Do Buy-Side Recommendations Have Investment Value?
Wesley R. Gray
Drexel University - LeBow College of Business; Empiritrage, LLC
Richard A. Price III
Utah State University - Huntsman School of Business
September 17, 2012
We examine a unique dataset consisting of personal details and investment recommendations for over 1,100 buy-side analysts (predominantly analysts from hedge funds). Short recommendations from these analysts generate an immediate and significant decline in price. Long recommendations have positive short-term returns and exhibit a positive drift. Our collective evidence suggests buy-side recommendations have investment value. We also document that broad institutional ownership decreases significantly for buy-side recommendations, but increases for the buy-side analysts’ employers, suggesting there is a wealth transfer between the broader institutional market and buy-side firms in our sample.
Number of Pages in PDF File: 66
Keywords: Hedge funds, buy-side analysts, sell-side analysts, stock recommendations
JEL Classification: G10, G14working papers series
Date posted: December 14, 2011 ; Last revised: September 18, 2012
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo1 in 0.672 seconds