Two months ago, we revealed the list of stocks most hated by the buy-side: that increasingly clueless cabal of Hotel California groupies which, unable to do fundamental analysis (thanks to the Fed) is forced into the same trades and then, when a paradigm shift strikes (as happened ever so frequently over the past year) is crushed under their own and their peers' weight leading to the worst hedge fund performance year since 2008. We said to go long these names in advance of hedge fund liquidations and collateral and margin calls. Incidentally, the trade generated substantial alpha in the past 6 weeks. The full list can be found here.
Today we were not at all surprised to find that the buyside's revulsion toward some of the worst (if better performing) stocks has spread and hit the sellside. Acording to Bloomberg, "analysts" are already ratcheting down their expectations for U.S. stocks, while various economic models are also moving downwards.
As a reminder, we have been covering the gradual conversion of banks such as JPM, Citi, UBS and today, BofA, who have all said to no longer "buy the dip", but to "sell the rip" instead, and while selling stocks, "buy gold."
More details:
Investment banks, including RBC Capital Markets and Citigroup, have been growing more cautious on U.S. stocks and telling clients to look for better opportunities elsewhere. "Fading [earnings per share] momentum and rising Fed funds mean that, after six consecutive years of outperformance, we cut the U.S. to 'underweight,'" Citi said this week.
Meanwhile, forecasts for U.S. economic growth have also been drifting lower because of a raft of newly released and worse-than-expected manufacturing data. Barclays lowered its U.S. fourth-quarter tracking GDP estimate to 1.1 percent from 1.2 percent, while JPMorgan Chase slashed its estimate to 1 percent from 2 percent on lower construction spending and weaker inventory investment. Meanwhile, the Atlanta Fed’s GDPNow indicator shows 1 percent growth for the fourth quarter, down from 1.3 percent on Dec. 23.
Incidentally, these are all the same "experts" who saw nothing but blue skies a year ago when stocks were at all time highs, and nothing seemed able to derail the diagonal move up and to the right... which now even the Fed's own former presidents admit was an artificially contrived levitation, all entirely thanks to the Fed and its central bank peers.
And while the list of "most hated buyside" stocks is at least actionable, not even we are sure what to do with the list of companies that are most hated by the sellside, besides perhaps revealing what it is. So for all those wondering, here courtesy of Factset, is the list of 10 S&P500 companies with the highest percentage of Sell ratings.
But first, some commentary from FactSet:
The number of Sell ratings increased by 4.5% relative to Q3. Six sectors witnessed a rise in the number of Sell ratings, led by the Health Care (+18%) sector. One sector (Telecom Services) recorded no change in the number of Sell ratings. Three sectors witnessed a drop in the number of Sell ratings, led by the Materials (-6%) sector.
At the company level in terms of Sell ratings, NetApp (+5) saw the largest increase in the number of Sell ratings during the quarter, while Diamond Offshore Drilling (-4) recorded the largest decline in the number of Sell ratings during this period.
And now, without further ado, the 10-most hated companies by Wall Street analysts.