Briefings

Week InReview: March 31, 2017

"I compare the timing of information acquisition among institutional investors and sell-side analysts, and I show that hedge fund trades predict the direction of subsequent analyst ratings change reports while other investors' trades do not. In addition, hedge funds reverse trades after analyst reports, while other investors follow the analysts. Finally, I show that hedge funds perform best among stocks with high analyst coverage. These results suggest that hedge funds have superior information acquisition skills, and that analysts assist hedge funds in exploiting information acquisition advantages."

From a working paper by Nathan Swem of the Federal Reserve about Information in Financial Markets: Who Gets it First?

Read entire Week InReview: March 31, 2017
img