References (28)



The Investment Value of Contrarian Buy-Side Recommendations

Steve Crawford

University of Houston

Wesley R. Gray

Alpha Architect; Drexel University - LeBow College of Business

Bryan Johnson

Creighton University

Richard A. Price III

Utah State University - Huntsman School of Business

September 17, 2012

We examine a comprehensive set of investment recommendations paired with analyst-specific information from over 1,000 buy-side analysts (predominantly analysts from hedge funds) from the private website SumZero.com. Recommendations from these analysts generate significant returns when the reports are posted to the website. Returns are the most dramatic for contrarian recommendations (i.e., those issued contrary to the sell-side consensus), particularly for buy recommendations. Furthermore, the returns to both buy and sell recommendations drift in the direction of the recommendation. We also explore institutional ownership changes and document a wealth transfer between the broader institutional market and buy-side firms in the sample. Collectively, the evidence suggests buy-side recommendations have investment value. The results also document the importance of new technologies in disseminating information to market participants.

Number of Pages in PDF File: 49

Keywords: Hedge funds, buy-side analysts, sell-side analysts, stock recommendations

JEL Classification: G10, G14

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Date posted: December 14, 2011 ; Last revised: October 27, 2013

Suggested Citation

Crawford, Steve and Gray, Wesley R. and Johnson, Bryan and Price, Richard A., The Investment Value of Contrarian Buy-Side Recommendations (September 17, 2012). Available at SSRN: http://ssrn.com/abstract=1971533 or http://dx.doi.org/10.2139/ssrn.1971533

Contact Information

Steve Crawford
University of Houston ( email )
Houston, TX 77204
United States
Wesley R. Gray (Contact Author)
Alpha Architect ( email )
213 Foxcroft Road
Broomall, PA 19008
United States
7732304727 (Phone)
HOME PAGE: http://www.alphaarchitect.com
Drexel University - LeBow College of Business ( email )
3141 Chestnut St
Philadelphia, PA 19104
United States
Bryan Johnson
Creighton University ( email )
2500 California Plaza
Omaha, NE 68178
United States
Richard A. Price III
Utah State University - Huntsman School of Business ( email )
3500 Old Main Hill
Logan, UT 84322-3500
United States
435-797-8352 (Phone)
435-797-1475 (Fax)
HOME PAGE: http://richardp.bus.usu.edu
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