Lesson 5 of 7 · All lessons in this module
- Company research reports and the analysis framework
- Recommendations, target prices and the investment thesis
- The body of the report: business, peers, financials, valuation, risks and ESG
- Sell-side research: audience, constraints and incentives
- Buy-side research, stock screens and activist short sellers
- Hard-to-value stocks and the growth rate implied by the price
- Why analysts disagree: revenue, margins, investment and financing
This lesson is part of the 2027 curriculum. You are following the 2026 curriculum, where it is not taught in this form. Switch if you are sitting the exam under the 2027 curriculum.
Lesson 5 of 7 · 12 min
Buy-side research, stock screens and activist short sellers
Buy-side research is confidential and serves the firm's own decisions; a stock usually reaches a full report only after passing a screen built around the strategy, and activist short sellers are buy-side researchers who publish to move prices.
In short
- Buy-side research is confidential, reported to internal decision makers and used by investment committees to make decisions and monitor existing positions.
- A stock screen narrows a universe in steps: start set → strategy-based quantitative criteria → secondary criteria → a list short enough to research in depth.
- Arbitrary thresholds can exclude attractive stocks; near misses and rank-ordering are ways around it.
- The buy side has more flexibility than the sell side to research smaller, less-followed stocks.
- Activist short sellers research stocks likely to fall, often alleging misinformation or fraud; they share findings with their limited partners first, then publish to influence the price and attract clients.
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