Sublime Analyst Headlines

Today is St. Patrick's Day and therefore I do not feel my typical sense of loss at waking up drunk. In, fact, my only concern at this moment is that I will spill my favorite morning brew (Guinness, coffee, and a dash of allspice) on the keyboard, shorting out the Rockintosh and preventing me from continuing my journey into the blogosphere.

I think back to this time last year; I was attending the Cowen Healthcare conference and was trying to hide my disgust at having to celebrate St. Patrick's day in Boston. There was some news item about some stupid investment bank that was having trouble. To my mind, it was no wonder they were losing money given they had the word "Bear" in their name. The news broke on Sunday night and while traveling out I tried to dial in to the conference call but all the lines were busy. There was another hedge fund manager on the plane who had successfully dialed in but he wouldn't share his phone line with me. Somehow in retrospect I do not find this surprising.

This morning I spent some time reading research notes, remarking on how some analysts just seem to fade away without a "cessation of coverage" note. It then falls on the buy-side analyst to figure out if they are still employed and if so, what their next up/downgrade is going to be.

The titles of research pieces fall into several key categories. I will use today's headlines for illustration:

The accidentally brilliant:

"ARNA: BLOOM Data...Soon--Lowering Earnings Estimate"
The innovative punctuation in this title is important because it reveals the analyst's true thoughts without subjecting the company to a tedious and divisive downgrade. On the surface, this looks like a simple note, saying "BLOOM data is coming soon; by the way, we are lowering our earnings estimate." (This in itself is a little silly since ARNA isn't going to earn anything in the next few years except the admiration of the obese if BLOOM works). But paying attention to the correct use of the ellipse, you get something entirely different: "BLOOM data approaches; soon we will be lowering our earnings estimate." Presumably because he thinks BLOOM is going to fail?

The brazenly zero-value-add:

"Genentech Inc. (DNA): Definitive merger agreement with Roche"
Only a Very Important Bulge Bracket Analyst (VIBBA) would be able to get away with a title like this, which could have been lifted from a headline on CNBC.com or, God forbid, Seeking Alpha. I suppose this kind of note can serve some kind of utility in letting a Very Important Portfolio Manager (VIPM) know that a certain little company was taken over by a bunch of cantonese, but I would imagine that the VIPM would have to be cowering under a rock, hoarding gold, twitching, and muttering to himself about AIG in order to have missed this wee news item.

The inadvertently revealing:

"Reports 4Q; Ph.III Data for Picoplatin in SCLC Coming Soon"
The analyst here made a point not to specify whether or not he thought the data would be positive, but is forced to write a note anyway because the company reported their quarter. From this title alone you can tell that this is not a bulge bracket analyst because those analysts can ignore quarterly results from little pipsqueak companies. The bland title also suggests that the analyst is unwilling to take a stand on whether or not the trial was successful; therefore he likely recently got burned on a binary event and is a little gun-shy.

The utterly obnoxious:

"Genentech:Time to Put it in the 'Win Column'; Downgrading to Neutral"
This is a variant on those titles like "as we predicted, XYZ fails" or "ABC works, as we predicted." In fairness, this analyst typically acknowledges when he is right and when he is wrong. But generally, please spare us a tallying of your brilliance. We know that you rule already.

The totally awesome:

"Wood morning - March 13, 2009"
I have to thank Wood & Co for this.