TL;DR
Whether an analyst becomes a star doesn't depend on forecast accuracy; it's their knowledge and how interestingly they convey it that investors reward.
Every year, organizations vote for "star analysts," but the contest has little to do with being right. One investment manager said he only reads reports from analysts who tick at least two of three boxes: they make me money, they make me think, or they make me laugh.
In other words, even if you don't make clients money, you can still succeed as long as you make them think or laugh.
A team from the University of Florida used large language models to score 1.22 million industry reports from 40 major US brokerages between 2012 and 2024, then checked who was most likely to be voted into the Institutional Investor All-Star team.
1. Bigger brokerages produce more stars
The bigger the brokerage, the more clients it has, which makes it easier to gather votes. So analysts at larger firms are more likely to be elected.
2. Accuracy hardly matters
Surprisingly, improving forecast accuracy has almost no effect on the chance of becoming a star analyst. Being right doesn't help.
3. Knowledge and communication are key
What really counts is how knowledgeable an analyst is about their industry and how well they convey that insight. Investors reward analysts who make them think.
In short: for an analyst, being interesting beats being right. Making investors think pays better than making them money.
Curated from high-quality sources, with concise summaries and key takeaways.
