Rochdale Securities analyst Richard Bove avoids the frenzied streets of NY and rarely speaks to the chief Executives at the Banks he covers, yet holds significant influence on Wall Street.
While bulge-bracket firms have a global institutional sales force to distribute their analysts’ research, analysts at smaller firms must be more creative to get noticed. Bove uses the media to reach the masses. His strategy seems to work. Case in point, commentary on Wells Fargo earlier last week. Although the bank far surpassed analyst’s forecast, Bove was not impressed by third- quarter earnings . His decision to downgrade the stock from a neutral to a sell earlier last week was enough to trigger a major decline in the entire stock market. His downgrade sent Wells Fargo and broader market indexes lower.
Bove is among a handful of influential analysts gaining “rock-star” status. Once employees for the bulge bracket firms, analyst who are now solo are using their own devices such as media to get their research out there. Meredith Whitney, a former analyst at Oppenheimer who covers financial stocks, is a prominent media-friendly analyst. She frequently appears on CNBC, Fox Business and Bloomber news. Another example is former Credit Suisse analyst, Ivy Zelman. Zelman is considered by many the housing industry guru. She has received eight number one rankings by Institutional Investor’s All-American Research Tea and six first place finishes in Greenwich Associates’ Institutional Research Services Poll.
“There’s a small, select group of people who come to the media again and again,” said Philipp Schnabl, assistant professor of finance at New York University’s Stern School of Business. “Maybe they made a few right calls in the past, so people put more weight on their analysis.”
Perhaps they have too much influence. Bove told the Dow Jones Newswire later that week that he will no longer provide immediate earnings commentary on air. “I’m not going to do it anymore. I’m going to have to see the numbers before I go on air,” Bove told Dow Jones Newswires Thursday. “It creates an untenable situation.”