At the time he only said he was starting an investment research firm that would be free of conflicts, but now, in an interview with Advisor.ca, he’s shed some more light on his plans.
Hodson says that investors are tired of listening to their brokers recommend new IPOs and that many of the people who suggesting stock picks have some sort of bias.
“On most new structured products and new IPOs, there’s no research. The only thing that investor has going for them is their relationship with their advisor,” Hodson told the financial website.
The company, 5i Research, won’t have an affiliation with any firm, he says. He won’t collect fees from companies and he’s not partnering with any fund management operations. He’ll look at numerous reports from a wide swath of brokers and form an opinion of his own. He’ll then write-up short reports that people can subscribe to for a fee. The company will cover IPOs and structured products, he says.
Interested investors won’t have to fork out huge fees for the research, says Hodson. He told Advisor that he plans to charge under $100 for basic research and more for extra, in-depth material. You can thank Sprott’s deep pockets for the cheap price.
“Some people have told me that’s too low; Sprott’s been very good to me financially,” he said. “I don’t need 10,000 customers on day one. It’s not going to kill me if I don’t get any business in the first six months.”
Hodson will hire his own analysts too—mostly newbies looking for experience. But, he hopes to eventually have five or six experienced analysts on his team.
The now former chairman had been with Sprott since 2006. While he had a good run there, in hindsight people should have seen the departure coming. In June the company killed his Sprott Growth Fund, which fell 62% in 2008 and had a two out of five star rating from Morningstar. It was down about 17% at the time Sprott announced that it would merge the fund with its Small Cap Equity fund.