Portfolio Managers’ #1 Frustration With Equity Research Analysts

While I was studying the Japanese language during college, I initially didn’t take notice that the word “chigau” (ちがう) is used to convey both “different” and “wrong.”  But after moving to Tokyo and learning the importance of conforming to the group, I developed a newfound appreciation for why these two English words require only one in Japanese.

I wish we had a word in English that could be used to convey both “different” as well as “correct”, because we could use it with equity research analysts to reinforce that great stock calls are those that are differentiated. After interviewing portfolio managers in New York, London, Tokyo and Singapore, I discovered one common complaint…buy-side and sell-side analysts aren’t differentiated enough from consensus.  The PM’s #1 issue is they often can’t see how their internal analysts or sell-side analysts clearly differ from consensus expectations.

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