The stock analysts; the Wall Streeters who tell you when and what to buy and sell

Washington Monthly, Oct, 1987 by John Rothchild

This explained their curiosity about each others' opinions. All day they are on the telephone talking to important investors, jockeying for influence. Each wants to have something new to tell the client that outdoes the previous caller. Each wants to be prepared for what's been said about them before they hear it from a client's mouth. Each struggles to be first on the telephone with the slightest nuance, such as an unusual jump in shampoo sales, or some unexpected loss in the razor sector.

As to where they get their information, Ms. Longley said most of it comes straight from company headquarters. Each Gillette analyst calls Boston two, three, even four times a week, to talk to Milton Glass. Mr. Glass is the Gillette vice president in charge of giving Wall Street the latest scoop on the company's progress, projected earnings, etc. After they hang up with him, the analysts quickly phone the big shareholders, hoping to tell them what's happening before the other analysts get through.

Squawking for Munsingwear

I drove up to Boston to meet this Mr. Glass. He was a perfect gentleman, and generous with his time. During a nice chat in his office, he expressed a fatherly affection for the analysts who follow Gillette. Since most of them call him at least once a week and see him in person four times a year at the quarterly meetings, he's gotten to know them as family.

Over a delicious lunch in the executive dining room, I told Mr. Glass my impressions of his analysts, how Ms. Hall of Prudential-Bache was ebullient, Mr. Raj of Merrill Lynch was cautious, and Ms. Temple of Salomon Brothers seemed a little grumpy. He confided that Ms. Temple was in a bit of a personal slump, which might explain her negative mood about Gillette, even though her earnings estimate was high. "Last year, she picked our Body Flowers as the product of the year and it failed. I cautioned her I didn't like the product myself,' said Mr. Glass. He was delighted with Ms. Hall's "domestic story,' because it presented the same information the others had received but in a more imaginative way.

In a few minutes with Mr. Glass, I began to understand why Wall Street analysts tend to think alike. After all, their earnings estimates for Gillette fell in a very narrow range, with hardly a dime separating the optimists from the pessimists. They get their information from the same source, in this case my host. Mr. Glass was determined to tell all of them the same thing at the same time, so none would be favored.

"Favoring an analyst would be a very serious matter and I don't do it,' said Mr. Glass. He reminded me of a college professor overseeing the writing of a term paper. His students, Ms. Hall, Ms. Longley, etc., worked with the same basic material and were expected to come up with the obvious answers, albeit with a few distinguishing flourishes.

In general, an analyst must explain back to the company what it already knows is happening to itself. Excessive flattery, or criticism, or oddball conclusions can ruin the relationship. An analyst with unpopular ideas may, like the fanciful newspaper reporter, be cut off from the source of information on which he or she depends. Mr. Glass said there's no such blackballing at Gillette, where all analysts are treated equally, but I've heard it's a fact of life at many companies. If there's important news from corporate headquarters, the popular analyst may hear it first.