The Wall Street analyst exodus continues, with Oppenheimer’s Meredith Whitney and Ladenburg Thalmann’s Dick Bove bailing on their firms today. And neither is jumping to large investment banks.
Whitney, who called the financial sector’s collapse, says she plans to open up her own shop, initially focused on independent research, but expanding into investment banking. She follows in the footsteps of former Wall Street analysts like transportation expert Edward Wolfe, a former Bear Stearns number-cruncher, and Ivy Zelman, a real estate guru, who both opened independent research firms in the past year or two.
For the controversial Bove, the move appears to be a matter of principal, not desire for change. By all reports, he would have preferred staying at Ladenburg, an independent investment bank founded in 1876, rather than leaving for the rather obscure Rochdale Securities, which specializes in independent research and block trading. But a July lawsuit filed by BankAtlantic Bancorp over its inclusion in a report titled “Who is Next,” which used the ratio of nonperforming assets to total assets to determine which banks could be in trouble, made that impossible. Defending the suit has already cost Ladenburg $1 million and could total $2 million to $3 million before all is said and done. Ladenburg wants to settle. Bove doesn’t. Rochdale says it will not be covering the costs of defending the lawsuit.
As analysts like Whitney and Bove leave large investment banks, investors will have fewer places to turn for solid analysis (say what you will about the buy/hold/sell recommendations, but the information contained in analyst reports are useful for anyone looking to invest wisely). Sadly, their moves confirm the exodus of analysts, noted by BusinessWeek’s Aaron Pressman in January. Retail investors may have to make do with less expert insight amid the worst stock market since the Depression.