Wall Street Journal's Best on the Street

kmlmass's picture
Rank: Senior Chimp | 23

There are so many ways to rank sell side analysts. Some, like the WSJ, stick purely to quantitative results of stock picks. Others, like starmine, consider EPS forecasting accuracy. Institutional Investor collects votes from the buy-side. Its easy to see how any of these methods can have flaws. What do you think is the most accurate (valid?) method of ranking sell side analysts?

Comments (5)

May 19, 2008

Namely with EPS forecasts and results of stock picks. I'm not sure if WSJ does this, but don't some ratings take into account trailing accuracy (ten and twenty year)? That is the kicker for me.

May 19, 2008

Can someone explain how S&P gets ranked with the banks. I thought they rated credit and were not really doing the same type of research the ER guys at banks do.

May 20, 2008

buy-side votes is the best way. Clients value a range of things from sell-side analysts apart from stock picking. That's the job of salesman, traders and PM's.

May 20, 2008

there really isn't one definitive accurate way to gauge sell-side analysts, as different buy-side firms look at different things in terms of what they actually need from the sell-side as ratul mentioned. usually, EPS estimation is not very useful as the buy-side clients keep their own models anyway. in my view, the thing that most people in the business look at is the greenwich poll, which measures how much revenue is generated by the research firms of the different banks through commissions. within each bank, however, votes from the larger buy-side firms are also tallied, which determine how much of commission allocation is paid out to each brokerage firm that the particularly buy-side shop does business with. that said, different metrics definitely tell you different things, and people in sell-side research generally have to accept, either willingly or by their own resignation, that the cash distribution model is rather opaque and will probably remain that way.

May 22, 2008
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