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Research Reports Do Not Contain an Analyst’s Complete Viewpoint

Because reports are in the public domain and are read by all the disparate audiences that analysts confront, 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 writing. 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 are never revealed in writing. Although analysts are no longer legally able to hold a radically conflicting stance than the one portrayed in the report, there is much left to be read between the lines.

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