In past editions of The IRA, we've commented on the fact that the Wall Street dealer and media communities are not particularly focused on meeting the needs of small investors. From the real-time information flow provided by Sell Side brokers and research analysts to their biggest clients, to the coverage choices made by the major print and broadcast media, the preponderance of attention and financial resource is targeted on the institutional investor.

Indeed, in the wake of the Enron scandal and Sarbanes-Oxley, the resource imbalance in favor of the institutional investor has arguably become even more skewed. Not only are there fewer analysts and reporters covering fewer companies and industries than ever before, but the availability of free information regarding all public companies has dwindled to a trickle.

Even as the SEC talks about implementing significant changes to the way in which public disclosure is submitted and disseminated via the EDGAR portal, the advantage given to the large, professional investor has never been greater. Not only do the big institutional houses and hedge funds see new information released by public companies hours before small investors do, but as a result, they are able to mine any arbitrage opportunities from the broad range of public filings -- by exchange traded vehicles and other entities -- in a way that individuals cannot.

Simply stated, most individual investors never see much of the disclosure made to the SEC or see it hours after the institutional players have already stripped the meat from the bones of a given opportunity. Whereas institutional investors can afford real-time updates from an EDGAR vendor, most individual investors must rely upon retail, advertising-driven web sites and search portals, which of necessity refresh their EDGAR data at best on a daily basis and display only a small subset of the data provided to the SEC by literally hundreds of thousands of filers.

In August of 2006, IRA deployed the consumer version of our IRA SEC Catalog on our home page, partly as a selfless act of public service and partly as an experiment in traffic measurement and search engine optimization. We needed a testbed to assess the business case utility and general public use robustness of our institutional-grade implementations. The tool has allowed us to make some observations about the needs of small investors who seek information via the internet. After almost nine months in operation, here's what we found:

User Demand

There is extraordinary demand for information on US public companies as well as all other SEC filers. Despite the plenitude of web sites offering information about public companies, the IRA SEC Catalog now generates between 15,000 and 20,000 page views per day, both from individual search queries and search engine robots. Indeed, roughly 90% of the traffic on the IRA web site is now generated by the IRA SEC Catalog.

Demand from search engines such as Google and Yahoo is immense and reflects not only machine-driven search agendas, but more specifically the needs of their end-users. Today there are literally hundreds of thousands of pages from the IRA SEC Catalog, and the IRA Bank Monitor and IRA Corporate Monitor demo tools, archived on the top internet search engines. Just try typing IRA and a ticker symbol on Google web search. The fact that the major search engines are looking for this content is a reflection of what individual users are seeking.

Search Query Breadth

The type of search query initiated by visitors to the IRA web site is not limited to large cap corporate filers. In fact, most of the search queries received by the IRA SEC Catalog concentrate on small cap filings. In addition to the usual large cap names, last week's favorites included Aspen Technology (NASDAQ:AZPN), supplier of integrated software and services to the process industries; Eagle Bancorp (NASDAQ:EGBN), a bank holding company for Eagle Bank; and Platinum Research (NASDAQ: PLRO), "a development stage enterprise, which is devoting all of its present efforts in securing and establishing a new business." Unnoticed by the Sell side, there is a vast sea of individuals looking for data about companies that are relevant to their investment objectives, work and personal lives.

And a large proportion of the queries to the IRA SEC Catalog include non-exchange traded filers, mutual funds, private banks and broker dealers, and SPEs, entities which generally are not included in the EDGAR offerings of many retail investor web sites. This suggests to us that the broad information needs of the small investor/analyst are not being met by the mainstream offerings provided by retail investor portals.

Search Query Depth

One of the interesting patterns that we observe among visitors to the IRA web site is the tendency to request several pages about the same subject. Visitors to our web site seem to want detailed information and distilled metrics about a given research subject, not merely the initial information about a filer's regulatory submissions. This suggests to us that while there is great demand for data on the broad range of filers beyond exchange traded companies that submit documents to the SEC's EDGAR portal, there is also equal if not greater user demand to have this information transformed into a form that is relevant and quickly accessible.

We have recently enhanced the free consumer version of the IRA SEC Catalog by displaying a real-time survey of the top filings requested by users on a given day or week on a rotating basis. In the coming months, we shall be continuing to monitor the traffic patterns on our IRA SEC Catalog, especially as the SEC makes the slow transition to interactive data and real-time data dissemination on the EDGAR portal.

As and when the SEC completes the modernization of the EDGAR portal to accept and disseminate machine readable filings, and push them to all investors in real time, some of the current technical disadvantage facing individual investors will be removed. But truly leveling the playing field between the individual and institutional investor will require a far broader change in the way in which financial data is organized, transmitted and most importantly "distilled" for end users.

At the end of the day, this is why we founded IRA in August of 2003 -- to better distil financial statement data into usable metrics -- and why we thank the hundreds of thousands of users who visit our web site every month and who help us understand the need and craft better solutions.

Questions? Comments? [email protected]