The Investment Value of Contrarian Buy-Side Recommendations

49 Pages Posted: 14 Dec 2011 Last revised: 27 Oct 2013

See all articles by Steve Crawford

Steve Crawford

University of Houston

Wesley R. Gray

Alpha Architect

Bryan Johnson

Creighton University

Richard A. Price

University of Oklahoma

Date Written: 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 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.

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

JEL Classification: G10, G14

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: or

Steve Crawford

University of Houston ( email )

4800 Calhoun Road
Houston, TX 77204
United States

Wesley R. Gray (Contact Author)

Alpha Architect ( email )

19 East Eagle Road
Havertown, PA 19083
United States
7732304727 (Phone)

HOME PAGE: http://

Bryan Johnson

Creighton University ( email )

2500 California Plaza
Omaha, NE 68178
United States

Richard A. Price

University of Oklahoma ( email )

307 W Brooks
Norman, OK 73019
United States
405-325-5759 (Phone)

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