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

Yes i regularly check out Investar's rankings and i think that any potential customers would more than likely check out IIR just because they rank so highly. Can only be a good sign for us shareholders as it means that the company, whilst still expanding its research output considerably, are still managing to keep the content at an extremely high standard as the rankings show!

I think that the freeing up of the Chinese equity market can only be good news for any company delivering quality research such as ours. Nice to find out if Mr Smith has any major plans in this direction as China could well be as bigger earner as the USA in future years.

Roll on results and more importantly updates. No suprises. No shocks -hopefully just positive news all the way!

Fully agree with all points Jdubb, Mr Smith has indicated that he will cover the Chinese growth potential in the annual report.

Also they will be at the Growth Company Investor Show very shortly after results are announced, so presumably have alot of positive news to talk about.

results end of next week or begining of week after,from the horses mouth.

Nice one copshaw, did you pick his brain on anything else ?

FYI

IIIR are Exhibiting at the Growth Company investor show on Wednesday, 13 June 2007, The Barbican Exhibition Halls, London

it was very breif as he was in a meeting at the time so that was all i got,seems to be pretty quiet on the bb about iir which suits me as usualy if you get to much hype it goes txts up,lets hope for good news and a possitive outlook going forward,and fingers x a few upgrades and a re rating,am i hopeing for too much?

NO. But you could do with some typing classes!!

Im with you on this one, in fact i added 10k this morning just to prove im not all talk! Have no worries about this stock. Even if update isnt as positive (which im sure it will be!) as we hope, it will only be a matter of time till it flys.IMO

fully agree about the typing,

copshaw

Not sure if you have seen it, the latest investars rankings for firms covering >100 stocks show IIIR are now ranked 1st for positive ratings as well as 1st for neutral ratings.

Here is a link to the latest Investar rankings, play about with the filters & settings + worth looking at the larger firms [Morningstar, S&P etc] all of which we outperform ;

Updated Investars Rankings

scotty, just had a quick look ,will have a chance to have a more indepth play around tonight.they seem to be outperforming some far bigger counterparts.thanks

Just had a nibble. Added 10k and moved the price a little!

Nice results. Maiden EBITDA, maiden trading profit. Very positive outlook. Here's the bit that I liked most:

Market expectations of 2008 revenues are expected to be achieved based on
current and committed business only, before consideration of business from
new clients, the contributions of revenues from new products, or
earnings-accretive acquisitions.

agree good set,and news about goggle anytime looking good for the future,be intresting to see how the mm react to it.

Agreed!! Too many positives to list! No MM reaction yet!

Oops - now we have a reaction! Not quite what I was hoping for.

well 15%down on good news ,will wait and see what the rest of the day brings.

any thoughts about today folks?

copshaw, the price fell on good news as you eluded to earlier. You would need an A4 pad to note all the opportunities the company are currently working on & poised to announce.

A disappointing reaction obviously, whether you are ST or LT you want the price to rise, never mind its fair to say that for me the company has far more upside than I had imagined [and I don't mean due to the fall today :o]

thanks scotty ,in for the longterm.

Copshaw - the other factor I feel may well have been the lack of news on google (as opposed to your take that news is imminent). This will soon be forgotten with so many of the fundamentals in our favour imo.

joe are you a holder of iir,and how long have you been in,spoke to s.smith about goggle yesterday ,just said to watch for an rns,i do beleive it will be a while before we here anything.