Why should this be surprising? The best minds in investment houses aren't occupied drafting investment analysis for retail investors, they're occupied making money. By contrast, retail investors who have a serious stake in the companies they follow have both time and incentive to develop a more complete picture of the companies they follow -- based not only on the work of other analysts, but based on observation and on comparisons and models that may have yet to reach the attention of busy analysts. If these private parties have the inclination to discuss their thinking, they can be great sources of thought on the companies followed.
The highlighted non-Analysts include Andy Zacky, author of the Bullish Cross blog. His analysis looks at historical trends to project earnings relative to recent company guidance. He shows his math in tables that are easy to follow, and he offers support to some specific predictions from sources that report on computer sales. Perhaps the most delightful example of how observant, reasonable people can get better results than analysts signing their names above well-recognized firm logos, is offered by this Zacky paragraph:
iPhone estimates are relatively easy and straight forward and easy to calculate this quarter. As of the end of fiscal Q2 2008, Apple sold approximately 5,407,000 iPhones as indicated by Apple's financial statements. On June 9, 2008, approximately 21 days before the end of the quarter, Apple's own Steve Jobs announced at WWDC 2008 that Apple has sold 6 million iPhones as of that date. Simple math indicates that Apple will sell approximately 600,000 iPhones for Q3 — 5.4 million Apple already sold as of the end of Q2 minus the 6 million iPhones announced at WWDC amounts to 600,000 iPhones. Since Apple has discontinued the current model, and announced the new 3G model, I doubt the EDGE iPhone will be making significant inroads between June 9 and June 30 which marks the end of the fiscal quarter. As easy as this calculation sounds, you'll be surprised to see how many analysts will get this wrong.Zacky's upside estimate, modeling the event that Apple's recent gross margin drop was a temporary matter, provides an idea what magnitude the possible upside surprises might be.
Another non-Analyst highlighted by the above-linked article goes by the handle Deagol on MacObserver's Apple Financial Board, and has posted analytic spreadsheets on StashBox. A strength of Deagol's comments is that he doesn't preach buying or selling in general, but in comparison to specific prices, based on his fair value calculations. A downside is that he seems to be modeling from past trends and without reference to specific current-product market-performance issues. His recent spreadhseet makes an interesting argument that analyst earnings estimates are of little predictive value of Apple performance, but that share price tends to predict the company's future earnings at a specific PE. How to interpret this in light of the shares' volatility is presumably left as an exercise for the reader. It might be interesting to see these results plotted backward further into the past.
Of course, my own analysis of Apple has certainly shown some shortcomings -- but at least where I've posted views I've been consistent with my story. Revising my historic predictions on the basis of earnings announcements isn't a game the small-timers and amateurs can play -- they'd be laughed out of the ballpark. We've got to make sense.
Paid analysts don't even need to make sense.