Brokers - do as I say, not as I do

[bowman]

Have a look at these figures and recommendations.

Stock is Austar (AUN)

Current recommendations (sourced from FN Arena)

BA-Merrill Lynch - Buy,high risk
Deutsche - Buy
J.P. Morgan - Overweight
UBS - Buy
Citi - Hold, medium risk
Credit Suisse - Outperform

Trading figures for last month (sourced from Paritech Pulse)

BA-MerrillLynch - net buy 3.5M
Deutsche - over 17m traded with a net sell of 75K
J.P. Morgan - net sell 1.17M
UBS - net sell 2.7M
Citi - net sell 2M
Credit Suisse - net sell 2.3M

I have no way of knowing the details of the shorting activity but I'd love to know.

 

[Sean K]

Re: Brokers - do as I say, not as I do.

Cripes, is that data reliable?

Pretty damning if so.

Seems a brokers buy recommendation means SELL!!

 

[bowman]

Re: Brokers - do as I say, not as I do.

Correction: BA Merrill Lynch, the only net buyer bought 3.5 M approx.

 

[bowman]

Re: Brokers - do as I say, not as I do.

Cripes, is that data reliable?

Pretty damning if so.

Seems a brokers buy recommendation means SELL!!

kennas, I assume the data is ASX data, as supplied by Paritech on their Pulse platform.

 

[stoxclimber]

Nothing dodgy going on here guys. These are separate divisions of the banks - the equity research divisions make the recommendations, the wealth management divisions have the holdings and the sales & trading divisions turn over the stock on behalf of clients. They operate independently of each other. None of these institutions is holding stock in any of these companies on their own account except for possibly prop trading

 

[alphaman]

They operate independently of each other.

Yes in theory that's how it works...

 

[freddy2]

They operate independently of each other.

I hope you are being sarcastic.

 

[stoxclimber]

Do you guys have any evidence to the contrary?

 

[prawn_86]

Do you guys have any evidence to the contrary?

Do you have any supporting evidence? :

I find it a bit hard to believe that a companies trading area would not read, or at least know, what recommendations its analysts are putting out.

 

[stoxclimber]

I've done a bit of work in the area myself. The traders/salesmen read the research reports yes, but the trading here is driven by what clients say - the salesmen might tell them the house view, but obviously clients don't always agree with the research reports.

The asset management guys also read the broker reports of their bank, as well as others. However, they also act independently - e.g. Paul Fiani would not sell his Qantas stake to APA despite his bank getting large fees if the deal was successful.

The basic allegation here is that these banks are crooks by telling you to buy the stock while they're selling it. However, they aren't crooks because the guys doing the selling aren't the ones recommending you buy, and they aren't in cahoots with the ones recommending you buy. All well and good to have a bit of skepticism but fair dinkum guys, especially freddy2.

 

[alphaman]

There is meant to be a Chinese wall between the divisions, so it's indeed reasonable for different divisions to act differently.

But do they really run independently? Let's be realistic here, if there is big $ involved and you know you will not get caught, what's to stop you from looking after your mates at the other division.

 

[Naked shorts]

But do they really run independently? Let's be realistic here, if there is big $ involved and you know you will not get caught, what's to stop you from looking after your mates at the other division.

People who are with the anti-corruption commission working on the inside?