Stock Option Investment Advice

Stock Research Analysts – Analyzed

Once again, it’s time to analyze the stock research analysts*. Finding perfect data is probably impossible, as we analyzed several sets of data and found all of them to have flaws. The primary issue causing most of the flaws in the data related to incorrect handling of stock-splits.

We recalculated the performance of the stock research analysts with better data, and with the new data the overall result of the stock research analysts is poorer. Of course the market has retreated since our last article possibly contributing to the poorer performance of the stock research analysts. The average success rate dropped from 60% in the previous article to 47%. Previously we found 71% of the stock research analysts outperformed the S&P 500 index ($SPX) and in this analysis we found 56% of the stock research analyst outperforming the S&P 500 index. The results of our analysis is shown below:

Analyst Start
Date
End
Date
Best
Pick
Best
Pick
%
Ret.
Worst
Pick
Worst
Pick
%
Ret.
Succ.
Rate
Avg
%
Ret.
Excess
%
Ret.
Over
S&P
500
AG
Edwards
8-Apr-98 18-Jul-06 SWN 786% ANLT -100% 61% 35% 23%
Adam
Harkness
27-Mar-98 17-Jan-06 CTSH 4894% EMRG -100% 40% 19% 6%
Am Tech/
JSA
Research
27-Jun-05 18-Jul-06 AMKR 102% CNCT -55% 27% -7% -11%
Avondale
Partners
11-Aug-03 13-Jul-06 PSYS 378% TRMM -72% 48% 11% -15%
B. Riley 30-Apr-02 10-Jul-06 CRDN 1269% CDIC -68% 52% 43% 28%
BB&T
Cap. Mkts.
31-Mar-00 14-Jul-06 PPDI 845% VERT -100% 63% 42% 59%
Banc of
America Sec
26-May-99 17-Jul-06 VLO 1211% ICGE -100% 54% 24% 29%
Barrington
Research
23-Jul-99 13-Jul-06 CECO 335% PRGX -96% 55% 26% 35%
Bear
Stearns
20-Mar-98 18-Jul-06 KWK 1725% GOAM -100% 50% 32% 19%
Bernstein 2-Aug-01 31-Mar-06 AET 291% PIR -70% 64% 29% 28%
Brean
Murray
18-Aug-98 17-Jul-06 ASFI 349% AKSY -85% 39% 2% -10%
CE
Unterberg
Towbin
15-Oct-98 27-Jun-06 CNQR 623% RBAK -100% 31% -8% -26%
CIBC
World
Market
27-May-99 18-Jul-06 NUAN 1285% RBAK -100% 47% 24% 27%
CL
King
16-Dec-04 17-Jul-06 CMRG 62% PQE -66% 41% -2% -5%
Calyon
Securities
31-Mar-05 18-Jul-06 DNR 102% UAUA -31% 52% 2% -3%
Canaccord
Adams
31-Jan-06 14-Jul-06 NCST 56% XXIA -37% 25% -5% -2%
Caris
and Co.
17-Jun-03 18-Jul-06 CELG 450% GENR -91% 33% -5% -27%
Citigroup 2-Aug-05 17-Jul-06 HANS 226% XMSR -55% 47% 2% 3%
Cowen
and Co.
4-Mar-98 5-Jul-06 PPDI 560% ARDM -98% 39% 20% 2%
Credit
Suisse
27-Feb-98 18-Jul-06 FTO 2419% VERT -100% 59% 45% 27%
DA
Davidson
23-Dec-98 7-Jul-06 AMIE 585% PTMK -90% 58% 26% 25%
Deutsche
Sec.
5-Apr-02 18-Jul-06 MDR 1040% DRL -89% 58% 26% 16%
Dougherty
and Co.
