Ann: Ceasing to be a substantial holder, page-19

FWIW, my 2 cents - I believe the broker’s don’t upgrade their estimates every time something happens - they try to provide a calm periodic review unless there is a significant news event. And like all of us they are having a look at consensus and unless they have very high conviction on a company are unlikely to stick their heads out too much I think. There’s also the way we all come around to new ideas which is not completely logical or linear - factors that are possible get ignored until they are more visible (back to those biases again) and suddenly they become probable and priced in as certain for some people.

My overall point would be it’s good to spend some time looking around at what the brokers say about a company but not too much time. You are really looking to see where you disagree with them on their key points which is why their actual research reports are more useful than the target price or eps (if you can get your hands on them from time to time, even a copy of an older one). For example I have fnarena and it doesn’t give the report but shows a short summary. It says from memory that ubs thinks that NRW’s margins are probably peaking now. That is of mild interest to me because they still increased the target price as you say, but also because I think there is a chance margins will actually slightly improve for the next few years year because of one offs, ADB improvements eventuating, the new RCR revenue, the place in the cycle and because NRW are saying they are not seeing cost pressures everyone else is seeing. (DYOR etc). I think ubs is looking at the other MS companies and seeing kinda average margins (could be wrong).

Aside, my impression is the funds managers use these reports (to a greater or lesser extent, depending on their style) as their sort of ‘default’ position.  For example, I’ll guess that Vinva use the broker estimates a lot because they are a quant fund and I don’t think do their own internal financial analysis or estimates for a company. On the other hand Wellington I believe are a high conviction value fund and they would use broker estimates not much at all or only as a way of seeing where they have a significantly different view to the ‘market’.

All my 2 cents, DYOR etc.