Seeking Alpha has a large readership and growing influence in today’s online financial landscape. A look into who drives the content behind it and what’s important to know when looking out for your company:
INFLUENCE
Founded by analyst David Jackson in early 2004, Seeking Alpha is a comprehensive online tool for investment research. The site covers a broad range of stocks, including more than 3,000 small and midcap companies, and provides a wealth of information including access to in-depth opinion articles, summarized news coverage, and performance charts. The site was also a pioneer in providing online access to the conference call transcripts of various companies.
The articles themselves are a major component of Seeking Alpha that boosts its influence with investors. Importantly, articles frequently appear on Yahoo! Finance, a highly trafficked financial information portal for individual and professional investors alike. According to Seeking Alpha, their readership has the highest percentage of financial professionals of any major finance website. Furthermore, in the past 30 days alone, 52% of Seeking Alpha readers bought stocks, double that of the TheStreet.com readership, which is the closest second at 26%. As it self- proclaims, “Seeking Alpha articles frequently move stocks, due to a large and influential readership which includes money managers, business leaders, journalists and bloggers.”
CONTRIBUTORS
Articles are written by individual authors and submitted to the Seeking Alpha Editorial Team for review before publication. The site has featured over some 9,000 different contributors since its inception.
While articles can be written by anyone, from the first-time individual investor to the most experienced analyst, Seeking Alpha maintains a high standard of quality in the pieces it publishes. The Editorial Team reportedly receives hundreds of submissions a day, of which only a fraction are chosen for publication.
EDITORIAL GUIDELINES
Seeking Alpha editors look to publish articles that are high-quality and considered to be “convincing, well-presented and actionable.”
Editors also look for fundamental analysis evaluating core aspects of a company’s outlook, not simply a technical reiteration of facts. Original topics with fresh perspectives, as well as those featuring compelling titles (that are not overly “bombastic” and outside the scope of the article itself), are also favorably considered. While still eligible for publication, articles pertaining to a stock trading at less than one dollar or one that falls below $100 million in market cap will be subject to greater scrutiny by the editors.
In addition to this initial vetting by the Editorial Team, Seeking Alpha also requires its contributors to comply with its disclosure standards, meaning they must clearly disclose any material relationship with the companies featured in the article or “parties that stand to gain in any way from the viewpoint they are outlining.” Disclosure information can be found in the disclosure heading beneath the title of each Seeking Alpha piece, along with the author’s assurance that they are not receiving any compensation for the article, except from Seeking Alpha itself.
COMPENSATION MODEL
Writers are rewarded based on popularity and paid according to the amount of page views their articles receive. Seeking Alpha pays its authors 10 dollars for every 1,000 times an article is viewed, which amounts to one cent awarded for each page view.
While seemingly a small amount, for popular authors, this could be a reasonably lucrative channel of generating funds. For example, articles from the top 25 most popular contributors have seen anywhere between 100,000-767,636 page views in the past six months, resulting in thousands of dollars in earnings. Though authors can be motivated by a wide variety of reasons, it is worth bearing in mind this economic factor as it might affect article content; particularly as a possible underlying motivation for articles that strike a more sensationalistic tone.
In addition to the financial incentive, Seeking Alpha contributors can be driven by the name they build for themselves within the industry by being featured on the site. One contributor for the site, Cliff Watchal, a broker and director of his own website, stated that, “Seeking Alpha helps draw attention to quality writers and allows them to literally leap into prominence in a matter of weeks.” So, as much as monetary compensation is a key factor, both Seeking Alpha and its contributors do depend on the site’s integrity in high quality publishing for the building of their reputation as well.
THE BOTTOM LINE: If a Seeking Alpha Article Features Your Company
Recommended action for CEOs based on articles that are:
Positive:
If a particular article reflects the company in a favorable light, is composed with a high degree of quality, and any forward looking statements it contains are in keeping with the company’s current public disclosure, it is acceptable and at times advisable for a company to promote the article and make it more widely available to investors by means of email or positing a link on the ‘News’ section of the company’s website.
Negative:
If an article is salacious purely for the sake of sensationalism (or perhaps compensation based on page views), it is best not to engage with author directly on the site. It’s not worth getting embroiled in a defensive debate on the comments section of the website.
Incorrect:
If there is a piece of information in the article that is simply inaccurate or misleading, it could be worth contacting the Editorial Team of Seeking Alpha to direct them to the article in question for correction or possible removal. This is possible by navigating to the bottom of the article page to the ‘Problem with this article?’ module and clicking on the ‘Please tell us’ link.
Overall, with all the exposure that Seeking Alpha pieces can garner, it is important at the very least to monitor articles that are published to keep abreast of what commentary is being written and disseminated about your company. This can be achieved by visiting Seeking Alpha’s portfolio alert page. From there, the company’s ticker can be entered into the portfolio, the “Get Alerts” button pressed, and “Breaking News” or “Analysis in Real Time” can be checked as appropriate.
John Nesbett, President, IMS