Scandinavian Working Papers in Economics

INDEK Working Paper Series,
Royal Institute of Technology, Department of Industrial Economics and Management

No 2015/11: Star sell-side analysts listed by Institutional Investor, The Wall Street Journal and StarMine. Whose recommendations are most profitable?

Yury O. Kucheev (), Felipe Ruiz and Tomas Sorensson ()
Additional contact information
Yury O. Kucheev: Technical University of Madrid (UPM), Madrid, Spain,Royal Institute of Technology (KTH), Stockholm, Sweden, Swedish House of Finance, Stockholm School of Economics., Postal: SE-100 44 Stockholm, Sweden
Felipe Ruiz: Department of Industrial Management, Business Administration and Statistics, School of Industrial Engineering, Technical University of Madrid (UPM), Postal: José Gutiérrez Abascal, 2, , 28006 Madrid, , Spain
Tomas Sorensson: Department of Industrial Economics and Management, School of Industrial Engineering and Management, Royal Institute of Technology (KTH), Swedish House of Finance, and Stockholm School of Economics., Postal: , SE-100 44 Stockholm, Sweden

Abstract: In this study, we compare the profitability of the investment recommendations of analysts listed in four different star rankings: Institutional Investor magazine, StarMine’s “Top Earnings Estimators” and “Top Stock Pickers” and The Wall Street Journal. We document that the highest average monthly abnormal return of holding a long-short portfolio, 1.58 percent, is obtained by following the recommendations of the group of star sell-side analysts rated by The Wall Street Journal during the period from 2003-2013. The results indicate that the choice of analyst ranking is economically important in making investment decisions.

Keywords: Star analysts; Analyst recommendations; StarMine; Institutional Investor; The Wall Street Journal

JEL-codes: G10; G20

29 pages, June 3, 2015

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