The life of a Wall Street analyst can be vexing. Hedge fund managers will take your call only if you have a can’t-miss idea to put in front of them. The analysts push their investment committees to help their cause by designating certain stocks as a top pick, or in the case of Goldman Sachs, they get the stock added to the Conviction List. Yet here’s the trouble with this back-and-forth between analysts and fund managers: If a stock pick doesn’t work out, they must yank it from the list and admit defeat. As an example, Goldman Sachs… Read More
The life of a Wall Street analyst can be vexing. Hedge fund managers will take your call only if you have a can’t-miss idea to put in front of them. The analysts push their investment committees to help their cause by designating certain stocks as a top pick, or in the case of Goldman Sachs, they get the stock added to the Conviction List. Yet here’s the trouble with this back-and-forth between analysts and fund managers: If a stock pick doesn’t work out, they must yank it from the list and admit defeat. As an example, Goldman Sachs just gave up on its Conviction List rating for The Fresh Market (NYSE: TFM), a smaller and less established rival to Whole Foods Market (NYSE: WFM). Since TFM was first added to Goldman’s coveted group of Conviction List stocks in February, it has fallen 15% while the S&P 500 Index has risen 20%. The one-year performance for TFM has been even weaker. #-ad_banner-#Yet it’s the reasoning behind the rating change that should spook any investors that are bullish on Whole Foods. “TFM’s expansion into more competitive markets will weigh on results, and rising… Read More