NEW YORK, April 1 Investment firm The Hidary
Group has acquired an independent research firm that JPMorgan
Chase & Co (JPM.N) inherited as part of the Bear Stearns Cos
takeover last year, the bank said on Wednesday.
Named Primary Insight, the 15-person company will be led by
its co-founders, David DeRose and Leighton Thomas, who decided
to partner with Hidary to acquire the firm after cutbacks at
JPMorgan meant they could not hire more staff or make
improvements to the unit's technology as they wanted.
A spokesman for the bank declined comment on the buyout and
research cuts, which DeRose put at 30 percent of JPMorgan's
"If you stay under a research division that's being cut 30
percent, we can't get any headcount," said DeRose. "When we
went to JPMorgan and asked to spin this out, that deal made
sense to them because we're going to immediately grow our
The Hidary Group financed the buyout and will have a
majority stake in the company, while JPMorgan will have a
minority stake. The terms of the deal, including the size of
the parties' respective stakes, were not disclosed.
Primary Insight is an alternative research group that sets
up conversations between institutional investors and experts
across industry sectors in return for a subscription charge
from the investors.
DeRose and Thomas declined to comment on Primary Insight's
revenue or the details of JPMorgan's investment.
Jack Hidary, one of two brothers who runs the investment
firm, also declined to give details of his company's stake in
The Hidary Group previously joined DeRose and Thomas in
2001 to found a similar firm called Vista Research, which was
sold to McGraw-Hill Cos Inc MHP.N in 2005.
DeRose and Thomas said they plan to improve the company's
technology and hire seven to eight people this year, which they
would not have been able to do within JPMorgan.
"Our intention with this business is to really pour a
significant amount of money into technology investment that's
... going to allow these guys to service clients better," said
Hidary. "I expect these guys to really take off now."
Banks across Wall Street have been cutting spending on
traditional research since the Securities and Exchange
Commission, worried about conflicts of interest, in 2002 banned
firms from using banking fees to pay analysts.
There are now a handful of companies offering alternative
research and the sector is worth about $450 million to $500
million, DeRose said.
Gerson Lehrman Group is the largest such company, according
to DeRose and Thomas.
Gerson Lehrman was launched in 1998 and has a network of
about 200,000 experts. The New York-based company posted
revenues of $284 million in 2008 and has about 700 staff
globally, a company spokesman said.
(Reporting by Elinor Comlay; Editing by Andre Grenon)