Expanded Disclosure Policy Information
|
If you are looking for share ownership disclosures for Biotech Stock Research, LLC staffers, please click here. |
|
If you are a
Subscriber and looking for share
ownership disclosures and recent position changes |
Biotech Stock Research, LLC (BSR) is committed to maintaining an honest site serving as an oasis among stock market research where undisclosed or generically disclosed front running, hidden agendas, and rampant conflicts of interest are too common.
We do not run a hedge fund or a mutual fund. We do not accept any consideration (money, shares, etc.) from publicly traded biotechnology companies or their employees. We don't run a trading desk. We've made the effort to stay as independent as possible in the belief that independence holds value in the research marketplace.
We do allow BSR staffers to own shares of the companies we cover. To help address the potential for bias this represents, we have created what we believe is the best and most detailed share ownership disclosure policy of any research firm in the business. The positions disclosures we are discussing here represent ownership in the personal accounts of BSR staffers and all shares have been purchased on the open market. Remember, BSR does not rund an investment fund.
The links to the two pages above represent the dual nature of our disclosure policy.
By clicking the link in the first box above, you will see ownership disclosures available to the entire public. This allows anyone who has heard about our research in the media or on other sites to immediately see whether a BSR staff member has a position in a particular trading vehicle. These disclosure cover all the stocks in our coverage universe plus any positions in biotech indexes (i.e. BTK, NBI, BSR Biotech IndexTM), and/or the biotech ETFs (i.e. IBB, BBH). Together, we call this group of market vehicles the "Disclosure Group." Companies in the BSR Biotech IndexTM but not in our coverage universe are not part of the "Disclosure Group".
The link in the second box is for Subscribers only. It shows detail on specific position changes (add, subtract, close) for all items in the Disclosure Group. The detail shows long and short positions. It also shows put and call positions. We do not disclose numbers of shares involved, just the direction and nature of the positions. Position changes are disclosed within 24 hours of the transaction as per the Terms & Conditions governing use of this website and our research. Until January 2005, the information in the second link was available to the public. A few Subscribers requested we only disclose the detail information to other Subscribers. We put it to a vote of our Subscribers in a survey conducted in late 2004 and the vast majority of the votes were to make this information non-public.
Ownership Policy Basics
Beyond the disclosure rules, all BSR staffers must agree to abide by our share ownership policy. Here are the basics of
that policy:
1. BSR management reserves the right to halt all staff transactions in a stock. Any missed profits or enlarged losses are the responsibility of the employee and not BSR.
We often come across new information about the companies we cover. We have an excellent track record of turning this information around to Subscribers quickly in the form of a BSR Alert, but sometimes the information is too intangible for immediate publication. We need to verify sources, facts, etc. Sometimes that process takes a few minutes. Other times it takes weeks. Trading halts are our way to make sure nobody at BSR can benefit from our position as researchers and publishers before our own Subscribers.
2. BSR management reserves the right to implement trade restriction buffers around the time we publish our research.
Some firms allow their staff to trade immediately after publication. That doesn't seem fair to us as our staff members likely have had a head start in assimilating the information and are ready to trade instantly after publication. This gives them a head start over readers who have to access, read, and assimilate the published information. Our "buffers" range from 15 minutes to a couple of trading days and are in addition to the trading halts described above. When news is highly anticipated for a specific date and time (as with FDA approvals), we usually default to the lower range unless our commentary is exceptionally long or complex. If we release tradable news in an issue of Biotech Monthly, the buffer is usually an entire trading day since it takes a while to get through the 30-40 pages in each typical newsletter. If the news event and our commentary take place outside trading hours, we may waive the buffer since our Subscribers then have ample time to read and assimilate the information.
3. Positions changes in potential additions to the coverage universe are prohibited within 90 days of the day the coverage is planned to debut. Any ownership position must be disclosed at the time the research process is started to BSR management and publicly at the time of coverage initiation.
This is the rule we have spent the most time discussing internally. Some BSR staffers have a predilection for wild-card investments -- something we call "cool science lottery tickets." Occasionally, one of these cool science lottery tickets actually bears fruit and develops into a company we believe is worthwhile to introduce to our Subscribers. In these cases, we disclose the pre-existing share ownership at the time we initiate coverage and leave it up to our Subscribers to factor in any bias due to the staffer's position. The alternative is to only restrict ownership to companies we cover or never cover a company that was owned by a staffer prior to initiating coverage. Our thinking is the former interferes too much with diversification and the latter would serve to deny Subscribers of some pretty good ideas.
4. The intent of BSR's staff trading restrictions are to give preferential treatment to BSR Subscribers in the use of BSR's research product. BSR management reserves the right to modify these rules or create new rules in order to satisfy this intent.
This is pretty simple. We've made the decision to allow our staffers to own shares in the companies we cover. Surveys of our Subscribers show they support this decision. In return, we do whatever we can to make sure Subscribers receive the benefit of our research first. Since you pay the bills, we think that's the fairest deal we can offer.
