This Just In: Upgrades and Downgrades

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." So you might think we'd be the last people to give virtual ink to such "news." And we would be -- if that were all we were doing.

But in "This Just In," we don't tell you what the analysts said and stop there. No, we're here to hold Wall Street to account. We're going to tell you what the analysts said ... and then show you whether they know what they're talking about. Helping us in this endeavor will be Motley Fool CAPS, our tool not only for rating stocks but also for rating the analysts who rate the stocks. With CAPS, we'll be tracking the long-term performance of Wall Street's best and brightest -- and its worst and sorriest, too.

And speaking of the best ...
According to briefing.com, an outfit by the name of Am Tech/JSA Research downgraded the stock of smallcap chip designer Sigma Designs (NASDAQ:SIGM) to neutral yesterday. All together now, say it with me: "That's nice... Um, who the heck is Am Tech/JSA Research?"

Funny you should ask -- I was wondering the same thing myself. Fortunately, the purpose of these columns is to help you get to know the analysts behind these ratings. So I did some digging on the Fool's data provider, Capital IQ, and here's what I found.

The "JSA Research" part refers to a 14-year-old Rhode Island operation that specializes in "aerospace equity research" -- companies such as Boeing (NYSE:BA), Raytheon (NYSE:RTN), and Lockheed Martin (NYSE:LMT). JSA has a "distribution partner" by the name of "Am Tech" -- a Connecticut shop whose full name is "American Technology Research." Formed in 2002, and staffed with refugees from higher-profile Wall Street firms, who fled their corporate overlords in search of freedom from the sell-side's bias toward, ahem, irrational exuberance, Am Tech is today "dedicated to delivering quality, unbiased, fundamental research."

Mere puffery, you say? You want Am Tech to prove it? I had much the same thoughts -- until I checked out this pair's record on CAPS and discovered what a stellar combination they make. There, I learned that these analysts boast a combined rating of 98.47, good enough to put them in the top 10% of Wall Street firms tracked by CAPS and deserving of the coveted "Wall Street's Best" icon.

With the younger half of this firm just five years old, and with the entire firm being tracked by CAPS for less than one year, Am Tech/JSA Research is already proving itself one sharp stock picker. It has gotten its calls right 68% of the time. Its claims to fame already include the following:

I must say that for a firm largely established on the premise that "sell-side research [is] biased and investment-banking influenced," Am Tech still makes precious few underperform calls. Out of its 67 picks that we're tracking on CAPS, the firm encourages investors to sell just eight times. That's a pity. I'd actually like to see Am Tech "go negative" more often, not least because with six out of its eight underperform ratings are beating the market, it looks as though the more pessimistic Am Tech is, the more often it's right!

Still, I don't want to quibble. In its short history as an independent shop, this team of analysts has already established an enviable record for itself. My conclusion: When Am Tech says "buy," investors should listen. And on those rare occasions when Am Tech says "sell," investors should listen but good.

That said, Am Tech isn't saying you should "buy" or "sell" Sigma Designs today. Its stance on the company is utterly neutral. If you're looking for more opinionated, er, opinions on the company, try visiting CAPS yourself. Over there, we've got 167 investors rating the stock, including one chap whose Sigma pick has already netted a clean two-bagger. To learn the identity of this wise Fool, just click here.

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 32nd out of well over 25,000 raters. Shanda is a Motley Fool Rule Breakers pick. The Fool has a disclosure policy.