Skillful Advice from Seeking Alpha?

Do non-professional analysts who publish on Seeking Alpha offer valuable stock-picking advice? In their August 2020 paper entitled “The Cross-Section of Non-Professional Analyst Skill”, Michael Farrell, Russell Jame and Tian Qiu measure skill among such analysts as the hypothetical abnormal return an investor would earn by following reports/recommendations that focus on one common stock over 5-day or 63-day post-publication holding intervals. They classify recommendations as buy or sell using either: (1) disclosed author positions, or (2) sentiment of associated reports inferred from word usage. They measure abnormal return for each recommendation as its 6-factor alpha, adjusting for market, size, book-to-market, profitability, investment and momentum factors calculated from daily returns from 13 months to one month before the recommendation. They further test an implementable trading strategy that buys (sells) at the ask (bid) and subsequently sells (buys) at the bid (ask) price at the end of the holding period, with and without delays of 24 to 72 hours after publication. Using 123,120 Seeking Alpha research reports prepared by 1,879 non-professional analysts (each with at least 10 qualifying reports) and focused on single common stocks, along with contemporaneous stock and factor returns, during 2005 through 2017, they find that:

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