re: Levy Leaving Lehmananybody have any thoughts on the future of sell-side research? I know one investment bank that has gone from 12 analysts to 1 in its communications group. Lehman is obviously cutting back. Where does it end?
re: Levy Leaving Lehman I would like to think sell side analysts will be completely gone in 10 years or less.
I have met VERY few good ones. Most are kids or blithering fools. If your good at being an analyst, you end up on the buy side.
Let me put it this way, would you rather take advice on what is important from Drew Lanza or Rich Church? (Apologies to Drew for putting him in the same sentence with Rich Church).
re: Levy Leaving LehmanSteve Kamman has it so right, Levy is really a class act and a fine guy. Any question of his ethics, or integrity is out of mind. Lehman research, with exception of Levy has been considered lightweight, and it just got a ton lighter.
re: Levy Leaving LehmanSteve Kamman has it so right, Levy is really a class act and a fine guy. Any question of his ethics, or integrity is out of mind. Lehman research, with exception of Levy has been considered lightweight, and it just got a ton lighter.
re: Levy Leaving LehmanWhereas I prefer not to pontificate about the future of research analysts, I have strong feelings about Steve Levy in specific. Steve is (was) in rarified air. For the past 15 years I can only think of two other analysts who belong in SteveGÇÖs class GÇô Mary Henry (Goldman Sachs, retired), and Nikos Theodosopoulos, UBS (still at it). What separates all three from their peers was their unique combination of hands-on industry experience and their objective, fair, candid, analysis. Granted that they all had to succumb to corporate pressures to push investment banking business. But we all knew that from the get-go. It was part of the game. These three did it with class, and tried desperately to minimize the inherent conflict in their business.
In the recent era of telecom corporate scandals, bankruptcies, and criminal activities, Steve stood out as honest, sincere, and proactively candid. Although I am sure Steve will do just fine, thank you, he will be sorely missed. Godspeed Mr. Levy.
re: Levy Leaving Lehmanby golly, i've got a few thoughts...
on the economics of sell side research:
sell side research was never a money maker in and of itself. at 5 cents a share (commission), you had to do a lot of business to pay for all the overhead. the real reason sell side research existed was to facilitate investment banking business. analysts who became well known in their field could attract both buy side clients and corporations wanting that analyst's coverage and imprimatur. the basic business of research was a loss leader for the real business of doing investment banking business. taken to its logical next step, the sell side analyst became not so much an analyst valued for his objectivity but a whore for bankers' wishes. taken a step further, we have a situation where frank quattrone had analysts reporting to him as head of investment banking.
but things have changed, for better or worse. today, with the pervasiveness of electronic trading and execution, i can trade for 1 cent a share through a machine. so if i'm going to pay someone 4-5 cents a share for research, it better be damn good research and there's not much of that going around. thanks to elliot spitzer, research has a lot more integrity, but where's the money in it? if analysts can't be whores for the bankers, they have to earn their own keep, and for the most part that's not going to happen. analysts pay is going down at the same time the hedge funds, who really care about performance and calling it right, are getting more and more power and money. the good analysts will go to the buy side where they can put their money where the mouth is instead of the other way around.
as for steve levy, i have been reasonably impressed with his work in the last few years. but i also remember his work from 15 years ago when he was whoring for a company called digital microwave.
re: Levy Leaving LehmanA few thoughts related to sell side research.
1.Fear of lawsuits.. If an analyst offers too strong an opinoin and the stock tanks, the exposure is huge. Strong opinions offered to the masses will be toned down before release. If opinions are to be moderated, why pay big bucks to someone with a strong opinion?
2.ETFs are beginnig to become a significant driver of individual stock prices. As the trend to invest in ETFs continues, sector analysis trumps individual stock analysis, and this type of analysis takes fewer people.
3.There will always be detailed analysis on individual stocks, but IMO it will be created for use by brokers dealing with "high net worth" individuals. The average investor will be directed to invest in ETFs to avoid individual stock risk.
re: Levy Leaving LehmanAgreed that there has been an exodus to the buyside. But at the end of the day, research is still effectively the distribution arm of banking. You can't keep paying sell side analysts less and less and think that you are going to have the infrastructure in place to win the best deals. Something's gotta change. Were I a new guy and agnostic about the buyside/sellside lifestyles, I'd be starting on the sellside.
I would like to think sell side analysts will be completely gone in 10 years or less.
I have met VERY few good ones. Most are kids or blithering fools. If your good at being an analyst, you end up on the buy side.
Let me put it this way, would you rather take advice on what is important from Drew Lanza or Rich Church? (Apologies to Drew for putting him in the same sentence with Rich Church).
seven
Sounds like Lehman is cheaping out.
I too worked with Steve on behalf of clients.
Good luck Steve, silly Lehman.
2nd tier they are now for sure.
Sounds like Lehman is cheaping out.
I too worked with Steve on behalf of clients.
Good luck Steve, silly Lehman.
2nd tier they are now for sure.
In the recent era of telecom corporate scandals, bankruptcies, and criminal activities, Steve stood out as honest, sincere, and proactively candid. Although I am sure Steve will do just fine, thank you, he will be sorely missed. Godspeed Mr. Levy.
on the economics of sell side research:
sell side research was never a money maker in and of itself. at 5 cents a share (commission), you had to do a lot of business to pay for all the overhead. the real reason sell side research existed was to facilitate investment banking business. analysts who became well known in their field could attract both buy side clients and corporations wanting that analyst's coverage and imprimatur. the basic business of research was a loss leader for the real business of doing investment banking business. taken to its logical next step, the sell side analyst became not so much an analyst valued for his objectivity but a whore for bankers' wishes. taken a step further, we have a situation where frank quattrone had analysts reporting to him as head of investment banking.
but things have changed, for better or worse. today, with the pervasiveness of electronic trading and execution, i can trade for 1 cent a share through a machine. so if i'm going to pay someone 4-5 cents a share for research, it better be damn good research and there's not much of that going around. thanks to elliot spitzer, research has a lot more integrity, but where's the money in it? if analysts can't be whores for the bankers, they have to earn their own keep, and for the most part that's not going to happen. analysts pay is going down at the same time the hedge funds, who really care about performance and calling it right, are getting more and more power and money. the good analysts will go to the buy side where they can put their money where the mouth is instead of the other way around.
as for steve levy, i have been reasonably impressed with his work in the last few years. but i also remember his work from 15 years ago when he was whoring for a company called digital microwave.
1.Fear of lawsuits.. If an analyst offers too strong an opinoin and the stock tanks, the exposure is huge. Strong opinions offered to the masses will be toned down before release. If opinions are to be moderated, why pay big bucks to someone with a strong opinion?
2.ETFs are beginnig to become a significant driver of individual stock prices. As the trend to invest in ETFs continues, sector analysis trumps individual stock analysis, and this type of analysis takes fewer people.
3.There will always be detailed analysis on individual stocks, but IMO it will be created for use by brokers dealing with "high net worth" individuals. The average investor will be directed to invest in ETFs to avoid individual stock risk.
4. I am probably wrong :)