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Research Never Contains an Analyst’s Complete Viewpoint

Because reports are in the public domain and are read by all the analyst’s disparate audiences, particularly negative or controversial content is watered down, or modulated. The degree of our skepticism, aspects of a company that are unclear but highly suspect, untrustworthy management, lack of confidence in estimates, anything edgy, doubtful, any wariness—none of this gets put into an analyst’s research report. If it did, legal compliance would edit it out anyway. Reports get such scrutiny that analysts are careful; they hold back and reserve the touchier, conjectural content for direct conversations when they can tailor it to a specific institutional client. An analyst’s body language or subtle leaning on a stock is never revealed in writing. Although analysts are no longer legally able to have a stance that conflicts radically with the one portrayed in the report, there is much left to be read between the lines.

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