Brooks McFeely is the founder and chief executive officer of MT Newswires, which started in 1999 to provide news about why stocks were moving in after-hours trading and has now expanded to covering news throughout the trading day.
A Naval Academy graduate and U.S. Navy veteran, McFeely served at Brunswick Naval Air Station and aboard the aircraft carrier Eisenhower in the Persian Gulf during operation Desert Thunder.
Following his military service, McFeely founded MT Newswires. He was also the founder of Pearl Investments, a black-box stat arbitrage fund in Portland, Maine. He was a co-founder and managing partner of the Washington, D.C.-based hedge fund Brochet Capital Partners, LP.
In addition to its subscription products, MT Newswires is distributed by Lexis/Nexus, Morningstar and Thomson Reuters, among others. Its news service is provided to consumers through brokers such as Charles Schwab and TD Ameritrade.
McFeely spoke Friday morning by telephone with Talking Biz News about MT Newswires. What follows is an edited transcript.
How did you get the idea for MT Newswires?
I graduated in 1995 and was always interested in financial services. I started a brokerage business, an independent stock broker. I tried financial planning and danced around different angles of starting and operating a small business in financial services.
But I knew that really wasn’t my thing, especially as the bubble was bursting. In late ’99 I realized my clients were calling me because they owned Cisco and instead of it going up 5 percent every day it was dropping 20 percent a day. I was sitting there one day reading Barron’s, ironically, about after-hour trading, and that ignited the idea. I did a little research and discovered there wasn’t really a source covering what was going on in after-hours trading.
So I started in late ’99 as a newsletter service, a subscription service. I had a website that I put together myself. It was functional but lacked any sort of design. That quickly led into CNBC calling in late 1999 and early 2000 and wanting to get on camera to talk about after-hours trading. I was the default expert on after-hours trading.
I grew the newsletter into a news service, exclusively covering pre and post market. We grew slowly and steadily from 2001 to 2005 and 2006, mostly through online subscriptions. And we had started to pick up some institutional accounts and distribution partnerships.
Why do you think the traditional business media weren’t covering after-trading hours news?
I think it was largely because it wasn’t going to move the needle for them. They have a business and financial news service, and the proliferation of direct market access platforms. What would be the reason? They wouldn’t be able to sell their service for any more money, and it was a small niche. And most reporters didn’t want to be hanging around 5 p.m. and 9 p.m. and at 4 a.m.
It really wasn’t that great of a business. It helped establish us. It takes years to establish connections to Lexis/Nexus and Thomson. Even though we didn’t have a service to provide us a real business, it gave us a name recognition and the time to build a distribution network and figure out what the business was, which was a full-day service competing with Dow Jones and MarketWatch. So we lived long enough and grew.
What has been the competition like with Dow Jones and its DJX product?
Clients called and said you need to produce a professional service. I had never considered competing with people like Dow Jones. It was certainly not a far cry from what were doing. So we added some features and avoided adding things like press releases that we didn’t think were good. And it was well received. JP Morgan was one of our first big displacements and we became the news service for JP Morgan’s private bank. And it just kept going from there.
Our biggest challenge is really just name recognition. We haven’t been out there as long as Dow Jones.
How big is your staff now, and what are the types of stories they’re covering regularly?
We have about 100 contributors globally. The primary advantage that we have and provide a service comparable to Dow Jones at half the price is that we’re a virtual news organization. We hire stringers and have built out our own system. We hire the best people no matter where they are — luxury goods out of Italy and commodities out of Canada. We have a very flexible platform, and we don’t have any legacy costs, so we can post those savings on to our clients. That’s the future of business journalism.
We pay them exceedingly well because we rarely lose them. My first hire from 17 years ago is now our managing editor. Many people have been with us for more than a decade. They don’t have to commute into big cities and deal with big company politics. We just keep getting better at what we do.
Does most of your editorial staff work out of their home?
Some folks have offices. Some folks have home offices. We have a lot of stay-at-home moms who used to work at Reuters or Bloomberg who needed to be able to drop off the kids at school or pick them up from the bus stop. Working with us, we allow them to do all of that and more. It’s just the nature of things.
Reporters can use computers and phones, and those things can move around with you. It’s just a common sense approach to journalism these days, and you get better people because you can find anybody — people who are willing to commute and people who are not. We are not limited by geography in our talent search.
Why do you want to expand into commodities coverage?
There is considerable interest in the market. We do a lot with precious metals and natural gas. So we want to expand into soft commodities and energy with our existing client base. So we’re in the process of building out what I would consider to be a very top shelf group of contributors who are well known in the industry, well-known commodity reporters and editors. So that is our next area of growth.
Who do you see as your biggest competitors beside Dow Jones?
I think there are other players in the space, but Dow Jones is the primary competitor in the type of coverage we intend to produce. Other competitors provide their service via a desktop. Because of the nature of the business of how that product is sold, we don’t provide a desktop, but we partner with those who do.
Why did you expand the business in 2006?
Our existing clients saw a need. Some distributors didn’t have many options in the way of full-day news coverage except for the Dow Jones service. There really wasn’t a whole lot of choices and people liked what we had done, and if we could carry over that style into daytime trading it would be a popular product. So we went into full-day coverage.
The bottom line is we’re quick and we can identify the needs and interests of the clients. And it’s a fair price where we can afford to compensate our journalists well.
How much content is there?
We produce about 1,000 stories a day. A couple hundred of those are SEC filings, which we get from a third party. We don’t take any press releases or third-party news. Our investor-level service has about 600 to 800 stories a day.
When did you launch an app? How many of your subscribers use it?
The app is really a demonstration platform for us at this point. We don’t intend to be a front-end solutions provider. We really license and sell a ticker tag and category coded news feed so our clients can build that into their applications and sites and so on.
Where do you see MT Newswires five years from now?
We’re starting to look overseas and looking to compete more in Europe and the U.K., and ultimately in Asia. We have pretty good European coverage now with our relationship with Alliance. Our platform is very flexible from every angle. It gives us an opportunity to compete anywhere at the best possible price. So it’s just a matter of time before we go to Asia. We’re talking to some partners about doing some things over there.
I think we still have quite a bit of decent growth to do over here too.
