Sell Signal on 36% Profit Increase Has Analysts in Math Denial

Sell Signal on 36% Profit Increase Has Analysts in Math Denial

By Rita Nazareth and Lynn Thomasson


Aug. 30 (Bloomberg) -- Meyer Shields says earnings at Warren Buffett’s Berkshire Hathaway Inc. will increase the most since 2006 this year. He’s also telling investors to sell the shares because the economic recovery is weakening.

The Stifel Nicolaus & Co. analyst has plenty of company. For the first time since at least 1997, fewer than 29 percent of ratings for stocks covered by brokerages worldwide are “buys,” according to 159,919 recommendations compiled by Bloomberg. Analysts are turning more pessimistic even as they push up estimates for profit growth among Standard & Poor’s 500 Index companies to 36 percent, the highest since 1988.

“People are sitting on a fence,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion. “When I go and talk to our equity analysts, they look at the companies and say, ‘Boy these companies look pretty good, earnings are OK, they have plenty of cash. What if there’s a double dip?’”
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