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Finance: What is a Sell Side Analyst? 1 Views


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What is a sell side analyst? Hit play to find out.

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00:00

finance a la shmoop what is a sell side analysts all right well they're the

00:08

brains of a stock brokerage more or less brokers essentially rent those brains to [Brain in a jar]

00:14

by side investors like hedge and mutual funds and wealthy family office

00:18

investors hoping that the genius insights of that sell side analysts will

00:23

entice the buy ciders to invest through the brokerage generating kindly loving [Bysider people standing by brain in a jar]

00:30

Commission's for the brokers got it in practice much investment banking and

00:34

corporate finance work is also generated via the reports created by that vaunted [Investment banking report document appears]

00:39

sell-side analysts and you can imagine if you're the CEO of itty bitty city

00:44

Corp comm and you read a glowing report from a sell side analysts who views your

00:50

stock today as a bargain at 12 bucks a share and puts in writing that they

00:54

think it'll be over a hundred bucks a share in three years if you were in fact

00:59

to do an offering like a selling stock or debt in your company well you'd

01:04

probably hire the firm who loved you above all other banks [Love hearts appear from bank building]

01:07

pushing you to hire them right that is you'd hire the bank who had a strong buy

01:12

on your stock long before you'd hire the one telling Wall Street to short you

01:16

well sell side analysts in theory are the investing whisperer of Wall Street [Young girl whispers in girls ear]

01:20

they don't actually pull the trigger and actually invest and live or die by their

01:25

own investment decisions instead they simply point out observations they've

01:30

made with dotted line recommendations to their constituency meaning the people

01:34

who read their reports as to what stocks to buy sell or hold well until

01:39

Regulation FD or full disclosure came along which required broad and full

01:43

disclosure of company information to their entire investing community all at

01:47

once sell side analysts were actively courted by the buy side so that the buy [Phone rings]

01:52

cider would be the first phone call from that sell side analysts when they were

01:56

gonna upgrade or downgrade a given security and then that buy cider could [Hedge fund manager answers phone]

02:00

buy it ahead of the rest of the world and make a quick buck or a few points

02:05

you know here and there the role was largely lambasted by regulators when it

02:09

came to light that some 95% of all investing recommendations

02:13

were a buy or strong buy with the sell-side analysts being urged [Cash placed on table by brain in a jar]

02:17

aggressively by the investment bankers who paid her to write glowing loving

02:22

things about the companies she covered well the result was more or less the end

02:26

of the sell-side analysts as a trusted respected role on Wall Street today

02:31

those once lucrative many million dollar-a-year jobs now receive anemic [Cash appears]

02:36

pay with anemic influence in a world where the buy-side simply stopped

02:40

trusting and/or listening to the recommendations of its brokers and [Girl cries and man walks away]

02:44

viewed the structure of the relationship as purely a utilitarian functionary one

02:49

where the job of the broker was to get the buyer the block of stock at the [Man with sack of stocks]

02:52

cheapest price possible that's it no frills so ya sell side analysts aren't

02:57

what they used to be which you know if you were on the itty-bitty City

03:01

Committee [Man throws cash into trash can]

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