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 simply tell you what the analysts said. We'll also show you whether they know what they're talking about. To help, we've enlisted Motley Fool CAPS, our tool for rating stocks and analysts alike. 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 worst ...
London-based banking behemoth HSBC took an interest in American clothiers yesterday, when it initiated coverage on a handful of stocks. More interesting still, the broker didn't just upgrade or downgrade them en masse; it picked and chose its positions. Abercrombie & Fitch (NYSE:ANF) and Ann Taylor (NYSE:ANN) -- up; Limited (NYSE:LTD) -- down; American Eagle (NYSE:AEO) and Chico's FAS (NYSE:CHS) -- neutral.

News reports on the new ratings don't tell us much about the criteria HSBC used for setting its ratings as it began covering the sector. So when deciding how to react, investors basically have just one thing to go on: HSBC's record. Fortunately, Motley Fool CAPS can help with that, because we've been "rating the rater" since August of last year.

As you may recall, when last we checked in on HSBC, it was very much a basket case. Its CAPS rating stood at a mere 68.20, and it was getting more picks wrong than right. In the three weeks since, HSBC has improved in at least one regard -- its CAPS rating is now up to 73.78, meaning the firm is making better stock picks than three out of four investors. In the other regard, though, HSBC still has reason to feel embarrassment. With an accuracy rating of just beyond 47%, it's still less accurate than flipping a coin.

Fact check
The good news is that HSBC is at least making progress. As you may recall, I agreed with HSBC's reasoning when it downgraded Coach (NYSE:COH) to neutral earlier this month. As it turns out, we were both right: Despite rising slightly since HSBC downgraded it on April 3, Coach has indeed lagged the S&P by about 3 percentage points. Chalk one up for HSBC.

Logic check
As HSBC breaks into the apparel-retailers sector, what's behind its ratings? About the only common theme I can find in the five choices is that, where the recommendation is to hold or buy, the company looks fairly valued with a P/E ratio approximating analysts' consensus for its growth rate -- that is to say, a PEG of about 1.0. (In Limited's case, the PEG is a bit higher than average at 1.1, and you'll notice that is HSBC's only "sell" rating.)

As I've already mentioned, news reports aren't clear on whether this was the primary criterion -- or indeed, even a factor -- in yesterday's recommendations. But as theories go, it's a start, and a reasonable one. That said, on at least two of HSBC's picks, I'm going to have to respectfully disagree with the firm's pessimism.

The reason: When HSBC says to sell Limited and just hold American Eagle, it's going up against the proven success records of two of the Fool's best newsletters: Motley Fool Income Investor, which has outperformed the S&P by 9% since inception, and backs Limited; and Motley Fool Stock Advisor, a 40% outperformer that has added American Eagle to its portfolio. Rating Limited an underperformer and American Eagle an also-ran, when these companies are endorsed by some of the Fool's best stock-pickers, seems like a fool's bet to me -- with a small "f."

Still not convinced? Need some more feedback? Then double-check our analysts' reasoning, and HSBC's, and my own, by seeing what our score leaders on each of these stocks has to say. You'll find the opinions residing on the companies' respective CAPS pages:

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 275th out of nearly 28,000 raters. The Fool has a disclosure policy.