Bloomberg: Brokerage analysts generally suck at picking stocks

Wanna lose money?  Follow Brokerage analyst picks:  Remember how last week Bernstein and Deutsche Bank analysts put out buys on Lehman?  We see how well that's turned out so far given this morning's news.   Bloomberg looked into just how well brokerage analysts do at opining on their own.  It seems that in general, overall, you would have LOST money by following their picks over the longer run.  And who was the worst analyst?  Merrill's Guy Moszkowski.  (Having seen this article over the weekend, and hearing him ask questions during the Lehman conference call, we must admit to cracking up).  Even Meredith Whitney, who's turned into something of an industry star for her prescient brokerage opinions, hasn't fared so well over the longer term....

Investors who followed the advice of analysts who say when to buy and sell shares of brokerage firms and banks lost 17 percent in the past year, twice the decline of the Standard & Poor's 500 Index.

Buying shares on the advice of Merrill Lynch & Co.'s Guy Moszkowski, the top-ranked brokerage analyst in Institutional Investor's annual survey, cost investors 17 percent, according to data compiled by Bloomberg. Deutsche Bank AG analyst Michael Mayo's counsel to purchase New York-based Lehman Brothers Holdings Inc. lost 59 percent. Citigroup Inc.'s Prashant Bhatia still rates Merrill ``buy'' after its 56 percent retreat from a January 2007 record.

``One would expect that if there was any industry Wall Street estimates would be more precise on, it would be their own,'' said Richard Weiss, who oversees $60 billion as chief investment officer at City National Bank in Beverly Hills, California. ``But this particular debacle was so global in nature and pervasive, you can't blame them for missing this one.''

In a May 5 report, Mayo said Lehman's earnings may vary widely as more writedowns are taken. The bank's long-term prospects make it an appealing stock, he wrote. Moszkowski cut his earnings estimate for Lehman in a June 4 report, saying it will post a second-quarter loss rather than his previously forecast profit. Bhatia forecast a 2008 loss for Merrill in an April 18 report, saying the firm faces a ``challenging market environment.''

Meredith Whitney, who correctly predicted Citigroup Inc. would reduce its dividend to preserve capital, lost 16 percent collectively at Oppenheimer & Co., her current employer, and CIBC World Markets, where she worked until mid-January. Whitney's advice included buying Lehman shares up until March 24 as the stock lost 35 percent.

The analysts who made investors the most money were Charles Peabody of New York-based Portales Partners LLC and Richard Bove of Ladenburg Thalmann & Co. in Miami, Florida, whose ``sell'' ratings on Merrill, Morgan Stanley, Lehman and Goldman Sachs Group Inc. produced profits of 47 percent and 18 percent, respectively, according to data compiled by Bloomberg. Citigroup's Colin Devine made 4.8 percent by rating Ameriprise Financial Inc., the only brokerage stock he covers, ``sell'' before moving to ``hold'' in July.

Here's the way they stack up:

Best
                                                      # of 1-Year
Analyst                        3 month 6 month  1 year   Picks
=================================================================
CHARLES W PEABODY                10.77   29.84   46.68    4
RICHARD X BOVE SR                 6.35    2.28   18.24    4
COLIN W DEVINE                    0.00    0.00    4.77    1
NIGEL P DALLY                     0.00    0.00    0.00    1
PATRICK O'SHAUGHNESSY             0.00    0.00    0.00    1
TAMARA K KRAVEC                   0.00    0.00    0.00    1
THOMAS GALLAGHER                  0.00    0.00    0.00    1


Worst
                                                      # of 1-Year
Analyst                        3 month 6 month  1 year   Picks
=================================================================
SETH DADDS                       -0.17   -1.10  -46.01    2
JAMES F MITCHELL                -10.85  -29.98  -44.38    4
MATT J SNOWLING                  -9.74  -10.29  -40.73    3
SUSAN ROTH KATZKE               -10.85  -29.42  -40.38    4
JEFFERY HARTE                    -2.88  -23.33  -39.30    4
TOM KERSTING                      3.17  -17.48  -39.14    1
MICHAEL L MAYO                   -8.32  -19.80  -38.05    4
DAVID RITTER                    -10.94  -19.81  -31.70    4
RICHARD H REPETTO                 4.62   -0.78  -30.67    3
MICHAEL T VINCIQUERRA             0.21   -0.33  -27.58    3
GLENN P SCHORR                  -10.80  -20.36  -27.50    4
ANDREW S KLIGERMAN               -7.71  -19.48  -25.80    1
ERIC N BERG                      -7.71  -19.48  -25.80    1
SUNEET KAMATH                    -7.71  -19.48  -25.80    1
JOHN HALL                        -6.83  -18.72  -25.09    1
ROGER A FREEMAN                  -1.78   -1.26  -22.07    6
WILLIAM F TANONA                 -3.88   -5.40  -18.84    8
LAUREN A SMITH                    1.20   -7.62  -17.13    6
GUY MOSZKOWSKI                    1.71    1.05  -16.89    3
JEFFREY SCHUMAN                  -7.71  -16.67  -16.67    1
MATTHEW E FISCHER                 4.59   -2.85  -16.66    3
MEREDITH WHITNEY                  1.82   -5.78  -16.34    4
DOUGLAS C SIPKIN                  0.04   -8.44  -16.26    7
CHARLES BRADLEY HINTZ             3.39   -5.20  -14.24    5
MATTHEW CZEPLIEWICZ              -3.32   -7.03  -13.51    4
DAVID TRONE                      -4.09   -5.53  -12.91    9
MICHAEL CARRIER                  -4.07   -4.62  -12.76    3
MICHAEL HECHT                    -0.30  -11.08  -12.21    7
KENNETH B WORTHINGTON             0.88   -6.14  -11.58    4
PRASHANT A BHATIA                -0.74   -9.97   -9.15    7
MARK LANE                         1.17   -8.18   -8.51    3
HOWARD CHEN                       4.48   -3.58   -2.25    3

Company Total Return Averages

Company                       3 month 6 month  1 year  # of
                                                       Analysts
===============================================================
Ameriprise Financial, Inc.       -4.19  -10.43  -12.71    9
TD Ameritrade                    -2.08   -3.60   -7.11   14
E*Trade Financial                 1.48    0.41  -37.60   13
Goldman Sachs Group               0.73   -9.44  -10.34   21
Interactive Brokers Group         5.02    7.63     na     4
Jefferies Group                  -1.39   -6.74   -0.15    9
Lehman Brothers Holdings Inc.   -13.25  -20.13  -23.87   19
Merrill Lynch & Co. Inc          -2.29   -8.51  -31.73   19
Morgan Stanley                    1.10   -7.17  -18.44   22
Raymond James Financial          10.16   -3.23   -4.10    5
Charles Schwab Corp.              4.73   -4.47    0.63   19

Analysts Lose 17% for Investors in Brokerage Picks - Bloomberg