Last week, Institutional Investor announced the results of its 2016 All-American Research Team with J.P. Morgan regaining the top spot after losing a close race to Merrill Lynch last year.
All-American Equity Research Team Results
In winning this year J.P. Morgan had 40 analysts being voted to the All-American Research Team – a gain of four analysts over 2015. BofA Merrill Lynch which earned second place had 32 analysts make the team, a drop of six analysts over the prior year. Evercore ISI put on a strong showing, ranking third overall in 2016 with 30 analysts making the All-American Research Team. This was a gain of five analysts over last year’s 3rd place finish.
Another way to look at the 2016 Institutional Investor results is by using a weighted average, where higher ranked analysts earn more points, thereby rewarding banks for quality finishes versus the quantity which made the cut. From this perspective, J.P. Morgan earned the top spot with 109 points; Evercore ISI took second place with 79 points; and, UBS took third.
A total of 294 analysts from 30 different sell-side firms were voted onto this year’s team, out of a universe of over 2,100 analysts from 120 firms who were eligible. The 2016 All-America Research Team reflects the opinions of 3,835 individuals at 1,090 buy-side firms, including more than 90 of the 100 biggest U.S. equity managers.
The 2016 Institutional Investor All-American Research Team ranking confirmed the continuous strength of J.P Morgan’s equity research franchise as the firm has taken the top spot in this survey six times over the past seven years. What was even more impressive this year was J.P. Morgan’s 30 point lead over second place when using a weighted average. Clearly, J.P. Morgan has a stellar research team.
Another conclusion we took away from this year’s II ranking is that Evercore ISI is for real. Last year, Evercore ISI tied for the third in the II All-America Research Team, the highest ranking ever for the firm. This was a jump from 5th place in 2014 when the firm was created following Evercore’s acquisition of ISI. This year’s third place (or second place depending on how you look at it) proves that the firm has quickly become a heavyweight in the U.S. equity research business.
Of course, this does not mean that either of these investment banks, or any of their sell-side brethren, should relax. In fact, some might argue that this coming year or two might be a few of the more challenging the industry has ever faced as the EU’s MiFID II regulations look to force investment banks to unbundle research payments from the traditional cozy relationship with their trading desks.
In fact, we could see significant changes in the II rankings in the coming few years as a number of sell-side investment banks are forced to reevaluate just how committed they want to be to the traditional equity research model given the change in payment model and economics.