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Wedbush Prime Brokerage – Best North American Hedge Fund Research Provider

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Wedbush Securities was founded in 1955, and is one of the largest providers of small and midcap equity research in the US. 

The research team sits within Wedbush Capital Markets group and has particular expertise in market sectors that include: retail, building products, homebuilders, footwear and apparel, leisure, specialty retail, restaurants, technology, IT services and payments, enterprise software, Internet and media; healthcare, and financial institutions. 

“We are very focused on the emerging manager space,” says Sean Trager, who heads up Prime Brokerage Services. “The landscape of the hedge fund industry has changed dramatically over the last decade. When you heard about the latest big fund launch you’d read it in the Wall Street Journal, it was front-page news. Nowadays, managers are coming to market with friends and family money and oftentimes they are only launching with up to USD25 million. 

“That’s our sweet spot. We try to position ourselves to be an extension of the manager’s trading desk.”

Indeed, these are portfolio managers that have left large hedge funds and, by extension, the infrastructure they could rely upon. Wedbush research is fully aligned with its clients, providing trading and analysis support that smaller managers simply do not get at bulge bracket firms.

“We make the same tools and efficiencies that the largest clients of prime brokers have, for all of our managers, and that’s largely why we’ve been recognised as a helpful element in the prime brokerage space, providing research, clearance and trading to folks who wouldn’t otherwise get such support,” says Trager. 

Wedbush understands that if you are a larger money manager you will likely command the attention of an analyst at a large prime. It makes sense if you’re generating good revenues for them. 

“Nevertheless, we recognise that the smaller manager is still going to benefit from reading the research report, from getting the call from the research desk’s sales trader to get a good feel for what’s going on with a particular stock,” says Trager, adding:

“What sets us apart from other research providers is the names that we cover. Traditional S&P 500 research is, for lack of a better description, free. If you’re looking for traditional, blue chip companies, there’s no shortage of research. But if you were to sit down with a healthcare company in, say, North Carolina, they would likely have only received very limited analyst attention. We concentrate our resources on covering less well-known equities where we perceive there to be hidden value.”

As Wedbush trades a lot of derivatives – it is very active in the futures space having acquired two firms in the last five years – and has a strong options business, the firm is able to support a wide range of strategies beyond long/short equity and global macro; i.e. statistical arbitrage, volatility arbitrage, special situations strategies as well as fixed income strategies.

“We also cover some quant funds. Sometimes, when they deploy the strategy they wonder why it doesn’t do well and for me I think it’s down to market impact costs. There’s something to be said for having a research analyst or sales trader to say `Yes, you should buy it and you should be more aggressive with this one’. Again, that’s where we try to help our clients,” says Trager.

On winning this year’s award for the second year running, Trager says: “I couldn’t have been more honoured to be recognised by the hedge fund community for our contribution to the space, and feel overjoyed to be standing alongside so many industry leaders and peers.” 

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