Guessing Games on the SellSide
Thursday, March 27, 2008 - 1:43 pm
Brokerage stocks have never provided much in the way of earnings predictability, but that does not stop the SellSide from taking their shots:
Why does anyone still pay attention to analysts covering Wall Street banks? In a time when Bear Stearns is worth $30 a share one week, $2 the next, and then $10 the next, is it any wonder that Wall Street research on Wall Street firms is meaningless?
Yet still, investors eat up their research reports, selling on downgrades, buying on rare positive comments, and holding unless otherwise instructed. Portfolio
Hazing the SellSide is a time honored tradition at many asset management shops. It is not hard to understand why:
....perhaps Whitney's most important disclosure evidently got very little notice: "We have very little earnings visibility and very little confidence in our estimates." She goes on to say that she doesn't believe she's alone in this predicament.....She may have little confidence in her estimates, but that doesn't stop her from changing her mind about them. A lot. It was just a month ago that Whitney made headlines when she slashed her first-quarter estimate for Citigroup from a profit of 68 cents per share to a loss of 28 cents. Now the estimate stands at a per-share loss of $1.15.
And while the SellSide offers unique insights that are absorbed into the investment mosaic, the latest grandstanding by a few analysts seems to be ego driven from where I sit.
Dick Bove and Whitney have made made their mark over the past few months, but they might want to enjoy their 15 minutes of fame, and grab those commission dollars. When it comes to financial stocks, I would rather talk to Sandler O’Neill or Keefe Bruyette any day.
Of course, the ego inflation is not limited to the SellSide, and some of the financial bloggers are taking themselves way too seriously.
Worthless Wall Street Research
Portfolio
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