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CASE STUDIES

 

Case Studies | Sample Projects-Questions We Explore | Case Studies Before Reg FD

INVESTIGATIVE RESEARCH

Why Did the Top Bank Executive Leave?
A recent hire, tops in his field, resigned after only two months at a commercial bank. The client worried that something was wrong with the bank and wanted to find out why the Executive Vice President left so abruptly. The bank would only say that the resignation was for personal reasons. Within two days OnCall Research not only discovered where the EVP had re-located, but was able to get his phone number and interview him regarding his early departure. The client was reassured that the bank was still a good investment and that the recent resignation did not throw the bank off track.

How is that New Technology Doing?
The client wanted to assess a company's product launch of a new medical device. We talked with hospital technicians who actually operated the new machines. We learned about the machine's innovations and software upgrades - the pros and the cons - and as well as assessments of the competitions' devices. By interviewing purchasing managers, OnCall Research got the inside track on the decision-making process and timelines for buying fleets of machines for hospitals. The advantages and disadvantages of buying an entire fleet from one source, as well as the "hands on assessment" of this new technology enabled our client to judge the potential success of the new product launch.

Before the Press Knows, We Know -- Assessing that New Product Launch
Before a public announcement, OnCall Research was able to unveil the "mystery partner" of an appliance manufacturer and discover its "secret" product still in test market. The client was able to evaluate the potential partnership and the promised effect of the new product on profit margins months ahead of the market.

OnCall Research's investigation into trends in cross branding and product innovation gave the client critical insights into the new product launch.

Who’s Playing Our Song? iPod! A Great Launch.         
We called it for iPod when it first hit the shelves. Not only did we find that iPods were selling fast, but stores were running out of stock. Some retailers were even removing slower selling MP3 players from displays. Our client got the word first: Apple reported earnings substantially higher than expectations, credited to the strength of iPod sales.

The Wheels were Falling Off this Product Launch
OnCall Research met face to face with Samsonite management after attending the road show for the company's IPO. OnCall Research closely tracked management's promises concerning the introduction of the new product line. In the process of the investigation, OnCall Research contacted purchasing managers at department stores and discovered that Samsonite was experiencing shipping problems causing late deliveries. Plus, the luggage construction was shoddy and the wheels were falling off. Based on OnCall Research's work, the clients shorted Samsonite which proceeded to drop from $50 to $5.

Will the New Chemical Product Launch Succeed?
Our client was betting on a new product launch by a chemical company it had invested in for years.  The client believed the company’s new product had a huge upside.  In the past this company had positioned its other products successfully and revolutionized an industry.  Would the new product be a winner in an entirely different arena?

We interviewed engineers and plants managers at global companies that were potential end users in all three major sub-sections of this industry.  We found that the product was met with skepticism by key players. Feedback was mixed.  OnCall Research did not think that this new product was a slam dunk success.

We gave verbal feedback to our client as we conducted the research. Our client insisted that this company’s products were always met with resistance before being widely accepted. We dug deeper.

We were able to reassure our contacts that we were not their competitors by sharing case studies from our website. Within two months the chemical company pulled the product from the market. Our client was surprised, but pleased we had warned him.

We Learned Retail Sales Were Soft During April 2010.
Even we were surprised! Our research told us sales in stores like Costco were soft during April.  We made the calls, did the store checks and trusted our results.  Sure enough, April results were disappointing in many stores with general merchandise as consumers are still cautious.

We Connect You with Experts
A client wanted to know how a new, just FDA approved, medical device compared with its competitors. How quickly would this new technology be adopted in the healthcare field? What were the pressures that were working toward early adoption? OnCall Research interviewed staff at more than 12 hospitals, probing for trends and building relationships with experts. We found an expert, with first hand knowledge of the competing technologies, willing to talk with our client. The client gleaned fresh, critical information from an expert to assess an investment.

CHANNEL CHECKS

How are Your Comps? We help You Monitor Your Positions
A client called OnCall Research for help getting "color and texture" on a current investment. Management would not give the client information on the day-to-day operations. OnCall Research called approximately 100 doors to speak with different shifts of staff for a sense how busy the business was, the popularity of new products and if they were hiring new staff. The client then compared quarterly sales projections with "real world" data.

