With literally 100s of research reports published each day carrying buy, sell, or hold recommendations, it's next to impossible to bundle all of this information into a concise and usable investment thesis. Add in the fact that tumultuous markets have made investors understandably gun shy to make long-term commitments, and it becomes clear that there is room - and demand - for alternative stock picking advice skewed towards trading.
Enter the TIM Group, a London-based financial technology firm that crunches the order flow of 5,000 contributors and then distills that information into trade ideas, or what they call "Alpha Capture" that are distinctly different than traditional sell side research.
"Trade ideas are different than typical research in a few key ways; they tend to be much shorter term focused...good for up to maybe 20 days, and are generated from the trading floor," says Tim Murphy, managing director at TIM Group (which stands for Trade Idea Monitoring).
Agilent (A) is a current TIM trade idea, despite the stock slumping to a 52-week low in the past few months. It's a stock that has been rated a "buy" all year long by 90% of the analysts who follow it, according to FactSet data. And in the last week, Agilent has rallied 15% in 6 sessions and landed it on the TIM "strong buy" list.
Murphy says Yahoo! (YHOO) is another TIM strong buy idea that reflects traders desire to capitalize on market speculation that some or all of the company might be sold. "Brokers see further upside in the next three weeks," he says, even though 60% of analysts who follow the stock still rate it a long-term "hold." Shares of Yahoo! are up 20% so far in October.
Officially, 47% of of TIM trading ideas are currently short ideas, or bets that a stock will decline. Murphy cites Research In Motion (RIMM) as one current short idea, saying that early demand for Apple's (AAPL) new iPhone 4S "has not convinced traders that RIM is a good play," despite of a 25% bounce in the past week.