27-Feb-01 14-Jul-06 TASR 438% WLSN -75% 52% 21% 23%
FTN
Midwest
9-Jan-04 18-Jul-06 CHRW 105% ALGN -63% 54% 4% -6%
Ferris
Baker
17-Nov-98 18-Jul-06 DECK 659% LOUD -90% 53% 21% 12%
First
Albany
25-Feb-02 13-Jul-06 SWN 794% DOVP -90% 46% 16% 5%
First
Analysis
Sec
15-Sep-99 1-Jun-06 TTI 1511% ARBA -99% 45% 37% 43%
Fortis
Bank
23-Jan-02 9-Jun-06 AMLN 356% GENR -90% 45% 5% -5%
Friedman
Billings
24-Apr-98 18-Jul-06 NEU 1241% ITWO -98% 54% 39% 27%
Global
Crown Cap.
16-Aug-05 7-Jul-06 ENMC 24% ASPM -55% 40% -6% -7%
Goldman
Sachs
20-Feb-98 18-Jul-06 RYL 1085% ICGE -100% 59% 38% 18%
HSBC
Sec.
27-Apr-98 11-Jul-06 BRG 254% FTE -79% 45% 9% -5%
Harris
Nesbitt
23-Jul-03 16-Jun-06 TXU 335% PARS -90% 51% 1% -24%
Hibernia
Southcoast
Cap.
20-Oct-04 26-Apr-06 BMRN 159% CRIS -72% 65% 16% 4%
Hilliard
Lyons
20-Apr-98 23-Jun-06 TOFC 23% SRT -26% 57% 1% -9%
Investec 6-Jun-02 13-Jan-06 LIFC 1382% ESST -89% 68% 91% 71%
J.P.
Morgan
19-Mar-98 17-Jul-06 NAFC 683% ICGE -100% 57% 27% 13%
JMP
Sec.
2-Jul-02 14-Jul-06 TCC 299% GNTA -90% 46% 8% -22%
Janco
Part.
4-Oct-04 12-Jul-06 BWNG 79% COOL -85% 36% -6% -15%
Janney
Montg.
17-Feb-99 12-Jul-06 URBN 738% VERT -100% 61% 32% 31%
Jefferies 8-Apr-98 17-Jul-06 VTIV 1160% RBAK -100% 53% 34% 22%
Kaufman
Bros
3-Feb-99 7-Jul-06 ENTU 885% FTGX -100% 29% -5% -2%
Keefe
Bruyette
10-Mar-98 18-Jul-06 NEU 1364% PXT -86% 68% 28% 12%
KeyBanc
Cap.
Mkts/
McDonald
7-Apr-04 17-Jul-06 ISRG 620% JAS -56% 60% 16% 8%
Ladenburg
Thalman
19-Oct-98 23-May-06 ASCA 1097% VLTS -100% 44% 15% -1%
Lazard
Captial
8-Nov-05 22-Jun-06 NTRI 33% CELL -60% 21% -13% -14%
Leerink
Swann
29-Jul-03 20-Jun-06 ILMN 193% DYAX -78% 40% -5% -30%
Lehman
Brothers
25-Feb-98 14-Jul-06 FRO 2761% ICGE -100% 57% 31% 12%
Longbow 16-Aug-04 14-Jul-06 TIE 238% PLAY -62% 59% 19% 4%
Matrix
Research
5-Jan-06 17-Jul-06 SKX 58% PLAY -62% 25% -6% -3%
Merrill
Lynch
24-Feb-98 3-Apr-06 XTO 1716% VERT -100% 59% 46% 26%
Merriman
Curhan
Ford
23-Oct-03 12-Jul-06 CORT 453% SQNM -86% 29% -5% -25%
Miller
Johnson
21-Jan-04 27-Jun-06 SMSI 151% TRMM -60% 45% 9% 1%
Moors
and
Cabot
23-Sep-03 22-Feb-06 MU 52% ASYT -77% 54% -5% -25%
Morgan
Joseph
14-Jan-05 27-Jun-06 AKAM 119% XMSR -63% 34% -4% -8%
Morgan
Keegan
28-May-98 17-Jul-06 QSII 1418% LJPC -88% 50% 56% 43%
Morgan
Stanley
4-Mar-98 18-Jul-06 YHOO 801% GOAM -100% 56% 27% 9%
Needham 17-Nov-98 17-Jul-06 HOLX 682% MSGI -100% 38% 2% -7%
Nollenberger
Cap.
20-Oct-05 10-Jul-06 WEBX 32% PALM -38% 26% -6% -11%
Oppenheimer 9-Sep-03 17-Jul-06 TSO 389% VION -75% 42% -3% -24%
Pacific
Crest
31-Mar-99 19-May-06 FFIV 489% VERT -100% 42% 9% 13%
Pacific
Growth
Equit.
17-Dec-99 1-Jun-06 CWTR 772% ITWO -99% 39% 9% 22%
