Analysts are not created equal. Some time the market masterfully; some offer detailed industry knowledge; others, as Sir Nigel Rudd once pointed out uncharitably, are just “stupid”. (The same, doubtless, applies to company chairmen.) But at least one group of analysts has won a vote of confidence from a large consumer of their work. Research from hedge fund GLG found that from 2005 to 2009, brokers’ “buy” recommendations for European stocks outperformed the market; in 2008, for example, by almost 1.5 per cent over the 100 days following such a recommendation. “Sells” performed less consistently, though, and had a terrible time in 2009 as analysts missed the rally.

Others in the research department are also earning their keep – to GLG’s benefit. The group typically asks one research salesperson at each broker to contribute fundamental trading ideas, based on their analysts’ “buy” or “sell” recommendations, with a two- to three-month time horizon. Among those 5,000-odd ideas each year, the “buy” recommendations outperformed the larger universe of positive analyst views – although “sells”, again, gave more mixed results. This could suggest that GLG benefits from the type of exclusive short-term information that, some claim, is available only to preferred clients. One example is the nuggets that might emerge from Goldman Sachs’ huddles between its research analysts and traders.