5. If a BSR staffer breaks the rules, in addition to any disciplinary action all profits from the trade (or reduced losses) exceeding $20 are to be donated to charity. Infraction transactions are reported to the Disclosure page. Any amount donated to charity is also disclosed.
This eliminates all potential monetary reward for the infraction. All infractions to date have been inadvertent (execution of forgotten GTC orders, typically) and involving "benefit" of less than $20.
1. BSR management reserves the right to halt all staff transactions in a stock. Any missed profits or enlarged losses are the responsibility of the employee and not BSR.
We often come across new information about the companies we cover. We have an excellent track record of turning this information around to Subscribers quickly in the form of a BSR Alert, but sometimes the information is too intangible for immediate publication. We need to verify sources, facts, etc. Sometimes that process takes a few minutes. Other times it takes weeks. Trading halts are our way to make sure nobody at BSR can benefit from our position as researchers and publishers before our own Subscribers.
2. BSR management reserves the right to implement trade restriction buffers around the time we publish our research.
Some firms allow their staff to trade immediately after publication. That doesn't seem fair to us as our staff members likely have had a head start in assimilating the information and are ready to trade instantly after publication. This gives them a head start over readers who have to access, read, and assimilate the published information. Our "buffers" range from 15 minutes to a couple of trading days and are in addition to the trading halts described above. When news is highly anticipated for a specific date and time (as with FDA approvals), we usually default to the lower range unless our commentary is exceptionally long or complex. If we release tradable news in an issue of Biotech Monthly, the buffer is usually an entire trading day since it takes a while to get through the 30-40 pages in each typical newsletter. If the news event and our commentary take place outside trading hours, we may waive the buffer since our Subscribers then have ample time to read and assimilate the information.
3. Positions changes in potential additions to the coverage universe are prohibited within 90 days of the day the coverage is planned to debut. Any ownership position must be disclosed at the time the research process is started to BSR management and publicly at the time of coverage initiation.
This is the rule we have spent the most time discussing internally. Some BSR staffers have a predilection for wild-card investments -- something we call "cool science lottery tickets." Occasionally, one of these cool science lottery tickets actually bears fruit and develops into a company we believe is worthwhile to introduce to our Subscribers. In these cases, we disclose the pre-existing share ownership at the time we initiate coverage and leave it up to our Subscribers to factor in any bias due to the staffer's position. The alternative is to only restrict ownership to companies we cover or never cover a company that was owned by a staffer prior to initiating coverage. Our thinking is the former interferes too much with diversification and the latter would serve to deny Subscribers of some pretty good ideas.
4. The intent of BSR's staff trading restrictions are to give preferential treatment to BSR Subscribers in the use of BSR's research product. BSR management reserves the right to modify these rules or create new rules in order to satisfy this intent.
This is pretty simple. We've made the decision to allow our staffers to own shares in the companies we cover. Surveys of our Subscribers show they support this decision. In return, we do whatever we can to make sure Subscribers receive the benefit of our research first. Since you pay the bills, we think that's the fairest deal we can offer.
5. If a BSR staffer breaks the rules, in addition to any disciplinary action all profits from the trade (or reduced losses) exceeding $20 are to be donated to charity. Infraction transactions are reported to the Disclosure page. Any amount donated to charity is also disclosed.
This eliminates all potential monetary reward for the infraction. All infractions to date have been inadvertent (execution of forgotten GTC orders, typically) and involving "benefit" of less than $20.
Q & A
Q: What about positions in companies you don't cover?
A: If we mention a company in an issue of Biotech Monthly or in a BSR Alert, we disclose any position (long, short, option, equity) in the text. It does not appear on either disclosure page unless the company is in the Disclosure Group (as defined above, essentially the biotech indexes, the biotech ETFs, and companies in our coverage universe).
Q: I read a media article quoting you and you did not disclose your ownership. How come?
A: This really bothers us, frankly. We make a point of telling all reporters we speak to about our ownership in the stocks they ask us about. Some reporters and editors don't seem to care what the source's potential conflicts are so they don't get put in the piece. Sometimes the disclosure is cut due to space concerns. This is the primary reason we retain the publicly-available disclosure section.
Q: Which should we listen to, your official research or the staff disclosures?
A: The problem with "listening" to staff disclosures is you don't know the motivation for the position change. For example, one of our staffers is in the middle of the remodel from hell. Another is looking to purchase a new car. Both are likely to have to sell stocks to finish these transactions. This is a reflection of their personal financial situation and not a reflection of our "official" research opinions. To say not to pay any attention seems to us to be a little Wizard of Oz-ish to us ("pay no attention to the man behind the curtain") and also would be ignorant of human nature. We just ask that viewers of our disclosures keep in mind staff position changes can be motivated by many things.
