ShmoopTube

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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made with dotted line recommendations to their constituency meaning the people

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

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

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disclosure of company information to their entire investing community all at

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

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

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

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

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

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came to light that some 95% of all investing recommendations

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

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

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

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

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

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

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

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

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

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

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

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Committee [Man throws cash into trash can]

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