Speed and Expertise in Stock Picking : Older, Slower, and Wiser?

There are significant differences among sell-side analysts in how frequently they revise recommendations. We introduce a method for classifying analysts based on their recommendation speed-style and show that much of this variation is an analyst-individual trait. Analysts who change their recommendations more slowly make recommendations that are more influential and generate better portfolio returns than those who do not. Examining the sources of differing investment value, we find that recommendations of slower-revising analysts are more likely to “lead the pack,” and revised following corporate disclosures that are harder to assess by non-stock experts. There is a strong tendency for analysts to change recommendations less frequently as their career progresses; however, recommendation speed-style is the only robust predictor of their recommendation value