bearishness no longer condoned on Wall Street (nothing new, i know):
Excerpt from Tuesday WSJ:
Heard on the Street
Analyst's Bearish Calls
Land Him in Doghouse
By ROBERT MCGOUGH
Staff Reporter of THE WALL STREET JOURNAL
When Laurie Buntain, head trader at Sife Trust Funds, heard that analyst Michael Mayo had recommended selling bank stocks, she swung into action.
No, she didn't sell Sife Trust's big holdings of bank shares that Mr. Mayo had railed against (which were falling). Instead, she angrily grabbed a picture of Mr. Mayo from a back issue of a magazine, blew up the photo on a copier, scribbled "WANTED" over his face and pinned it to her bulletin board.
Mr. Mayo, a 36-year-old analyst at Credit Suisse First Boston, a unit of Credit Suisse Group, says he has been "feeling pain" since making his negative call on May 24. Mr. Mayo dropped in Institutional Investor magazine's influential analyst poll -- in which big investors vote for their favorite analysts -- to the No. 2 spot among regional-bank analysts, from No. 1 last year. "There was some very clear backlash against me" from big investors, according to Mr. Mayo.
Jury Is Out on Bearish Call
The jury is still out on Mr. Mayo's bearish bet. Bank stocks plunged after his call but have roared back in the past month to about the same level as before. But Mr. Mayo knows one thing: "You make a lot of friends when you say to buy a stock," but not when you put out a "sell."
So it goes as a member of Wall Street's most high-profile minority group: Analysts who yell "sell." A mere 0.8% of all analysts' recommendations on Nov. 1 were "sells," according to First Call/Thomson Financial. By contrast, 70.1% of analyst recommendations were "buys," which usually mean the analyst expects the stock to outperform the market. The remaining 29.1% were mealy mouthed "holds."
Sure, investors clamor for objective research from Wall Street. But when push comes to shove, says veteran money manager David Dreman: "People that own a stock don't want to have it tampered with."
It is no longer news that analysts' recommendations may lack objectivity. Or that "sell" recommendations anger the company being criticized. Or that the company sometimes penalizes the analyst's firm by pulling investment-banking business. Or that the analyst can get frozen out of meetings and lose access to a company's financial whispers.
Here's what isn't as widely known: The pressure that negative analysts feel is often from their own clients -- institutional investors -- yes, the very people who would seem to benefit most from such objective market calls.
Motives Are Questioned
"Some are questioning my motives," Mr. Mayo says. They ask him if "I'm in bed with the shorts," or investors who seek to profit from declining stock prices. (Mr. Mayo isn't recommending shorting bank stocks, but he does believe they are going down in price.)
The pressure also comes from another, less-known source: other analysts. Mr. Mayo braced himself, for instance, when he told investors to reduce bank holdings in general and to sell four big banks: Bank One, J.P. Morgan, Citigroup and Chase Manhattan.
But the fallout included shots from his peers. For instance, Thomas Hanley, a well-known bank analyst at Warburg Dillon Read, referred to Mr. Mayo derisively as "Mayo-naise" in a conference call. Mr. Hanley says he believes bank stocks have a bright future, but he says he doesn't want to talk about Mr. Mayo.
Meanwhile, the four banks Mr. Mayo recommended selling have been polite and accessible -- if a bit frosty, he says. Credit Suisse First Boston does business with all four firms, but Mr. Mayo says he doesn't know whether his firm has lost any business to them -- and he doesn't want to know. (The various firms say there was no retribution or have no comment.) Mr. Mayo has gotten the occasional annoyed comment from colleagues in other departments, but he says his research bosses have backed him up.
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