An Insider’s Look at Brokerage Research
by Mike Mayo
Mike Mayo, a top-ranked bank analyst, authored “Exile on Wall Street: One Analyst’s Fight to Save the Big Banks From Themselves” (John Wiley & Sons, 2011). He recently talked with me about how investors should approach analyst stock research and a company’s own assessments.
—Charles Rotblut, CFA
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Charles Rotblut (CR): Could you explain what the role of a sell-side analyst is and what exactly a sell-side analyst does?
Mike Mayo (MM): I’m a sell-side bank analyst, and my job is to analyze large banks, write reports about those banks, offer an opinion about whether those banks are doing well or poorly, and offer an opinion on the stock of those companies—either to buy a bank stock or sell a bank stock.
More generally, a sell-side analyst publishes reports on companies in any industry. What’s unique about a sell-side analyst is that the research gets distributed to those managing money. I don’t actually manage money myself but, in effect, I advise those who do. Something else unique about my position is that I will continue to follow a company whether I think it is a buy-, hold- or sell-rated stock, whereas those who manage money, once they sell the stock, sometimes they might not have the same level of analysis as they would if they actually owned the stock. So there is a continuity of analysis and oversight that I have in my job that you might not always have with those on what’s called the buy side, or those actually managing the money.
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