Practical analysis for investment professionals
09 May 2012

Mike Mayo, CFA: Lessons for Financial Analysts from the Exile on Wall Street

In a passionate talk at the 65th CFA Institute Annual Conference in Chicago, veteran banking analyst Mike Mayo, CFA, delivered some advice for young analysts thinking of issuing a negative rating on a stock: do your homework, make sure you’re right, and develop a thick skin.

As chronicled in Mayo’s book, Exile on Wall Street: One Analyst’s Fight to Save the Big Banks From Themselves, companies that are the subject of less-than-glowing coverage may come after you, and, says Mayo, the managing director of the banks group at CLSA, “they have a lot of ways to humiliate you and make you look stupid.”

This is one reason why — even after the 2008 financial crisis — only 3% of U.S. stocks are rated by analysts as a “sell.”

When first contemplating whether to issue a sell rating on a bank he covered, Mayo said he wrestled with the feeling that he was violating loyalties — to company management, to his employer, and even to his family, which might suffer if he lost his job as a result of the downgrade. “But that’s not what I was taught in the CFA Program,” he said.

Read more on the Annual Conference blog →

About the Author(s)
Charlie Henneman, CFA

Charlie Henneman, CFA, is head of educational events and programs at CFA Institute. Previously, he was the director of structuring and operations at Indosuez Capital, the CDO (collateralized debt obligation) management group of Credit Agricole Indosuez. Henneman previously held several positions in credit and structured finance, including managing director at advisory boutique AGS Financial, senior vice president and chief credit officer in the new products and ventures group at Enhance Financial Services Group, Inc., and director in the new assets group on Standard & Poor's structured finance ratings team. He holds a BA in political science from the University of Rochester and an MBA in finance from the New York University Stern School of Business.

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