Generally, the buy side spends more time working top-down rather than bottom up, so the bulk of due diligence is building proprietary models that helps build a short list of potential investments. Sell side works more bottom up (i.e. you’re going to cover a company so then you look at the macro picture and how it will effect the key drivers of the company).

“…not for educational purposes. No analyst report that I’ve ever read mentioned what important components of a qualitative assessment produced the company’s current quantitative results.”

A key point i want to make is that the analyst reports are educational for current and future events, but they do not strive to educate the potential investor on past events that lead to the current results (the exception being if the past event was last quarters just released earnings). The lack of education on how the company came to be happens for two main reasons: 1) Analyst reports are produced for the institutional investor crowd not the retail crowd. With this target market in mind, the Institutional investors do not care how the company came to be because 2) You can find all past how the current profits came to be by going through the annual and quarterly earnings reports, the MD&As, the AIFs, and any prospectuses and any buy side firm worth its money would have already done their own proprietary background analysis and would understand the company.

The sell side does produce one single report however that contains all the background of the company, the industry, the markets, its strategy, its structure etc. that does clarify how the company came to be and that is the initiating report. Once that document is published, shorter notes detailing current events gets published from there on and these reports do not tend to rehash ideas and education commented on during the initiating report.

sorry for the long winded post. just sharing another perspective. Cheers.