Companies that chose Citi as a lead bank on their IPOs last year tended to get a favorable rating from Mr. Mahaney. On Citi-led deals in 2011, he awarded three "buy" ratings — for Active Network Inc., Bankrate Inc. and Zillow—and one "neutral," for Groupon Inc. He initiated coverage on four non-Citi led IPOs, with three "hold" ratings and one "buy."
The three Citi IPOs he rated "buy" have underperformed the market by an average of 5.7 percentage points; the non-Citi IPO stocks he rated "neutral" have done worse, underperforming by an average of 45 points.
Thursday, January 5, 2012
Wall Street Research is Still Biased
Interesting article in the WSJ today about an internet analyst at Citi who has been drawing hot IPOs to his firm. This just serves to highlight the fact that even after the changes that were made in 2003, Wall Street research is still biased and always will be.