit, Instant Information’s InfoNgen and SkyGrid, pointed out Valentine, though she called nine-year-old FirstRain’s platform “a unique engine” due to features such as the fixed-income service.
Currently, FirstRain has about 150 employees and offices in New York and Gurgaon, India, along with several university mathematicians who develop and tweak the search algorithms. It counts as clients the California State Teachers’ Retirement System, First State Investments, Pioneer Investments and TCW Group, and its distribution partners include FactSet Research Systems and Capital IQ, a division of Standard & Poor’s.