Piper
Jaffray
23-Feb-98 14-Jul-06 STRL 2498% PRGX -98% 46% 17% -2%
Prudential 15-Apr-98 18-Jul-06 DNB 757% IPIX -100% 58% 41% 30%
Punk
Ziegel
29-Jul-98 17-Jul-06 CTSH 521% CTIC -93% 37% 13% 3%
RBC
Cap.
Mkts
6-Nov-01 13-Jul-06 MDR 701% TPC -93% 57% 22% 11%
Robert
W.
Baird
17-Mar-00 14-Jul-06 WCC 578% ITWO -100% 55% 17% 33%
Rochdale
Securities
22-Mar-06 14-Jul-06 WR 8% BOBJ -47% 15% -10% -5%
Rodman
and
Renshaw
30-Sep-02 29-Jun-06 JCOM 314% ALT -96% 32% -15% -67%
Roth
Cap.
20-Mar-00 13-Jul-06 UHAL 1480% MBAY -99% 48% 34% 49%
Ryan
Beck
and Co
9-Oct-02 18-Jul-06 ADSK 360% ALT -97% 55% 15% -44%
Sanders
Morris
Harris
28-Mar-03 29-Jun-06 VLO 562% PIR -70% 58% 31% -12%
Sandler
O’Neill
15-Nov-04 16-Jun-06 NDAQ 137% NPTE -44% 59% 9% 5%
Soleil 23-Dec-05 14-Jul-06 PTMK 32% WIND -47% 30% -11% -8%
Southwest
Sec
1-Jan-99 4-Jan-06 PNRA 1032% ARTG -96% 45% 37% 26%
Stanford 9-Nov-04 18-Jul-06 BMRN 169% SGTL -87% 50% 3% -3%
Stephens
Inc
11-Mar-98 23-May-06 SWN 1097% HAXS -100% 59% 51% 35%
Stifel
Nicolaus
31-Mar-00 30-Jun-06 BTU 703% ELOY -92% 51% 24% 41%
Sun
Trust
Rbsn
Humphrey
23-Aug-01 18-Jul-06 PSYS 476% CHTR -91% 50% 17% 11%
Susquehanna
Financial
30-Nov-04 12-Jul-06 SKX 68% ANDS -71% 30% -10% -15%
ThinkEquity 14-Apr-03 23-May-06 DNA 343% BPUR -94% 39% 0% -40%
Thomas
Weisel
17-Jun-99 18-Jul-06 STRM 560% RBAK -100% 40% -4% 4%
UBS 20-Jun-03 18-Jul-06 LQU 409% DRL -89% 52% 10% -14%
WR
Hambrecht
10-Feb-00 18-Jul-06 GRMN 405% RBAK -100% 43% 3% 16%
Wachovia 26-Apr-00 18-Jul-06 URBN 799% VITR -96% 55% 18% 33%
Wedbush
Morgan
8-Sep-99 18-Jul-06 URBN 356% DLK -99% 47% 6% 14%
William
Blair
30-Jul-99 17-Jul-06 JLL 560% JDSU -97% 50% 11% 18%

*We analyzed the record of the stock research analysts going back to February 1998 for all current stocks listed on the Nasdaq, NYSE and American stock exchanges. Stocks for companies going belly up or delisted are not included as are companies that have been acquired by or merged with other companies, and stock research analysts without a recommendation issued in 2006 were also not considered. For this analysis, we assumed “market outperform” means a buy, “market underperform” means the stock is to be sold, etc. Another issue we must take into consideration is that stock research analysts sometimes recommend a stock investment strategy for a buy, and then cease to cover the stock, but never issue a stock trading strategy for a sell recommendation, for this case we just assumed we’re supposed to continue holding the stock.

[tags]stock research, stock trading, investment strategy[/tags]

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