Can anyone explain me the meaning of buyside analyst and sell side analysts…?
Buy side analysts work for investors; e.g., mutual funds, ETFs, that sort of thing.
Sell side analysts work for investment banks selling securities to investors.
If you are talking about research, sell side analysts do NOT sell securities. They pitch investors on investment ideas (buy hold sell) and arrange management meetings etc
I heard that buy side is better. Is this true?
Yes
Buyside=BSD
Sellside=Glorified BOM
I always thought of it as who would want the research - buyside are guys managing assets (ie. mutual funds, hedge funds) but sell side are guys producing the research specifically to sell, ie. investment banks and all that.
but then again, I’ve always been pretty unclear on the matter.
Thanks everyone…
my question is …
how do they compromise their independence and objectivity by being an selll side or buyside analysts…from ethics point of view…
Dafuk?
^ Respect
My sentiments exactly!!
Sell siders may compromise their integrity by favoring a buy where there should be a sell. Sell side organizations make their money by the number of transactions that they complete, therefore the financial goal is to keep transactions flowing. Sometimes (often) the best strategy is not to transact, but SS analyst faces pressure to endorse what management wants to unload from (or occasionally accumulate in) in their inventory. Or the SS analyst might decide to put a sell rating on a business that their employer uses as an investment banking client. Management is not supposed to interfere with the objectivity of the analyst, but that doesn’t mean that they don’t (or that the analyst doesn’t self-censor) if they just say that a big client should be sold. It mucks up the relationship AND it can mean that there is less money to be made (for transactions in the near future) even if the relationship stays the same (if you are going to sell new stock for that client at a lower price, the client may decide to wait for later, or, alternately, you may not have as much leverage for demanding a nice commsion from them).
Ethically, there are fewer issues with being a buyside analyst. Here people value what you genuinely think (provided your thought process is decent). However, you still have to be careful in a legal sense about not using material non-public information, and you can’t be front running your clients and/or institution. And much of the time, you have to keep your mouth shut about what your company is doing with outsiders.