John,
I was talking about the ability of, e.g. the analyst who follows Intel to trade Intel in his own account.
Certainly at my firm, and I would guess others, the initiative to recommend a stock comes from the analyst, not someone else (unless they have a "strategist", which can lead to a confusing situation of a "strategist" recommending Intel and the analyst not). It didn't take long to make a major move (add or remove a stock from the "recommended list"- all stocks rated "1"). If I wanted to make a move, I'd tell my director of research, who would call a meeting of the investment committee after the close that day. My recommendation would be vetted, and, if (not inevitably) approved, would be announced, and go into effect, at the morning meeting the next day. Few, if any, would get a "heads up" before that. An analyst who made a practice of tipping his hand to a favored few before the meeting of the committee would not endear himself to the less favored salespeople, whose analysts' ratings played a major role in analysts' compensation.
Now, if you want to talk about the interplay between analysts and the trading desk (for stocks in which our firm made a market), well, that's a different story.
Best,
2MacLean |
