Inderesin kahvihuone (Osa 10)

[Pohjolan_Eka]

@Jarnis

@Zen65

The problem with Inderes’ recommendations is that a ‘hold’ recommendation cannot be given, which should actually be the most common recommendation, as excessive trading should be avoided, as investment guides already state. It’s hard to understand when other analysis houses manage to give ‘hold’ recommendations…

The explanation for this has always been that in every situation, one must be able to take a view, and “hold” is practically “we failed to take a view”.

In real life, however, this leads to ‘add’ / ‘reduce’ recommendations sometimes being such that they can be interpreted as “add but actually hold” or “reduce but actually hold”

Verneri once had a classic post about the multitude of meanings of recommendations

@Verneri_Pulkkinen

Although recommendations are concise and, in terms of beauty, like a cherry on top of the analysis cake, they can be misleading on their own. I’m writing this somewhat tongue-in-cheek, but the point itself is all the more serious: without knowing the analysis and justifications themselves, recommendations (and target prices) are meaningless.

I have been working at Inderes for 4.5 years now, and here is a list of different recommendations and descriptions I have encountered so far.

As you will soon notice when reading these, you must read the analysis or watch a video where the investment target is discussed to find out the “correct” recommendation.

Note: these are only the recommendations I have observed so far; they are like alien planets in space, meaning more are constantly being discovered over time.

Buy

CONVICTION BUY = The analyst believes 150% in the company and the buying opportunity is genuinely excellent
Buy = Pretty good, read the analysis and consider if it fits your own portfolio
Hazard-buy = The company is really risky, definitely not a “buy” for everyone
Trap-buy = The analyst tries to lure you into a poor (value) company with a buy recommendation for years

Add

Buy-add = Actually a buy recommendation, but the analyst is being cautious by saying ‘add’. In my experience, this is the best recommendation at Inderes!
Buy, but next quarter’s result is bad -add = The analyst is playing games and expects the market to react poorly to next quarter’s bad result, and therefore doesn’t go for a ‘buy’
Add add = You could actually add a little
Loose add = A fairly common recommendation when the analyst could also be on the ‘reduce’ side, but a small majority of factors support a positive recommendation. Very close to a “hold” recommendation.
Hope-add = The company has previously had a buy recommendation, but the story and numbers have not developed as expected. The analyst protects their Starmine points by moving to the ‘add’ side and hopes that the previously envisioned success will still materialize.
HODL-add = Actually a hold recommendation, but it’s not available at Inderes, so ‘add’
Reduce-add = Poor arguments for a positive recommendation, but somehow the recommendation is still ‘add’

Reduce

Add-reduce = You could actually add, but staff are not allowed to go against recommendations
Hold-reduce = hold
Lighten-reduce = A good time to lighten up
Sell-reduce = You should actually sell everything, but the analyst avoids too radical a recommendation for fear of some positive surprise

Sell

Hold-sell = Actually just hold good companies in your portfolio
Lighten-sell = Time for a small lightening
DO NOT TOUCH THIS -sell = The company is as hazardous as radioactive waste and the sell recommendation is a warning sign
Escape-sell = No time to waste, sell as soon as you can