Providing independent equity research coverage is almost impossible for companies that do not provide enough profit potential (i.e. Investment banking commissions, fees, trading profits etc.) for traditional brokerage based/investment banking firms. Because of cut backs in the number of analysts employed by these firms, this is also beginning to apply to larger cap stocks as well.

Four out of five U.S. small-cap firms (companies with market caps of $100 million) have no analyst coverage, and with Wall Streets’ current trend of downsizing research departments, coverage is becoming even scarcer.

Given the absence of analyst coverage, the market value of many small-cap equities is often significantly below their intrinsic value, and often many times below their analyst-covered peers. The size of this disparity ranges up to 50%; clearly illustrating that many investors will not invest in those firms lacking analyst coverage.

Micro cap and small cap stocks have out-performed large and mid-cap companies in 2002. This fact has attracted investor interest in these two categories of equities.

A basic consideration in choosing any investment is liquidity. Analyst covered stocks are by and large much more liquid than their non-covered peers. This is especially true of equities in the small cap category.

There are three accepted methods for improving the liquidity of a stock: intrinsic growth, financing, and independent research. BlackStar Research makes independent research available to the small cap investor. We offer truly independent analysis.