Recognized as the gold standard for objective measurement of sell-side analyst performance, what makes a winner in the Thomson Reuters Analyst Awards?
With MiFID II poised to bring significant disruption to the research ecosystem, our quantitative-based awards program is now more relevant than ever before.
The Thomson Reuters Analyst Awards set the standard by which excellence and performance are measured in the sell-side research industry, while also acting as a vital benchmarking tool for buy-side budgets.
Based on StarMine methodology, the winners are selected on:
- the returns of their buy/sell recommendations relative to industry benchmarks
- the accuracy of their estimates against the consensus view
- the ability to successfully distinguish their top-performing stocks from their bottom-performing stocks (in other words, those who are not afraid to make a sell recommendation).
The winners are those that sifted deep into their industries to distil more differentiated, research insights, as well as extracting outsized returns from their coverage.
Watch video — Thomson Reuters Analyst Awards – Roundtable
No sitting on the fence
Interestingly, both stock picking and estimate accuracy are different competences.
They each require distinctive flair, and are typically associated with different types of analysts’ personalities, suggesting winners intersect across the prism of research.
Analysts sitting on the fence with neutral calls do not do well in the rankings. The hold rating really meant stay away, which suggested missed opportunities as they did little to help their clients.
Under MiFID II, analysts will need to demonstrate the value of their substantive research and determine an appropriate price for it. These regulations will make the buy-side vigilant about the quality of the research it consumes.
These coveted rankings — respected and valued by institutional investors — can help connect with the sell-side across the critical research axis. In addition, the awards will act as a proxy of assessing the quality of their research or differentiation.
The messages for 2017 money managers:
- look to the smaller research houses when formulating investment strategies, as they do better in the country-based awards
- call in the bigger brokers, with their wide-ranging waterfront coverage, in the larger region-based awards — such as Europe and Asia, as they consistently do well in the overall rankings.
As a result of MiFID II, sell-side research is going to get a whole lot more interesting from 2018 and beyond.
The Thomson Reuters Analyst Awards can provide leverage to the sell-side in promoting their credentials to the discerning buy-side.