My 2007 top stock pick is IIR (Independent International Investment Research plc)

Website: www.iirgroup.com
Share price: 20p
Capitalisation: 5.2 m
Year end: 28 Feb 2007

Overview

Independent International Investment Research (IIR) provides research on
global companies and currencies, for broker-dealers, investment banks, money managers and private clients.
The equity research business comprises wholly owned subsidiary Independent Financial Markets Research Ltd. (IFMR). The India-based (Chennai and Mumbai) equity research team now covers 300 companies, of primarily non-US with American Depositary Receipt programs.IFMR, established in 2002, has benefited from the 2003 Global ResearchAnalyst Settlement (GRAS) in the US, which required broker-dealers to provide independent research to retail clients.

Supplementing the equity research business, Pronet Analytics.com Limited
(Regulated and Authorised by the FSA in the UK and registered as an
Investment Advisor with the SEC in the US) offers investment advice and trading strategies to clients such as Standard Chartered and Citigroup. The ability to combine currency forecasts with the Group's fundamental equity research also offers an attractive product differentiator and has helped improve the performance of recommendations for US$-based investors in overseas stocks.


Insinger initiated coverage in September 2006 after the company finally turned a corner and became profitable with the new business model starting to bear fruit. The report provides a detailed background of the company & the new business model [far better than I could hope to write myself].

http://www.iirgroup.com/iir/docs/Insinger_research_note_Sep_2006.pdf

The forecasts were very conservative as you would expect at such an early stage of the companies turn around in fortunes, these forecasts have since been easily surpassed & a trading update was issued on the 20th Dec ;

http://www.iirgroup.com/iir/docs/Trading_update_11_December_2006_v1.7.pdf

Followed closely by an upgrade in forecast from Insinger showing a substantial increase of 261% in EPS forecasts ;

http://www.iirgroup.com/iir/docs/06-12-2-IIR.pdf

At the time this meant the company was trading on an 83% discount to research-oriented peers and as such has risen to today's price of 20p per share [was 13.5p when picked]. This is still very cheap and only puts IIR on a PE of 8 despite their exceptional growth - versus an industry average of 20 25.

Whilst the company does not have a history of earnings performance it is worth bearing in mind that the Insinger forecast only includes CONTRACTED business and does not take into account conversion of the strong existing pipeline or any new pipeline as the year progresses [see comments in trading statement + confirmed by CEO] Additionally any potential revenues from new product developments & other medium term growth drivers [see Insinger initial coverage & last finals] are excluded.

Furthermore the company is looking to break into new areas where independent research is beginning to take hold, in particular SE Asia & the UK. Market commentary is very positive for growth of the indies into these areas. A very useful source of industry specific information is;

http://integrresearch.blogdrive.com

To assist their major expansion plans they are currently strengthening the management team and looking to increase the research analyst heads in their Indian subsidiary from the current 60 to 200 staff during the .

As well as organic growth, earnings accretive acquisitions in the research space will be considered - Any acquisition would be paper based,

The current CFO for example is PT and cannot give any more time so a replacement is being sought, [any of you looking for an interesting role?] Details of which I attach as it gives an insight into where the company is heading in 2007;

http://jobs.efinancialcareers.co.uk/job-4000000000223293.htm

To conclude

+ Current PE is 8 versus industry average of 20 25.

+ Current EPS forecast is ultra conservative as based on contracted business alone, excluding the pipeline and likely additional business wins + growth into new areas.

+ Management & research team being strengthened to take advantage of the pipeline of deals.

+ Mr Smith CEO is planning a number of investor relations exercises [Insinger coverage was the start of this] early this year which is hoped will see the company more appropriately valued by the market.

+ Has very little debt, the company has been supported financially by Mr Smith & his trust over the last 2 years.

+ Significant taxable losses to utilise

+ Potentially a bonus of a multi million settlement from Google for Gmail trademark claim - talks are discussing after previous offer by Google was rejected.

- Liquidity is poor but will hopefully be addressed in some way as part of the investor relations drive and paper being issued for earnings accretive acquisitions.

http://www.iirgroup.com/products/GER/researchuniverse

And you may be on yours hols anyway Scotty, so they may just hold it down the local pub and cut out the middle man!!

do you think the current weakness in the dollar will have a significant impact going forward.

Copshaw, you may have already read in the results but they used a budget rate of 2.05 so more or less on the button at the moment.

jd, I would be more comfortable in the local pub than some swanky location. Can't beat a pint of best & a good homemade pie.

read that scotty ,hopefully it will weaken a bit

Thought you might, worth keeping an eye on thats for sure whichever direction it takes.

FWIW The concensus of about 10 - 15 analysts at the time IIR set their budget rate was [from memory] approx $1.96 so a good call on IIRs part imo.

scotty,spoke to them this morning ,still no date for agm,problem is finding somewere suitable to hold it,it is not going to be in their office,it would not accomidate every one according to the guy i spoke with.should know next week .

cheers copshaw, keep us informed. Are you going to attend if convenient ?

jdubb, what do you thinks going on ? I can only guess [and it is that] they are going to release some stunning news to attract the heads they expect at the AGM given noone turned up last year ? Or maybe they have a very small office !

Yes scotty im mighty confused too. I see what your getting at, but if they have some good news then they better release it soon or they may as well have the AGM in the Dog n Duck! as no bugger will be going (except you of course!)Hope it is attractive news as we need something to stop me falling asleep!!

Maybe the offices are very small for all directors to fit into at once + me ? I am slim only about 12 1/2 stone, Mr Ledsham packs abit of a gut but nothing worth dieting for & Mr S is like a bean pole.

If the blond bit from the GCI show is there then I don't mind squeezing up alongside her to make more room :o)

copshaw if you call again do you mind asking who 'everyone' is likely to be & whether the blond bit is attending so I know whether to get my hair cut prior to attending. Thanks.

Scotty, you have hair my god!!

Yes mate, a full mullet of the stuff !

waiting for a call from mr smith will ask about the blonde!,hope to make the agm but holidays coming up,so i wish they would make their minds up about time and place,begining to wonder if that seller has sold out as it has been very quiet of late.

Cheers copshaw, let us know what you find out.

what do you boys think of the bloodbath on the markets today,dow down over 300 points,wish i had some spare cash to pick up one or two bargains.

We have had a good run lately so no big surprise & the sub prime problems have been flagged for some time. Keeping my cash in the pocket for now until the normal summer lull is over & then will see what bargains are about.

Good to see in the bloodbath we stayed flat :o)

Alot of my current stocks are chinese growth stocks listed on AIM, I still think China has plenty of legs yet & whilst they continue to list at what in most cases are very low multiples then I am happy to oblige with a small investment. Especially those that have a green / climate change tag attached to them.

well still no word of agm,spoke to the company today,s smith has yet to return my call,was one of the secretarys,has know idea when or where,have to say not very impressed with their pr,or am i just getting impatient.

copshaw, they are normally very good at responding to investor questions. I guess when they have a date it will be announced, I am impatient as I'm chomping at the bit to see what news they have on new products etc.

looks as though i will miss the agm as will be on holl,so enjoy the ride.

When is it then copshaw ? I'm away middle of August but was kind of hoping it would be end of the month...

st.ill dont know,but im away for 2 weeks on sat