How Hedge Funds Rate Wall Street Analysts

摘要

On Wall Street money talks, and nobody speaks louder than hedge fund managers. Sell-side analysts are listening. Since major brokerage houses signed the $1.4 billion global research settlement with the Securities and Exchange Commission and other regulators in 2003 to resolve allegations that sell-side research favored investment banking clients, analysts have had to earn their keep without subsidies from investment banking fees. Instead, they live by commission revenue alone, and hedge funds are among the biggest commission generators. Credit Suisse First Boston estimates that hedge funds generate 40 to 50 percent of the daily trading volume on the New York and London stock exchanges, producing about $7 billion in cash equities revenue globally for the industry in 2004. In turn, hedge funds expect sell-side research to satisfy their hearty appetites for fresh information — and not to rehash the same old historical data and earnings reports that were the bread and butter of research in the past.