Definition
The term buy-side analyst refers to an individual that evaluates the future earnings and investment quality of companies on behalf of their clients. Buy-side analysts will normally work for hedge funds, pension plans, mutual funds, high net-worth individuals, and other types of non-brokerage investment firms.
Explanation
Also known as buy-siders, buy-side analysts identify investment opportunities that will increase the net worth of a fund. They do this by providing research reports and investment recommendations to their company's money managers. Buy-side reports are not available for purchase, and their approach to valuing a security is not made public.
Sell-Side versus Buy-Side Analysts
The objective of sell-side analysts is to provide valuable insights into a security so the buy-side investor purchases the security from the brokerage firm that employs them. Ultimately, the service they provide is the marketing of securities. Sell-side analysts also specialize in a specific industry and track a limited number of securities.
Buy-side analysts use the information provided by sell-side analysts; combining this information with their own proprietary models. Portfolio managers would then use the buy-side analyst's research reports when making their buy and sell decisions. Buy-side analysts don't specialize to the degree seen on the sell-side. A buy-side analyst might specialize in the securities of a segment of the economy. For example, they might specialize in analyzing technology stocks.
Related Terms
The term accumulate is used to identify the stocks a sell-side analyst believes will perform slightly better than the overall market in the near term. Accumulate is considered a buy recommendation; although it is not considered vitally important for an investor to hold this security in a portfolio of stocks.
Moneyzine EditorSeptember 18th, 2023- The term sell-side analyst refers to an individual that evaluates the future earnings and investment quality of companies on behalf of a brokerage firm. Sell-side analysts will normally specialize in following the companies in a specific industry.Moneyzine EditorSeptember 21st, 2023
The term hold is used to identify the stocks a sell-side analyst believes will neither outperform nor underperform the overall market in the near term. A hold rating is neither a bullish nor bearish recommendation, and is associated with a stock the analyst feels will provide a return roughly equal to the overall market's.Moneyzine EditorJanuary 19th, 2024- The term underperform is used to identify the stocks a sell-side analyst believes will disappoint investors relative to the overall market in the near term. An underperform rating is a bearish recommendation, and is associated with a stock the analyst feels investors should not add to their portfolio.Moneyzine EditorSeptember 21st, 2023
- The term strong buy is used to identify the stocks a sell-side analyst believes will significantly outperform the overall market in the near term. A strong buy is a bullish recommendation, and is associated with a stock the analyst feels their clients should hold in their portfolio.Moneyzine EditorSeptember 21st, 2023
- The term strong sell is used to identify the stocks a sell-side analyst believes will significantly underperform relative to the overall market in the near term. A strong sell rating is a bearish recommendation, and is associated with a stock the analyst feels investors should not have in their portfolio.Moneyzine EditorSeptember 21st, 2023
