Influence and predictive value of Seeking Alpha articles

Abstract

Recommendations issued by Seeking Alpha authors can affect trading activity substantially, which makes them an interesting source of information for retail and professional investors. A recommendation's chances to become influential in this sense are larger for more accessible articles and depend on characteristics which are observable without reading the text. This result is consistent with the existence of processing costs, as Seeking Alpha community members might be unwilling to spend much effort reading articles and instead use superficial criteria to pick recommendations. Article features that are consistent with a detailed, in-depth analysis provide more valuable mid-to long-term investment advice. However, the immediate reaction of readers to such articles is less pronounced. We provide evidence for potentially profitable investment strategies based on those article features.

Keywords: JEL classification: G14, G17, G41 Analysts, Seeking Alpha, Social Media, Investment Research

JEL Classification: G14, G17, G41