Gordon Johnson | The Unplugging of Solar Power | Zer0es TV

TL;DR

Wall Street analyst Gordon Johnson shares his journey of setting up a broker dealer and publishing negative research, focusing on his bearish views on Tesla.

Transcript

all it takes is a change in sentiment all it takes is for a big investor in some run to say hold on you're telling me 20 years down the line every one of your customers is going to renew their solar contract with you no way so today we're talking with gordon johnson of glj research now gordon is very rare on wall street because he owns a broker dea... Read More

Key Insights

• 😚 Wall Street often discourages sell ratings due to the dominance of investment banking business and fear of losing client relationships.
• 😀 Short biased research faces significant challenges and risks, including limited access to management and legal implications.
• 👨‍🔬 Many sell side analysts and investment banks prioritize investment banking revenue over unbiased research.
• 😤 Access to management teams and conversations with them play a significant role in the analysis of long-only investors.

Questions & Answers

Q: How did Gordon Johnson transition from investment banking to research?

Johnson started in investment banking but found he enjoyed stock-picking over the long hours of investment banking. He gradually transitioned to the research side and learned the job through working with experienced analysts.

Q: Why did Johnson initiate sell ratings on solar stocks?

Johnson identified a significant oversupply in the solar industry and believed sell ratings were warranted. However, he faced resistance from his employer due to the dominance of the investment banking business and the fear of losing business opportunities.

Q: Why did Johnson decide to start his own broker dealer?

After facing pushback and limited access to companies, Johnson felt the need to take control of his research and provide unbiased analysis. He believed his clients valued his product and made the decision to start GLJ Research.

Q: How does Johnson's research process differ from typical sell side analysts?

Johnson emphasizes a comprehensive analysis of companies, considering factors such as demand, costs, and industry trends. He avoids backing into a conclusion based on stock price movements and focuses on building accurate models for valuation.

Summary & Key Takeaways

• Gordon Johnson started in investment banking but transitioned to research due to his interest in stock-picking.

• He noticed the oversupply in the emerging solar market, leading him to publish sell ratings on solar stocks, which was rare.

• Facing pushback and limited access to companies, Johnson decided to start his own broker dealer, GLJ Research, in order to provide independent and unbiased research.