Sell Side Research - Analysts' Call Returns vs Brokers' Polls & Rankings
Is it not strange that not more emphasis is placed on objectively measuring returns from tracking exactly analysts’ calls?
Granted that “whispers” and servicing buy side clients are significant aspects of an analyst’s function – hence the obsession over rankings in brokers polls e.g. II or AsiaMoney (on this side of the world).
But would not an objective ranking of analysts based on their written and published calls be a more important metric to look at?
Bloomberg has its ANR function which does the above half heartedly, and when rankings are published in the financial media some references are made to good calls etc; however i’ve yet to see theoretical portfolios built exactly on analysts’ calls and hypothetical returns updated and published regularly for investors’ consumption though. Or am i missing something here?
Thomson Reuters StarMine rates you relative to the other stocks that you cover and gives you a 'star rating' from 1 (crap) to 5 (excellent). It is calculated by building a model portfolio around you recommendations. To do well, your Buys have to outperform your coverage by >5%, Holds -5% to 5% and sells have to Underperform by >5% (it is assumed they are shorted).
FT and WSJ publish a ranking based on objective criteria - earnings estimates/stock picking. The reality is that the clients don't seem to care too much, people who are truly good at stock picking go to the buy side
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