The companies covered by Sidoti's traditional research generally share three traits: profitability, market capitalization below $3 billion, and little to no research coverage by the larger Wall Street brokerage houses, who tend to focus on larger companies, reflecting the liquidity demands of institutional investors.
Sidoti coverage is not contingent upon corporate finance fees. Our analysts' recommendations are based solely on investment merits. Analysts generally do not cover companies that limit access to their senior executives by not participating in non-deal roadshows.
Our research process begins and ends with our industry-leading researchers, employing several selection methods - screens to compare and contrast key financial criteria; discovery of additional equities in a sector after the analyst finds the first; and recommendations from our institutional clients, as the leading small- and micro-cap money managers usually have favorite, undiscovered jewels in their portfolios.
Sidoti analysts conduct their own due diligence, visiting companies and key operating and financial management. Our analysts will not cover companies that limit access to the CEO and CFO. In particular, our analysts focus on fundamentals - cash flow from operations and EPS, with analysts interacting regularly with customers, suppliers and competitors or, as we like to say, fundamental "blocking and tackling."
Most of our analysts cover specific segments, while others uncover value in "special situations," where companies do not neatly fall into one industry. Our sectors include housing, retail, basic industries, technology, business services, capital goods, automotive, computer software, regional banking, telecommunications, entertainment, healthcare, and consumer products.
Sidoti also offers a company sponsored research product that is of the same quality and has virtually the same content as our traditional research offering, except that there is no BUY/NEUTRAL rating system for a stock. Instead, we use a two-tier risk rating system. The analysts providing company sponsored research are the same experienced Sidoti analysts producing our traditional research coverage.