research analysts

  • 26 Oct 2012 at 1:49 PM

Citi Analyst’s Ability To Follow Law Was Consistently Strong, At Times Exemplary, At Other Times Not So Much

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Citi today fired Mark Mahaney, its internet analyst, and was fined by Massachusetts securities regulators, for sending dumb emails to reporters. The Massachusetts consent order is here. Mahaney’s main misconduct1 is that on April 30 of this year a French reporter asked him about Google’s YouTube business:

  • Do you think that YouTube has been above your Total Net Revenue estimate 2011 ($876M)
  • Do you think that YouTube will be above your Total Net Revenue estimate 2012 ($1119m)
  • Do you think that they are largely profitable?

And Mahaney replied “Yes Yes Yes.” This was problematic because:

The information that [Mahaney] gave to the French Reporter had not been previously published. [He] had published a research report on Google, Inc. on March 21, 2012 and did not publish another research report until his interview with “All Things Digital” on June 21, 2012.

Two thought experiments. First, Mark Mahaney’s job was to drum up institutional business by producing actionable estimates and opinions about the stocks he covered. One way to do this is to publish research reports. Google, it is fair to say, is an important stock that he covered. He did not publish any research reports on Google for three months this year. What do you think he was doing during that time? Your choices are: Read more »

  • 22 Aug 2011 at 2:38 PM

Hottest Sell-Side Analysts Distinguish Themselves By Covering Companies That Don’t Trade Yet

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I actually own these cufflinks

It’s not difficult to find cases of sell-side analysts recommending a stock at its peak, and then keeping the buy on all the way down to its bottom – at which point it becomes a sell. Josh Brown points out an egregious example and asks:

I have no idea how much brokerage firms pay analysts to cover stocks or whether or not the costs are really offset by revenues from institutional trading. I’m assuming that whatever they pay them, it is money well spent and they make more than enough in reciprocal brokerage profits – because how else to explain it otherwise?

Conveniently the Times this weekend answers both questions. Re: how much they’re paid, the answer is “more than a potted plant, anyway,” although the compensation packages do suggest that if they were really so good at picking stocks they’d do so on the buy side: Read more »