Why I don't care about broker buy notes - hard data

Comments

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   AJB

   11 February 2016, 01:42

   One of the more respected brokers (if there is such a thing) released an amazing analyst report on a company called COMS not so long ago (I still have it somewhere as well). It was hilarious suggesting a short term target of 10p (which it reached for a day or two) and long term targets of a lot higher multiples.

   Now look at it…. The wealth destruction there by David Breith was quite incredible, maybe they were just duped by him and believed the figures he spewed but a little bit of research would have seen that it wasn’t tenable!?

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   Woody44

   11 February 2016, 02:31

   Well said TW and thank you for providing pretty much the only source of bear viewpoints in the market.

   Broker notes are occasionally useful for providing revenue and earnings forecasts, as the house broker usually has access to management, and then the investor can make his own decisions based on whether those forecasts are met or even achievable. For buy recommendations or target prices the notes are a waste of time.

   I have heard of recent placing commissions being in excess of 5%, especially at the bottom end of the market, and at least two sources have suggested commissions in double figures for purely retail placings.

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   desperado

   11 February 2016, 02:34

   An exception are notes from Roger Bade (at broker Whitman Howard), who is often quite acerbic and frequently negative about marginal mining projects.

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   RL

   11 February 2016, 14:04

   Absolutely, and thanks for this. BS churners. I wish I knew then what I know now! I have (could pretty much say had) an ‘Advisory’ account from when they were HB (the first broker I trusted and were then OK, which was why I stayed) which is around 79% down. They phoned me up a couple of times bordering on intimidatory (one I felt was intimidatory), if not to give them more funds, to sell what were already massive losers at their extortionate dealing charges (compared to non-advisory), and go into something else at their extortionate dealing charges – I think all were flipping. When I declined they made my account ‘dormant’ (not what I thought I was paying the extortionate advisor charges for in the first place). ALL are very substantial losers; at least four have gone to ZERO (I can’t remember all, but there were more than four, as they are no longer listed so no longer showing on my iii records); others may as well be zero e.g. MTV, EVO. What was worse for me was that I already had shares in a couple of their recommendations and kept them as a result of BS info – so lost a lot more than I actually ‘invested’ via them. One of theirs I did sell via their info advice but against my gut feeling: that one of course was the only one of the lot whose share price increased (doubled), probably because they wanted to flip something else to me. I would love to know what the total loses to investors through advisory accounts and flipping is – but that will always be kept under their carpets…

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   Woody44

   12 February 2016, 04:28

   I also note that Sanderson Capital Partners Limited (Beaufort) is now doing its own balance sheet lending to Kibo and Eurasia. It will be interested to see what the result of this is on Beaufort’s broker notes. Will Beaufort even declare an interest?

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   Phil

   13 February 2016, 08:38

   People who work in the city (including the regulators) are enablers, they are paid to bring credibility to incredible stories