“Sell” Is a Four-Letter Word
Sell-side analysts are real people like you and me who happen to have very well-paying jobs. You can't blame them for wanting to hold onto those jobs. Their employers, mostly brokerages, derive much of their profits from investment banking, that is, working with companies when they issue more stock, make acquisitions, borrow money, and so forth. How much money is involved? Say an investment banker brings a new company public by underwriting its IPO. The underwriting fee is negotiable of course, but think 7 percent. So a deal is worth 7 percent of $150 million, or $10.5 million, if the new company issues 10 million shares at an initial offering price of $15. When one company acquires another, both firms hire investment ...
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