Shrinking Bulge


New York – Regional investment banks have opportunistically added research staff as analysts have been laid off from large investment banks.  We have been tracking press releases announcing equity research hires since the beginning of the year.  Using this metric, hiring reached a peak in May of this year, as regional banks issued a flurry of announcements of recently added staff.

Date Analyst Hiring Firm Sector Former Firm Ranked
10-08 Ed Morse Louis Capital Markets Economist Lehman
1-09 Mark Matthews Fox Pitt Kelton Asian Strategist Merrill Lynch
3-09 Brian Belski Oppenheimer Strategist Merrill Lynch
4-09 Shelby Tucker Oppenheimer Utilities Bank of America II Ranked
4-09 Phoebe Wong Piper Jaffray China Consumer Lehman
4-09 Eric Lau Piper Jaffray China Industrials Deutsche Bank
4-09 Aaron Schwartz Ladenburg Thalmann Software JP Morgan
4-09 Peter Wright GC Research Technology Fidelity Investments
5-09 Rachel Rothman Wedbush Morgan Restaurant, Gaming Merrill Lynch II Ranked 2008
5-09 Lawrence Keusch Morgan Keegan Medical Technology Goldman Sachs II Ranked 2008
5-09 Bret Jones Brean Murray Healthcare IT Leerink Swan
5-09 Michael Horwitz Robert W Baird Clean Technology Stanford Group
5-09 Christine Tezak Robert W Baird Clean Technology Stanford Group
5-09 Yili Liu GC Research Asian Research Fidelity Investments
5-09 John Morris BMO Capital Markets Consumer Wachovia
5-09 Andrew Kaip BMO Capital Markets Metals & Mining Haywood Securities
5-09` Gary Lieberman Wells Fargo Health Care Stanford Group
5-09 Tim Willi Wells Fargo Financial Technology Avondale Partners
5-09 Biren Amin Soleil Biotech Stanford Group
5-09 Gary Tenner Soleil Financials Sun Trust Robinson Humphrey
5-09 Glen Campbell Scotia Capital Telcom Merrill Lynch
5-09 John Roque WJB Capital Technical Strategist Natixis Bleichroeder
6-09 John Pancari Fox-Pitt Kelton Small cap banks JP Morgan
6-09 Tim Long BMO Capital Markets Technology Banc of America II ranked
6-09 Ananda Baruah Brean Murray Computer Hardware Bank of America II ranked 2008
6-09 Charles Minervino Susquehanna Financial Energy Goldman Sachs II ranked
6-09 Jonathan Casteleyn Susquehanna Financial Financials Wachovia
6-09 Mayank Tandon Signal Hill Capital Technology Fidelity Investments
6-09 Andrew Huang Morgan Joseph Technology American Technology Research
6-09 Dana Guido Merriman Curhan Natural Resources Barclays/Lehman
6-09 Michael King Merriman Curhan Biotech Bank of America
6-09 William Ong Merriman Curhan Capital Equipment American Technology Research
7-09 Alan Laws Bank of Montreal Oil Services Merrill Lynch
7-09 Phillip Jungwirth Bank of Montreal Oil Exploration Merrill Lynch
7-09 Ambrish Srivastava Bank of Montreal Technology BMO Capital Markets

Hiring has been consistent across different regional banks.  Recruits have been mostly drawn from bulge firms, but also include hires from Fidelity Investments.  Refugees from Stanford Group, which went bankrupt after Allen Stanford was indicted for fraud, are also featured.  American Technology Research, an independent research firm acquired by Broadpoint Securities in October 2008, also experienced defections of analysts to rival firms.

Not all hires are celebrated by press releases, so this analysis is not comprehensive.  It also does not reflect bulge firms that have been hiring throughout the crisis, such as Credit Suisse.   Barclays Capital is agressively expanding research staff outside the US, as has Nomura Securities.

Nevertheless, when measured by coverage, it appears that the advantages of the bulge firms has been eroding as a result of the current crisis.  The gap between the bulge firms and regionals has narrowed.  Based on our chart below, bulge firms’ coverage of US equities ranges from 700 to 900 stocks.  A couple of regional firms appear to have built their coverage to rival that of the bulge firms.  We estimate Stifel Nicolaus’ coverage at around 800 firms and Raymond James at 700 firms. RBC and Jefferies are on the threshold at coverage of approximately 650 and 600 firms respectively.

Some independent firms can also rival coverage, notably Argus Research with coverage of around 700 firms, which has been adding to its institutional research offerings.  Morningstar, which covers over 2,000 stocks, has also been beefing up its institutional offerings.  Sidoti, an independent which specializes in small cap coverage, is at 500 stocks.

We did not analyze the overlap of coverage across firms.  Historically, regional brokers have tended to cover a higher portion of small and mid-cap stocks than the bulge firms.  We expect that regionals have been largely increasing their large cap coverage as a result of their hirings, diluting their small cap coverage somewhat.

US Stock Coverage


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