Year-old service offers independent stock analyses

Investors looking for a thorough analysis of stocks are usually left with two choices — their own research or the analysis of a brokerage firm.

The time involved in stock analysis, however, has usually left no choice at all. Until recently, investors have had to look to brokers to do the work for them, even though there are potential areas of conflict if a brokerage is involved with underwritings.

A recent report from the Toronto Society of Financial Analysts discussing the changing role of equity analysts said “40% (of the firms we spoke to) had portfolio managers doubling as analysts,” and said “three major U.S. brokerage firms have instituted point systems for rating analysts where the biggest factors affecting the point totals are the number of client visits rather than the accuracy of market calls.”

About a year ago, however, a company called Equity Value Service started offering independent, objective analyses as its single line of business and its sole source of revenue. EVS conducts detailed research and analysis on a universe of about 300 Canadian companies, rates them according to risk and reward and offers investment advice based on investment objectives. “The bottom line is, we don’t have an axe to grind,” says Eugene Bukoveczky, an EVS analyst who follows the gold stocks. “And we’re not media stars. We’re steady fact hounds.”

EVS, owned by Southam Business Communications which also owns The Northern Miner, has established a short but impressive track record since it published its first report on March 1, 1991. For the 11 months ended Jan. 31, the TSE 300 achieved a total rate of return of 3.9%. EVS’s “steady asset growth” portfolio — the most conservative of its three model portfolios — returned 27.8%, its growth income portfolio achieved 14.8% and its aggressive trader achieved 16.8%.

Modelled after the successful ValueLine product in the U.S., EVS concentrates solely on Canadian companies. About 37 of the 300 companies it follows are mining stocks.

EVS bases its analyses on public information and interviews with company management.