Q: My understanding is that now BSR discloses staff position trades but only to Subscribers and within 24 hrs of a trade. Since BSR changes your BSR Model Portfolio at the close of next business day for stocks you recommend, that seems to lend itself to manipulation by the staff. What I mean is that staff can buy say 12 hrs ahead of a report. The report comes out and induces buying by subscribers, which brings up the price. Then your release the staff trades to subscribers and also possibly add it to your portfolio creating additional buying. Therefore, if my interpretation is correct, BSR staff have a heads up on everyone else.
A: There are a number of misconceptions in this question. By this point in this document, we hope the reader would be able to answer it on his/her own. Just in case, though...
First, we do not "recommend" stocks. We are a research service that aids investors' own due diligence efforts. Second, any change we make in the BSR Model Portfolio comes along with a specific clock time and date of when we will make the change. It's rarely "at the close of the next business day." Third, staff cannot buy "12 hours ahead of the report" because of the aforementioned trading halt and trading buffer rules. Finally, we remind the reader we run no hedge fund or mutual fund, so the comment about "add it to your portfolio" has no basis in fact.
The questioner is probably confusing us with our competitors, most of whom do run investment funds first and write research second. BSR staffers do have a heads up on everyone else, which is why we have these rules in place to make sure our Subscribers are able to take advantage of our research before our staff.
Q: I get that your rules prevent front-running by your staff, but what about for your consulting clients or large customers?
A: Unlike all of our competitors, we do no consulting on publicly-traded biotechnology companies. We find it a fundamental conflict of interest to consult for hedge funds and other investors and then turn around and publish that same information -- often weeks or months later -- to Subscribers as 'new' research.
Furthermore, one of our research guarantees is we send out our research to everyone at the same time (to the limits of e-mail technology). New research is posted on our web site for all Subscribers to see so there is physically no way for anyone to get it "early".
If you have other questions, please contact us by the means listed on our Contacts page. We'd be happy to answer them for you.
A: If we mention a company in an issue of Biotech Monthly or in a BSR Alert, we disclose any position (long, short, option, equity) in the text. It does not appear on either disclosure page unless the company is in the Disclosure Group (as defined above, essentially the biotech indexes, the biotech ETFs, and companies in our coverage universe).
Q: I read a media article quoting you and you did not disclose your ownership. How come?
A: This really bothers us, frankly. We make a point of telling all reporters we speak to about our ownership in the stocks they ask us about. Some reporters and editors don't seem to care what the source's potential conflicts are so they don't get put in the piece. Sometimes the disclosure is cut due to space concerns. This is the primary reason we retain the publicly-available disclosure section.
Q: Which should we listen to, your official research or the staff disclosures?
A: The problem with "listening" to staff disclosures is you don't know the motivation for the position change. For example, one of our staffers is in the middle of the remodel from hell. Another is looking to purchase a new car. Both are likely to have to sell stocks to finish these transactions. This is a reflection of their personal financial situation and not a reflection of our "official" research opinions. To say not to pay any attention seems to us to be a little Wizard of Oz-ish to us ("pay no attention to the man behind the curtain") and also would be ignorant of human nature. We just ask that viewers of our disclosures keep in mind staff position changes can be motivated by many things.
Q: My understanding is that now BSR discloses staff position trades but only to Subscribers and within 24 hrs of a trade. Since BSR changes your BSR Model Portfolio at the close of next business day for stocks you recommend, that seems to lend itself to manipulation by the staff. What I mean is that staff can buy say 12 hrs ahead of a report. The report comes out and induces buying by subscribers, which brings up the price. Then your release the staff trades to subscribers and also possibly add it to your portfolio creating additional buying. Therefore, if my interpretation is correct, BSR staff have a heads up on everyone else.
A: There are a number of misconceptions in this question. By this point in this document, we hope the reader would be able to answer it on his/her own. Just in case, though...
First, we do not "recommend" stocks. We are a research service that aids investors' own due diligence efforts. Second, any change we make in the BSR Model Portfolio comes along with a specific clock time and date of when we will make the change. It's rarely "at the close of the next business day." Third, staff cannot buy "12 hours ahead of the report" because of the aforementioned trading halt and trading buffer rules. Finally, we remind the reader we run no hedge fund or mutual fund, so the comment about "add it to your portfolio" has no basis in fact.
The questioner is probably confusing us with our competitors, most of whom do run investment funds first and write research second. BSR staffers do have a heads up on everyone else, which is why we have these rules in place to make sure our Subscribers are able to take advantage of our research before our staff.
Q: I get that your rules prevent front-running by your staff, but what about for your consulting clients or large customers?
A: Unlike all of our competitors, we do no consulting on publicly-traded biotechnology companies. We find it a fundamental conflict of interest to consult for hedge funds and other investors and then turn around and publish that same information -- often weeks or months later -- to Subscribers as 'new' research.
Furthermore, one of our research guarantees is we send out our research to everyone at the same time (to the limits of e-mail technology). New research is posted on our web site for all Subscribers to see so there is physically no way for anyone to get it "early".
If you have other questions, please contact us by the means listed on our Contacts page. We'd be happy to answer them for you.