Get to Know a Guru

At The Motley Fool, we poke plenty of fun at Wall Street analysts and their endless cycle of upgrades, downgrades, and "initiating coverage at neutral." In our recurring column "This Just In," we cover the most headline-worthy upgrades and downgrades, testing the analysts' logic and examining their records to help you decide whether they're worth listening to at all. And in "Get to Know a Guru," we use upgrade and downgrade news as a springboard to introduce you to some of the lesser-known names in analyst-land. Up this week: Morgan Keegan.

Profiles in punditry
As all eyes turn to the clock, counting forwards until pet hospitalier VCA Antech (NASDAQ:WOOF) reports its quarterly earnings this afternoon, this Fool's eyes wander backwards to an analyst upgrade the stock received back on Friday. The name of the analyst -- well, that's a story in itself.

You know how you hear a name sometimes, and it seems familiar, but not quite known? That's the feeling I get when I hear the words "Morgan Keegan." The name fits into a continuum of analyst names that kind of blends together: Morgan Stanley, Morgan Keegan, JPMorgan, JMP Securities ... So who is Morgan Keegan, anyway? Well, that's just what I set out to learn. Without further ado, let's get to know this guru.

According to Motley Fool CAPS: "Morgan Keegan is a regional investment firm that offers full-service investment banking, securities brokerage, trust and asset management services to its clients. The equity research analysts follow over 200 companies within the following sectors: consumer products, consumer services, energy, financial services, health care, homeland security technology, industrial distribution, insurance, real estate, special situations, technology, transportation, and trucking."

That's the sales pitch. For a bit more color on Morgan Keegan, I turned to its own website. There I learned that the firm is based in Memphis (Tennessee, not Egypt), has more than 400 offices in 19 states, and since 2001 has been a wholly owned subsidiary of southern financial powerhouse Regions Financial (NYSE:RF).

Are these guys any good?
So much for the firm's biography. What we really want to know about is its resume. When MK speaks, should investors listen?

There's no nice way to say this: No, you probably should not listen to anything Morgan Keegan has to say. I don't mean to sound harsh, but for a firm with nearly a 40-year history under its belt, MK's record on CAPS is simply abysmal. On CAPS, we hide its rating behind the fig leaf of an "Under 20" euphemism to avoid undue embarrassment. But you can assume that the firm's true rating is very low indeed -- because its overall CAPS score is negative, and its 45% accuracy rating tells you that MK's picks are more often wrong than right. For instance:

Of course, every dog has its day. Morgan Keegan's good days were when it picked stocks like:

Speaking of dogs, it was MK's recommendation of VCA Antech in particular that got us looking at the firm, so perhaps a few woofs on that company are in order. According to MK, the tainted pet food scandal that began with a recall on March 16 will boost VCA Antech's profits when it reports this afternoon. According to MK, it's likely that more pet owners than usual availed themselves of VCA Antech's services, paying to have their animals tested for illness, and perhaps paying even more for treatment in the quarter ending in March.

Granted, there were just two post-recall weeks in the quarter, so the difference in profits might not be much. Still, MK's logic seems sound. If the predicted profits do not materialize this afternoon, look for them to show up next quarter, into which any testing conducted in April will fall.

While you're waiting, if you'd like to hear from an analyst with a truly stellar record of calling VCA Antech right, click on over to the company's CAPS page. There you'll learn that the "analyst" who knows VCA Antech best is no analyst at all, but an ordinary, individual investor just like you and me.

JPMorgan is an Income Investor pick.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 137th out of more than 27,000 raters. The Fool has a disclosure policy.