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#31
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In general, very few of the sell side research analysts I met came with a strong background in industry. Which is why I personally tend not to care what they say, also since they're sell side obviously they're going to have alot of client biases built in to their analyses (even with strict Chinese Wall, I mean they're pumping their sales people with info all the time and looking to move stock, pretty sure commissions generated are factored into their bonus pool). [/ QUOTE ] Interesting - I'm probably getting an offer from a Wall Street firm in the next couple of weeks to do equity research. While I have no finance experience (MBA and a bit more education, yes, but nothing practical), it's my extensive industry background that has them interested for exactly the reason you hit upon. Unlike a 25 year old finance whiz straight out of Wharton, I might have to dig around a bit to figure out the impact of some convertible subordinated low-fat triple-whip debentures. However, I know the industry, understand the trends as more than pretty curves on a chart and can separate what's real and what's BS at a company. That's something that should be able to add a lot of value to the research and a pure finance guru may not bring to the party. |
#32
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Al, "the random VCs that luckboxed" I have a series of potential blog posts queued up discussing VCs with track records that show virtually no successes beyond luckboxing while following a total herd mentality (while not making any contrarian bets that succeeded, not having companies that are successful over the long term, not having companies they stand behind for a long time until they finally make it, not helping companies shift their business models to ones that work, etc.) Whether or not I find an appropriate venue to post them publicly is a whole different issue. [/ QUOTE ] ElD, I really hope you put the post together. I've had similar conversations with my friends regarding hedge fund managers and would love to hear your take on it. Also, I'm sure, judging by the interest in this current thread, that others would be interested in your view as well. |
#33
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Meeker, Blodget, Grubman et al took alot of heat for their ridiculously bullish forecasting 1996-2000, but I don't think anyone ever questioned their basic valuation skill set. [/ QUOTE ] That's because nobody knew anything about their basic valuation skill sets. [ QUOTE ] They were moving markets with a really transparent agenda. [/ QUOTE ] And this is why. |
#34
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I think what it boils down to is this. None of these so-called experts or analysts really know what they are talking about. ... However, I think it is much easier than that. Maybe I have an unnatural talent, but to me, it is extremely easy to see what stocks are going to outperform the market..., I prefer to invest in a group of high-performing individual stocks that can blow the market away by anywhere from 25-100% per year. Current examples are: NTDOY, GME, GKE, VMW. [/ QUOTE ] Nice level... If you could actually beat the market by 'only' 3% per year, within 5 years you could easily have a $4bn hedge fund, making $60mm in fees and, say, [12+3 =15% *0.2 =3.0%] $120mm in carried interest. Even a $1bn HF [easy with that growth rate and consistent performance] would pay you ~ $50mm per year. |
#35
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[ QUOTE ] The Richard Perry's and Steve Mandel's of the world left the sell-side a long, long time ago. HFs hire top analysts directly, a 'learning period' at a WallSt bank is no longer required at all - a big change from 20 years ago. [/ QUOTE ] From the point of view of one of those direct-to-HF analysts, I don't think it's as black and white as you make it sound. Do you really think the HFs are getting all the talent? [/ QUOTE ] No, read what I actually wrote. |
#36
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Analyst - fitting 2p2 handle, I just hope you're covering Leisure and can somehow use your position to increase the Idol gambling market! I only did OK this year could use some more fish...
IIRC, post-2002 sell-side research houses were (understandably) getting hammered for issuing biased research, and alot of groups went out of their way to reestablish some cred and tap industry people such as yourself. Lack of actual industry expertise necessary in this function is the main reason I didn't want to work sell-side equity research: I had only banking experience to that point and wanted to move from finance more to industry (spec. operations, business and strat planning). Like, I wanted to know what it was like to run a business, execute a business model, the true metrics of performance, etc. This idea actually segues nicely to Diablo's post about "luckboxing VCs". When I worked in VC, we co-invested with alot of the top tier groups in the Valley so were privy to their portfolios. I guess I could add fuel to the fire by naming specific investors but choose not to - but I can say generally speaking that what Diablo's saying is spot on. The main issues, imo, were the ease of raising venture funds, the sick valuations, and most importantly, the lack of expert principal investors with operating experience in industry to evaluate startups correctly. Who would you trust to invest your venture money: some HBS ex-McKinsey or ex-Goldman guy... or senior management at Cisco / Oracle / IBM / with 10 years+ operating and industry experience? Venture, more than any other asset class, is about understanding industry trends and what product or service can win... To be fair, alot of very smart people with deep domain knowledge dropped the ball also, getting caught up in the valuation race, but the glut of non-expert principal investors in the Valley is what I think led to alot of bad-decision making in the form of pumped up valuations, ridiculous follow-ons (hi Kozmo, Napster) etc. -Al |
#37
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Just saw this article that puts an almost malicious slant on analyst reports.
http://www.bloomberg.com/apps/news?p...amp;refer=home Cliff's notes: A bunch of hedge funds are being sued for paying off an "independent" research company to write poor reports on a particular company. Not sure who is in the right here, the whole thing sounds really sketchy. Anyone have more info on these shenanigans? |
#38
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1) I think you need an 'allegedly' in that sentence. That whole Prem Watsa saga almost defies belief. However, suing analysts and investors who disagree with you virtually always backfires, see overstock [SEC investigating] and biovail for details [claimed they missed #s due to a truck accident in Detroit - they are a pharma firm, no joke.]
2) First Amendment I think still applies. I am free to say 'XYZ firm uses highly aggressive acc'tg, and is worth at most $10, not $80' like Rocker Partners did for Enron, LDO. Writing a report doesn't cause a stock to go down. Fraud, SEC investigations, poor earnings, and mainly, people selling it do. If Odyssey Re owes the IRS another couple hundred million $, then FFH is worth less than it currently trades at. JMHO. |
#39
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OK, we have some finance folks here. And a number of investors. I have a lot of thoughts on the research side of the investment banking industry. But this news today really says it best. http://www.alleyinsider.com/2007/08/...eekers-yo.html Mary Meeker, MD and head of tech research at Morgan Stanley issues a report on YouTube advertising. Other analysts made projections in the tens to hundreds of millions of revenue impact. Mary's number? An incredible $4.8 BILLION - nowhere near what anyone else projected. The article above shows that her team made an incredibly basic error and was 1000x off on their numbers. This team is supposed to be among the leading experts in analyzing financial information and is 1000x off due to a math error - that part is sloppy, but hey, stupid mistakes happen. But the fact that not a single person on the team has the intuition to say "Hey guys, this just FEELS wrong" is really mind-boggling. [/ QUOTE ] El D. I feel like at this point in your life you'd know that everyone's an idiot. Period. You are an idiot. I am an idiot. Your forum is full of idiot. Just bang hot girls, and you're good to go! |
#40
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Just saw this article that puts an almost malicious slant on analyst reports. http://www.bloomberg.com/apps/news?p...amp;refer=home Cliff's notes: A bunch of hedge funds are being sued for paying off an "independent" research company to write poor reports on a particular company. Not sure who is in the right here, the whole thing sounds really sketchy. Anyone have more info on these shenanigans? [/ QUOTE ] Only seems fair, since people have been paying "independent" research companies to write positive reports for years. |
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