Is the Company's Membership Drive Working?
OnCall Research called across the country to over 70 doors to get a read on how well a discount chain’s membership drive was progressing. OnCall Research was successful in gaining critical information to add to the client’s model for assessing sales expectations for the quarter. OnCall Research data got it right on the money. The company’s earnings per share came in 2 cents ahead of the estimate of analysts polled by Thomson First Call!

Who’s Playing Our Song? iPod! A Great Launch.
We called it for iPod when it first hit the shelves. Not only did we  find that iPods were selling fast, but stores were running out of stock. Some retailers were even removing slower selling MP3 players from displays. Our client got the word first: Apple reported earnings substantially higher than expectations credited to the strength of iPod sales.

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SAMPLE PROJECTS - QUESTIONS WE EXPLORE
You have questions, we dig for answers

Many of these Case Studies listed were conducted in the mid 90’s when we were able to have private conversations with management.

Are Sirius Satellite Radio and XM Satellite Radio selling?
XM Satellite Radio XMSR; Sirius Satellite Radio, Inc. SIRI
Over 30 Circuit City, Best Buy and Sears and Wal-Mart Stores were interviewed to determine sales and how XM’s competitor, Sirius Satellite Radio, was doing in the market. Questions: In how many cars are you installing with XM per day/week? How does this compare with how many you were installing last month? If I were to buy a unit today, how long would it be before I could be installed? Are you installing Sirius Satellite Radio? When did you start installing Sirius? How many are you installing per day/week?

Should the Client Short a Stock?
O’Reilly Automotive ORLY, NASDAQ and AutoZone AZO
100 stores in 8 States and 60 Cities were surveyed.  Questions: Is O’Reilly losing market share to AutoZone?  The client was considering shorting O’Reilly. Conclusion: The short that might be explored is AutoZone.  Most mom and pop auto body and auto service companies were extremely negative about AutoZone. Many reported that they would not buy from AutoZone and that many AutoZone parts were defective.  “We often have to install their parts more than once because of the poor quality. What good is a warrantee when you lose so much time with labor?”

Is the new medical technology working?    
Cytyc CYTC
 
More than 30 hospitals and Breast Care Centers were interviewed.  The inquiry focused on the reliability of ductile lavage. Questions: Is ductile lavage being used on an experimental basis for high-risk women or is it becoming one of the ongoing tools used for good breast health care?  Can doctors get enough of a sample to test? What percentage of high-risk women produces enough fluid to be tested?  Is insurance coverage for the procedure increasing or is the lack of insurance coverage a barrier to usage?

Is Weather affecting sales?
Peet’s Coffee and Tea PEET
More than 30 Peet’s shops and Grocery stores selling Peet’s beans were interviewed over a period of 2 to 3 months to monitor the sale of drinks and beans. Stores were interviewed to determine how well drinks and beans were selling during the summer. Questions: Does the sale of coffee decline when the weather gets warmer?  In most cases the answer was no.  One Whole Foods in the Boston area reported that they sold out of Peet’s beans on a holiday weekend in part because of the cool weather. During the interview at grocery stores questions were also asked about the impact of the economy on sales.  At many Whole Foods the impact was slight and many were doing better than the year before.

Which lottery do you want to play?
Scientific Games Corp SGMS
CEOs and Directors of the lotteries of 12 states were interviewed to monitor the quality of service provided by Scientific Games and to determine if the contracts with the company would be renewed.  The research was conducted in 2002. Questions: How well does SGI meet the needs of its customers (i.e. the states)? How reliable are their systems and support? How could SGI do a better job? How competitive is SGI’s online lottery offering.  What are its strengths and weaknesses?  What is the lottery’s view of GTECH?  What is their reputation in the industry?  How is their reputation changing over time?   Have they been improving on customer service and support? Would you consider switching from SGI (GTECH) and under what circumstances would you do so. What criteria did you use in evaluating lottery vendors?

