Indies Making Headway in II Rankings

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New York, NY – Last week Institutional Investor released its annual All-America Research Team for 2009, ranking the country’s top equity analysts as determined by 3,000 buy-side research directors, portfolio managers, and other investment professionals at 890 firms.  Barclays Capital captured the top spot with 46 ranked analysts, barely beating out JP Morgan with 44 positions, making this year’s contest the closest since 2002.  BofA Merrill Lynch rounded out the top three firms with 37 ranked equity analysts.  However, we think one of the most interesting stories in this year’s II rankings was the surprising advances made by independent research firms, as 9 indie firms (or 10, depending how you count it) received top marks in 2009.

2009 Institutional Investor All-American Research Team Rankings

2009

2008

Firm

Positions

1

1

Barclays Capital

46

2

2

J.P. Morgan

44

3

3

BofA Merrill Lynch Research

37

4

5

UBS

33

5

7

Credit Suisse

31

6

6

Sanford Bernstein

28

7

4

Citi

27

8

8

Goldman, Sachs & Co.

17

9

10

Morgan Stanley

16

10

9

Deutsche Bank Securities

13

11

12

ISI Group

9

12

13

Wells Fargo Securities

3

13

15

Empirical Research Partners

2

13

15

Oppenheimer & Co.

2

13

19

Strategas Research Partners

2

16

Jefferies & Co.

1

16

Robert W. Baird

1

16

Cirrus Research

1

16

Concept Capital

1

16

Cowen & Company

1

16

Furey Research Partners

1

16

Leerink Swann

1

16

Piper Jaffray

1

16

Stifel, Nicholas & Co.

1

16

Washington Analysis Corp.

1

16

Wolfe Research

1

16

Zelman & Associates

1

16

Unaffiliated – Janet Pegg (formerly with Encima Global)

1

All data presented in this blog provided courtesy of Institutional Investor.


A Few Sell-Side Firms Pick Up Steam

Before we discuss the surprising performance of independent research firms this year, a few sell-side firms posted amazing improvements in 2009 which warrant mention.  Not only did J.P. Morgan take second place overall, but the firm increased its number of ranked analysts by 6.  UBS, which took fourth place overall, actually gained seven ranked analysts this year to 33.  However, the largest improvement came from Credit Suisse which ranked fifth in 2009 (up from 7th place the prior year).  Credit Suisse garnered 31 ranked analysts – up 14 positions from its performance in 2008.  Morgan Stanley, which placed ninth this year, had six more ranked analysts in 2009 than it did in the previous year.

Indies Make Hay in 2009

A few independent research firms have consistently made the cut in previous II All-American Research Team Rankings, including Sanford C. Bernstein, ISI Group, and Empirical Research Partners.  However, nine (or ten) indies were ranked as the top 4 analysts in their respective sectors in 2009.  This includes:

Sanford C. Bernstein:  Ranked 6th overall in 2009 with 28 ranked analysts (5 more than the firm earned in 2008).  Only two of Bernstein’s 30 analysts were not ranked in this year’s All-America Research Team, and one-third of the firm’s analysts received number one rankings.

ISI Group:  Ranked 11th overall in 2009 with 9 ranked analysts (2 more than they captured in the previous year).  Ed Hyman won his 30th consecutive number one ranking in Institutional Investor’s Economics category.

Empirical Research Partners:  Tied for 13th overall in 2009 (up from 15th the prior year) with two ranked analysts.  Company founder, Michael Goldstein took first in Quantitative Research and second in Portfolio Strategy.

Strategas Research Partners:  Tied for 13th overall with two ranked analysts.  Company co-founder Jason Trennert and Daniel Clifton & his team were Runners-Up in the Portfolio Strategy and Washington Research categories, respectively.

Cirrus Research:  Tied for 16th overall, Cirrus Research founder Satya Pradhuman took Runner-Up in the Small Company research category.

Furey Research Partners:  Tied for 16th, company namesake Jim Furey was also named Runner-Up in Small Company research.

Washington Analysis Corp.:  Tied for 16th overall, Les Alperstein and his team placed second in the Washington research category – up one place from 2008.

Wolfe Research:  Tied for 16th, company founder, Ed Wolfe was ranked second in the Airfreight & Surface Transportation category with his namesake firm after finishing atop this category for six straight years (most recently at Bear Stearns).

Zelman & Associates:  Tied for 16th overall, former Credit Suisse analyst Ivy Zelman ranked second in the Homebuilders & Building Products category for the second consecutive year.

Janet Pegg:  Tied for 16th overall, Janet Pegg was runner up in the Accounting and Tax Policy category.  Although listed as “unaffiliated”, Janet Pegg worked for independent research firm, Encima Global through June 2009.  In July 2009, Ms. Pegg joined UBS as Managing Director and accounting analyst in their Strategy and Valuation Group.

Acceptance of Indies Grows

While the performance of independent research firms in this year’s Institutional Investor ranking has some historical significance, it should really come as no surprise as indie providers have been gaining acceptance from buy-side investors over the past six to seven years. 

However, we think this year’s results are more an indication that independent research firms are gaining acceptance as a viable career alternative for top notch sell-side and buy-side analysts.  In fact, six of the ten firms listed above were actually founded (or co-founded) by ex-sell-side or buy-side analysts who decided to strike it out on their own.

Based on a number of factors, we suspect this trend will not abate any time in the near future as sell-side and buy-side analysts see tremendous personal, professional, and financial opportunities associated with commercializing their research brands by joining the ranks of independents.

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