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

Sorry wheres my manners, hello nice thread by the way. Just started trying moneyam out & was pleased to see an IIR thread already set up.

hi,scotty its a good board this, jdudd is well ahead of me in his research and his posts make good reading ,as was yours ,well have to say that i was surprised with the drop today,will see what tomorow bring,when is the growth company investor show,copshaw

Hi copshaw, having read the thread it appears me & jdubb have crossed posts before. I also regularly post on the advfn BB, but new to moneyam so thought I would add my thoughts here as well whilst I was looking in.

The growth company investor show is in June, Mr Smith hasn't confirmed 100% that we will present but did ask a few investors there thoughts.

Nice to have you on board Scotty- you seem familiar LOL! I'd recognise that analysis anywhere! Shame we are stuck in this volatile period at the moment. Volume is very low and the SP will continue to swing on small trades. Scotty within what time scale do you percieve the SP to reach the 2.50? Incidently that gives a market cap of 65mil!! Not that im complaining as by that time i'll be a millionaire!

hi scotty,never used advfn just usualy post on iiiample would have thought it would be well worth their time to go to the roadshow,unles of course they are going to keep the posetive newsflow coming and dont think they need to,

jdubb, its my expectation [hope] for the LT I have no timeframe in mind as such but feel if the demand is there to push coverage to 1000 international stocks we will be laughing, also that same coverage as you know can be adapted quite easily for Asia at a small cost so again chunky margins. How long this will take I don't know, when the new website with dynamic updates of stocks under coverage is launched we should be able to track the increase.

See how satish gets on at the Indian subsidary, but you don't just employ an extra 100+ analysts overnight. Unless they use a 3rd party agent until recruitment levels are built - they did this before creating our own Indian subsidary.

It is a fag packet calc & I hope to add more meat to my forecasts once I have more visibility of the numbers either through meeting the management &\or newsflow from the company. Remember its only a few months since we got the news to kick all this off, so there is some gut feel in there too.

IN research will help identify earnings accretive acquisitions as well, whilst dilutive will help the business scale quicker but also challenging to ensure a smotth transition.

A mkt cap of 65 million isn't alot for a already profitable growth stock with no debt & huge margins + 5 - 6 million of tax losses to utilise, just need more visibility which the 'ultra' conservative 1 year Insinger forecasts don't give.

copshaw, I think they will go to be honest, which is good because tickets are free :o) You havn't missed anything not using advfn imo.

thanks scotty.

Obviously keeping the price down to get rid of stock on hand imo. Will go back up soon no doubt.

jdubb, nice and quiet on this stock once again which is normally a positive sign as you know.

Looking for news of this google initiative soon per the companies recent statement in the Trading update, should wake a few up imo :o)

any ideas about the fall in sp ,

Give it time copshaw, the fall is disappointing but shows that most people have sold out simply because the price hasn't continued to rise. When news comes they will be scrambling back & buying the rise [hopefully anyway] the PE is way to low for a growth stock & will be upgraded in my opinon.

Let the new management team get to work as they are fresh through the door, I hope for good news flow between now & the autumn but interims will be when these really take off as the forecasts are translated into hard numbers.

PE is an undemanding 12.5 versus sector average of 25 which is reasonable given the growth we are experiencing, this PE is based on contracted business only ignoring the pipeline & opportunities which is why I think we will see some serious upgrades.

Good luck

cheers scotty,would think their could be an up date on the google news soon.

Lets hope so, like jdubb I have waited a few years so happy to hang on for another few now that we are finally producing the goods.

I sold half of mine at 58p and I'm rather wishing that I had sold the lot now. Long term this will indeed go far, but short term it's got to double to get back to a 58p bid - that's a big ask now that all the bubble has burst.

well pond life i bought at 57p,looking for the bottom to buy a few more

Pond life, I wish I sold all my 400k at 58p bid with the benefit of hindsight & bought them back at 30p. but at that price it still discounted too much in the SP + Gordon would have had me for around 20% - 25% of my gains [taper relief on some of my holding only].

As you know with this share it can double in no time atall with the right news, they are looking to increase investor visibility of the company over the coming months which is needed so investors can see where the company is heading - look out for the growth company investor show in June.

Like you I think medium - longterm it will go a very long way, their research rankings are excellant & coverage is growing + they are opening up new sales channels as you will know per the RNS etc.

The directors are happy taking pay in share options & back pay into shares at 50p so I am happy to wait for better things & the next leg up past the recent dizzy heights of 60p.

Also whilst I try to discount any 'google' impact the answears google gave to the recent TM cancellation application was so weak [imo] that an eventual settlement looks in googles best interests - it shouldn't be hard for googles 14 TM lawyers to see we had prior use in 2002 which they contest !

I can do a search & find this info in 5 minutes. ---------edited out--------

if anyone wants the basis for the current insinger forecast i can mail it or indeed any links to the US TM office, investars rankings etc then let me know.

volume up the last few days,almost all buys news soon?

ANY THOUGHTS AS TO IF WE HAVE HIT THE BOTTOM ,?

Definately the bottom. Seller is out on good authority, so should continue up in run to results and updates.