CARSON HELPS CORPORATIONS READ INSTITUTIONS’ PULSE: SHAREHOLDER SLEUTHS FLYING HIGH BY KEEPING EAR TO THE GROUND

When Ford Motor Co. wanted to know how its plan to spin off Associates First Capital Corp. would play with its major shareholders, it turned to the Carson Group.

Carson, a boutique equity surveillance firm whose main business is helping corporate America keep tabs on its institutional shareholders, was able to tell Ford who would probably like its plan to sell the consumer financing division, who wouldn’t and who might be on the fence. When the time came to do the deal, Ford knew what to expect – and how to market the deal to its constituents.

“It’s not just who’s buying and selling, it’s the whys we need to know,” says Mel Stephens, director of corporate communications for Ford.

Ford is apparently not alone. Founded by a handful of analysts from the Carter Organization – one of several now-defunct proxy solicitation firms that used equity surveillance as an early-warning signal in the hostile takeover battles of the 1980s – Carson has grown nearly as quickly as the market it tracks.

Fueled by the huge inflow of capital into mutual funds, the related explosion in shareholder activism and the 1990s trend of basing executive compensation on stock market performance, Carson has in nine years built a Fortune 500-heavy client list that will ante up 1999 revenues of more than $44 million.

“Fear sells and greed sells. We sell both,” says Carson president Scott Ganeles.

Carson also sells spin. Although monitoring stock trades remains its bread and butter, the firm specializes in going beyond the data.

wants a piece of it all

“Our idea is to use this information to be proactive,” says Mr. Ganeles. “If you can get accurate market information in a timely way, the business applications are endless.”

Carson wants a piece of it all. It helps clients develop investor relations plans, vet strategies – for example, helping AT&T sell shareholders on its split-up – and even, it claims, predict institutional behavior, as in the Ford case.

All of these products start with Carson’s profiles of more than 20,000 portfolios and funds, dossiers that contain everything from investment histories to where a money manager went to high school.

It isn’t just the companies that want to feel close to fund managers. Global Equities Online, the electronic version of Carson’s database, is increasingly popular with investment banks, which use it to identify likely buyers for initial public offerings and other offerings. “We use it every day,” says Suzanne Skipper, vice president of equity capital securities at Bank of America Securities. “We used to have to go to several sources, and the information wasn’t always current.”

scoffs at a rival

Carson’s main competitor is Thomson Financial Services, which has historically done more basic data collection but recently introduced some of the more sophisticated products for which Carson is best-known. Mr. Ganeles apparently is unfazed. “It’s easier for Armani to make underwear than for Kmart to make suits,” he says.

Now, Carson wants to sell to a new audience. It is negotiating with several online brokerages and mutual fund distributors to provide a version of its product to retail investors. “It could be our biggest market,” says Mr. Ganeles.

The biggest challenge facing Carson is how to pay for its very ambitious expansion plans, which include a revenues target of $90 million by 2002 and a possible IPO.

In need of a major capital infusion, Carson earlier this year hired an investment bank to shop a minority stake. So far, there’s been lots of interest, but no deal, according to Mr. Ganeles.

Crain News Service