Since his bid to return to politics failed, former New York governor Eliot Spitzer is now backing an innovative Israeli tech company called TipRanks. Over 4,700 Wall Street analysts are rated and ranked by the site, which aims to hold financial experts accountable for their stock recommendations. Users can also search any stock to view the most successful analyst’s recommendations on that stock right now. Here, for example, we can see that top analysts have a cautiously optimistic outlook on Apple (NASDAQ:AAPL) based on 27 recent analyst ratings.
Spitzer, who earned the nickname “Sheriff of Wall Street” for going after corrupt financiers, is also a committed advocate for analyst accountability: in 2003 he led an investigation into analysts issuing overly optimistic reports to secure work for colleagues. The largest financial firms subsequently settled for $1.4 billion.Now he has turned his attention to one of the most crucial questions faced by investors. “This is more important for investors,” says Spitzer. “This isn’t whether [analysts] are [misrepresenting companies] intentionally. This is simply, are they good or bad?”
He recently appeared on CNBC’s Halftime Report with TipRanks founder and CEO Uri Gruenbaum to discuss whether investors can trust Wall Street analyst recommendations.
According to Gruenbaum "We provide our users with the simple answer of whether that guy can be trusted or not". Founded in 2012, TipRanks measures the performance of Wall Street analysts against objective criteria such as success rate and average return. For example, the no.1 analyst right now, B.Riley FBR’s Craig Ellis, has a very impressive success rate of 83% and average return of 39% across 390 stock ratings.
“There is a lot of bad advice making the rounds in top financial publications” Gruenbaum explained, “Let’s face it, not all analysts are created equal. By scanning leading financing websites for analyst recommendations, TipRanks is able to provide relevant information regarding the analyst’s performance history so that [investors] can make informed financial decisions.”
As well as analysts, TipRanks now uses its natural-language-processing algorithms to track three other types of financial experts, namely corporate insiders, financial bloggers, and leading hedge-fund managers. Plugging Apple into the firm’s search engine, for example, returns an average analyst price target of $195 a share, representing upside of around 9%, and a ‘Very Positive’ hedge fund sentiment signal.
Investors can use these statistics to immediately discover the best financial experts who consistently outperform the market. In the words of Spitzer “this is information transparency the way nobody else provides it."