The Latin word “melius” directly translates into “better” in English. However, it is the Japanese translation into “kaizen,” which means “continuous improvement,” that best reflects our culture and core values.
By trade, the founders of Melius Research have collectively spent more than a half century analyzing and researching large-cap industrial companies. Many of today’s large-cap industrial companies have put “melius” into practice as they seek to improve their business models, overcoming challenges and capitalizing on new opportunities every day. This notion of “melius” is where we too find inspiration.
Our mission is simple: we commit to continuously improving our research and ourselves every single day. We are dedicated to delivering a better product by improving efficiency, lowering costs, and simplifying the current investment research process for our clients.
We aim for our research to be deep and mission-critical, allowing our clients to draw important conclusions in a timely and efficient manner. By definition, we are an independent research shop – but we see ourselves as much more. We see ourselves as an integral part – a true partner – in your research process.
While we were contemplating the formation of Melius, there were three academics who influenced our mission and inspired all of us:
The first is Cal Newport. His book, “Deep Work” reminded us that our best written work, best stock calls, and most original thinking stems from extended moments of calmness, reflection, and in most cases – isolation. Our best work is done without interruption and in a hyper-connected world this is increasingly hard to find. Those who are most successful and productive, in Newport’s opinion, are those who are able to re-install deep work blocks into their schedules. We are followers of the wisdom. Our business model allows us to spend more than twice the time on research than our past experiences have, and with greater intensity.
The second is author Greg McKeown, whose book “Essentialism” lays out the simple principle of focusing your work on what is essential. It directly applies to our work and how we look to help our clients improve their own processes. For example, if a typical institutional investor historically has needed eight working days to come to a buy/sell decision on a stock, can we as partners help them cut through the clutter, focus on what is essential, and accelerate their decision to 4 days? In essence, we aim to provide not just an essential research product but productivity itself.
The third author is Adam Grant, who wrote “Originals,” which has helped us understand how desperate our own industry is for disruption. The world of stock research has not meaningfully improved since the adoption of Excel as a modeling tool in the late 1980s. We find that analysts are increasingly rewarded for creating volatility on behalf of their trading desks, rather than making fundamentally and intellectually honest investment calls. Research departments ubiquitously track “noise factors” like number of emails sent, phone calls made, reports written, and days on the road. Adam Grant has inspired us to break tradition and find our own path.
We find commonalities in the growth of boutique investment firms with the advent of low cost airlines. Southwest Airlines in the 1970s offered a better solution at a disruptively lower price. New airplanes with a single size and purpose, happier pilots and crews, and city-to-city direct service in less crowded and more efficient airports. Southwest had a cost structure at least 50% below legacy peers and passed that on to customers while still earning an outsized return. We find inspiration in that model. We believe that our cost per stock under coverage is 30-50% lower than what it costs a traditional supplier and we can invest most of this savings into data/data analytics and better research tools while also passing on savings to the ultimate customer. And we anticipate 20-30% time savings from being singularly focused on research.
Lastly, our mission is meaningless if we cannot execute on its promises. We are confident in our ability to give you a truly differentiated experience and to deliver a product that helps you make better decisions that result in better investment outcomes.
We just ask that you give us a chance.
The Partners of Melius