CRA Insights

The Cammer analyst factor in securities class actions

February 10, 2020

In a previous article on Bloomberg Law, we presented statistics on how the turnover factor has evolved in the past 30 years since Cammer. In this article, we focus on the analyst coverage factor for companies trading on NYSE, NASDAQ and AMEX (up to its acquisition by NYSE) for which analyst coverage information is available.

Analyst coverage has increased significantly over the past three decades. However, there is still a non-trivial fraction of stocks that are covered by few, if any, analysts. Since there is no bright-line threshold for the number of analysts following a stock, in this paper we set an illustrative benchmark at the number of analysts that covered Coated Sales – the stock at the center of the Cammer decision. The vast majority of large exchange-traded companies exceed the number of analysts that covered Coates Sales. However, the finding that a significant portion of stocks have very few analysts contrasts with the claim that merely trading on a major US exchange ensures efficiency.

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