Net Net: Promoting innovation and managing change
Net Net: Promoting innovation and managing change

Dunkin’ Sachs: Goldman Does the Right Thing

Dunkin Donuts
Mario Tama | Getty Images

I’m late to this story that everyone else in the world covered Tuesday. But I don’t understand why their hasn’t been louder applause for Goldman Sachs analyst Michael Kelter initiating coverage of Dunkin' Brands with a "sell" rating.

There’s even been a mildly critical tone in some of the news coverage, implicitly scolding Goldman for being an underwriter for the Dunkin's initial public offering and then having its research department brand the stock as overvalued.

Am I missing something? Isn’t this what all the Wall Street scolds have been begging for?

Not that long ago, the “corruption” of stock research was one of the biggest complaints about Wall Street. The idea was that the investment-banking divisions had basically captured the research divisions, transforming research into a form of marketing for IPOs.

So we had prosecutions and evictions from the securities industry. A global settlement. Building “Chinese Walls” between investment bankers and research analysts. Now we would finally get research that was truly independent, free from the investment-banking conflict of interest mess.

That hasn't worked out well, mostly because no one has figured out a good business model that can make that sort of research pay off.

There’s far more money, if you’re a great stock analyst, in hedge funds, for instance. Why churn out reports that brokers—also a troubled model—can use to pitch to clients?

But this Goldman report is exactly what the white hats wanted. And what do we get? Headlines like this: “Dunkin’ Underwriter Goldman Sachs Gives Stock ‘Sell’ Rating.”

Maybe it’s just a Goldman thing. Everything it touches withers on the media vine into a form of double-dealing.

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