The Best of the Best


Last week the Wall Street Journal came out with a list of its “Best on the Street” research.  The list uses the Journal’s 17th Annual Analysts survey and identifies the top five analysts in each of 44 industries.  The top five is based on the performance of buy-sell recommendations.

While S&P garnered the most mentions in the list there were 47 total firms represented in the winners.  Analysts from Greenwich Consultants, Soleil, Sidoti, Stanford Financial (now defunct), Argus, Longbow, Garp, Green Street Advisors and many others were also listed.  Regional Investment Banks were also relatively well represented.  The notable thing to take from this list is the diversity of names on it as well as the high representation of independent research providers.  In fact, surveys such as this have repeatedly shown that the performance of sell-side institution’s recommendations leaves something to be desired.

S&P garnered the most winning analysts with 23 different mentions.  106 different S&P analysts were eligible for an award.  S&P’s global director of equity research, Stephen Biggar, attributes this success to the fact that as S&P sees it, “saving someone 50% on the downside counts as much as getting 50% on a buy recommendation.”

Indeed FactSet Research, which helped to compile data for the survey, mentioned that on average 29% of the winners’ active ratings were sells at the start of 2008, whereas among those analysts not in the top five, the percentage of active sell ratings was only 8.9%.   The number of sell recommendations of those who ranked highest in the survey climbed to 40% at one point during the year, while those outside the top 5 saw an increase as well, but only to 13%.

FactSet Research Systems Inc., a Norwalk based company that tracks analyst recommendations, helped the Journal to compile the survey data by surveying more than 7,000 analysts at over 470 firms.  From this number, 1,925 analysts at 163 different firms were chosen as qualified for inclusion in the rankings.  Those that were not eligible generally did not cover at least five stocks in an industry group during the year.  This year also marks the first time that analysts based outside the U.S. were included in the survey.  The Journal is planning to put out more details about the winning analysts in a report on May 26th of this year.


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