What movies are they really watching in their hotel room?
Lodgenet Entertainment Corp LNET and On Command Corp ONCO
In 1998 top-level management of hotel chains and franchises were interviewed to determine the length of contracts each hotel had with LNET and ONCO; whether contracts would be renewed; the quality of service; and how the technology and support could be improved.


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MORE CASE STUDIES

In August 2000, the SEC adopted Regulation FD to curb the practice of selective disclosure.  Before that time research firms could have private conversations with management.

Investment Ideas

K-Swiss (KSWS) – in January of 1999, OnCall Research uncovered K-Swiss athletic footwear while in the mall scouting for hot ideas.  When OnCall Research “discovered” KSWS, it was trading at $5*/share.  During the time of our research KSWS $25 rose steadily to a price of $25* (*adjusted for splits).

Maytag (NYSE:MYG) – In the mid-1990’s OnCall Research talked to friends about their appliances while searching for new investment ideas and learned that Maytag, the first US company to launch a front-load washer, had a huge hit.  Maytag’s Neptune, with its environmentally friendly design saving both water and wear and tear on clothes, was called the “Cadillac” or “Ralph Lauren” of washers. OnCall Research met with Maytag management, visited the factory and closely followed Maytag’s marketing and sales strategy for the new washer.  During the same time period, Maytag launched a new vacuum utilizing cutting edge technology.  OnCall Research felt the Maytag story was compelling and recommended it to clients.  MYG steadily climbed from $28 to $69 during the time of our research.

Samsonite Corp.  – OnCall Research met face to face with Samsonite management after attending the road show for the company’s IPO.  OnCall Research closely tracked management’s promises concerning the introduction of the new product line.  In the process of the investigation, OnCall Research contacted purchasing managers at department and discount stores and discovered that Samsonite was experiencing shipping problems causing late deliveries to the retailers. When the line arrived, the luggage construction was shoddy and the wheels were falling off.  Based on OnCall Research’s work, the clients shorted SAMC, which proceeded to drop from $50 to $5.

Callaway (NYSE: ELY) – OnCall Research started following Callaway Golf the first year it went public by attending the annual meeting and having lunch with the heads of domestic and international sales. In the process of interviewing golf enthusiasts, OnCall Research discovered that the Callaway "Heaven Wood" seven wood allowed average players to play better and have more fun,  OnCall Research met with management many times thereafter, visited the factory and the research center, and assessed channel checks through golf shops, pro shops, and golf catalog contacts.  ELY was a ten bagger for OnCall Research.

Connecting Investors with Experts

Input Output (NYSE:IO) – Input Output, a designer and manufacturer of seismic data acquisition products, was in the process of developing and testing a digital sensor, which was touted as having superior qualities to analog sensors.  OnCall Research was asked to find and interview engineers in the oil industry to determine the perception of the company and its management, the viability of the new product, barriers to entry and likelihood the industry would move immediately to adopt this new technology.

ProBusiness(PRBZ) – OnCall Research visited the management of ProBusiness when the company was considered the “gold standard” for outstanding service in payroll processing.  Ironically, HR departments complained extensively about service provided by the competitor, ADP, which later acquired ProBusiness. When OnCall Research’s client wanted to take a larger position in ProBusiness, but was unable to gain critical information on GoldenGate, the new upgrade to their core software which had already been delayed by a year, OnCall Research used proprietary contacts to find the beta sites the company refused to reveal.  Based on OnCall Research’s information and interviews with beta site users regarding the progress of the upgrade, the client then interviewed beta site developers and expanded their position in ProBusiness.  


Monitoring Long Positions

Clients who have long positions in companies ask OnCall Research to monitor current performance.  Examples include Apple, Hewlett Packard, Pier One, West Marine, Staples, Costco, The Cheese Cake Factory and Williams Sonoma. In December 2009, OnCall Research’s data indicated that Williams Sonoma would likely beat expectations, supporting a client’s buy and hold recommendations.

Case Studies | Sample Projects-Questions We Explore | Case Studies Before Reg FD


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