Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on May 18, 2018 2:56:26 GMT -8
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Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on May 18, 2018 4:50:46 GMT -8
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Since84
Moderator
To infinity and beyond!
Posts: 3,933
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Post by Since84 on May 18, 2018 4:58:44 GMT -8
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Post by incorrigible on May 18, 2018 5:41:00 GMT -8
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Post by sponge on May 18, 2018 8:40:55 GMT -8
Interesting volume in the June 150 calls.
Someone just sold $77 million worth of contracts.
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bud777
fire starter
Posts: 1,352
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Post by bud777 on May 18, 2018 13:33:38 GMT -8
There was a recent reference in PED's article to accountability for analysts who downgrade a stock unfairly. Considering this led me to a very interesting paper called "Inside the Black Box of Sell Side financial Analysts" You can find it here: www.shareholderforum.com/access/Library/20130300_Brown-Call-Clement-Sharp.pdfIt is a well researched paper based on a survey of 365 sell-side analysts. A sell-side analyst is one who is making earnings forecasts and stock recommendations to investors and institutions who might buy the stock. A Buy-side analyst works for funds and brokerages suggesting which stocks to buy. I was not aware of the difference until this article. It is not often clear whether an analyst is buy-side or sell-side, but they are really quite different in their motivations. I wish the press would always tell us that information. I believe that most of the analysts we read here are sell-side, so let me focus on them. The primary value of a sell side analyst is his access to management information. This is initially surprising since one might expect that it is the brilliance of their analysis, but upon reflection, if everyone has the same information, analysis alone would not distinguish anyone. On the contrary, having access to management is the most important component of the analyst's value. This creates an interesting dynamic between the company and the analyst. A consistently negative analyst is unlikely to receive favored access. This leads the analyst to low ball earnings expectations to make it easier for the company to surprise to the upside. At the same time, a SELL or HOLD stock recommendation may also lead to less access. I think we see this bias often when we see a drop in the forecasted earning with a BUY rating. The most important factor in an analysts compensation are broker votes. The buy side analysts vote on which sell side analysts produce the best information. This in turn depends on who has the best access to the company. PLease read the paper and see if I summarized it correctly. I think it provides a much richer view from which to interpret the daily FUD.
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