WORLD’S TOP ANALYSTS FINANCIAL TIMES SPECIAL REPORT | Friday May 16 2008

www.ft.com/topanalysts2008 Their stock is high

The FT’s first annual awards for the top equity analysts and brokerages around the world, in collaboration with StarMine 2 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts

In This Issue Celebrating the achievements of the best analysts in the world The Financial Times is delighted to be highlights some significant trends and employs a methodology respected launching its first annual awards for the pinpointed by the data. Yet more and widely used by investment banks top equity analysts and brokerages information can be found on our website and fund managers around the world. around the world, in collaboration with at www.ft.com/topanalysts2008. Top quality research is very valuable – StarMine, the research analytics The FT and StarMine have literally so for those who make company. collaborated in the past on some investment decisions based on it – and This special report gives details of the regional analysts’ awards, but this year we are delighted to be celebrating the awards, which were presented to we are taking the partnership global. achievements of our winners. winners at a dinner at the New York StarMine pioneered the quantitative Martin Dickson Stock Exchange last night. It also measurement of research performance Deputy Editor, Financial Times Why there’s gold in Goldman TOP BROKER The broker has won the admiration of its peers over the past year for its ability to navigate a credit crisis that has made predicting the behaviour of markets such a lottery for others Resurgence of research Page 4

Tools of the trade HOW THEY DO IT brings fresh challenges The weapons in the equity analysts’ armoury include luck, astute judgment, clever OVERVIEW Winning firms worldwide* modelling, visiting department stores and Global jumping on aircraft Francesco Page 8 Guerrera, Chris Goldman Sachs 41 Hughes and Aline Merrill Lynch 39 Introduction van Duyn on the THE FT/STARMINE GLOBAL AWARDS Citigroup 38 Top Global Broker: Goldman Sachs tough new world Top analyst: Jim Parker, of Raymond James for equity analysts Credit Suisse 37 Tips from the top analysts, Pages 2­9 JPMorgan 31 hen I see clients The regions these days, I Europe THE FT/STARMINE GUIDE TO THE TOP 10 need to bring in STOCK PICKERS, BROKERAGES, AND EARNING a psychologist’s Exane BNP Paribas 11 ESTIMATORS Wcouch more than my spread- US: Pages 10­15 sheets.” Citigroup 10 Developed Europe: Pages 16­19 The quip, sighed by an Asia: Pages 20­23 analyst at the end of a one- Goldman Sachs 10 week round-the-world trip packed with meetings with fund managers, sums up the There’s more on FT.com Asia BIOGRAPHIES AND STOCK PICKS see-sawing emotions of The full report is available online along with research specialists during Credit Suisse 10 the current financial turmoil. extended biographies of all of the analysts On the one hand, analysts Citigroup 9 and their stock picks for 2008, and there are find their services to be in downloadable pdf versions of all the tables in high demand, especially for Merrill Lynch 8 this Special Report individuals and brokerage www.ft.com/topanalysts2008 houses, such as those recog- nised in the 2008 FT/ US StarMine awards published today, that have delivered Goldman Sachs 24 Front page illustration: Greg Meeson valuable insights to clients. But at the same time, the Merrill Lynch 23 choppy economic conditions and the state of deep freeze in Citigroup 19 Contributors many markets have taken analysts out of their spread- Credit Suisse 19 Chris Hughes Robin Kwong sheet-based comfort zone, Investment Banking Hong Kong Correspondent forcing them to make bold Correspondent calls while relying on con- Andrew Baxter stantly-changing information. Francesco Guerrera Special Reports Writer First, the good news. As US Finance & Business and Commissioning Editor the credit squeeze has put World’s Top Editor investors’ nerves and portfo- Sarah O’Connor lios under severe strain, Broker Anuj Gangahar FT Contributor research has experienced a US Markets resurgence in importance Correspondent Rod Newing that looked unlikely after the 2008

FT Contributor Enron-era research scandals. * Number of awards won across all Aline van Duyn After Wall Street firms’ regional and industry catagories US Markets Editor Steven Bird decision in 2002 to pay $1.4bn Designer to settle a case brought by FT Graphic Hal Weitzman then New York state attor- Source: StarMine Chicago Correspondent Katie Carnie ney-general Eliot Spitzer, the Picture Editor debate was “whether there is need for experienced sell-side when the capital markets of last year, it brought with Justin Baer any value in research”, says analysts who have seen the were a lot easier to interpret. it a sharp rise in volatility US Business Reporter For advertising details, Tom Schmidt, head of equity markets go through difficult Back then, market volatil- and new market dynamics. contact: Hope Kaye and derivative research for periods,” says Mr Schmidt. ity was low and while some The turmoil has meant Jeremy Lemer phone +1 212 641 6548 the Americas at JP Morgan. But the very conditions sectors were doing especially that equity analysts had to US Markets Reporter [email protected] or Now, he says, the question is that have given research well, being right about an be especially agile in gauging Tim Hart phone +1 212 “how much value” is in it. new-found prominence have individual stock was still the prospects of the stocks Justine Lau 641 6554 “In the past six to nine also made the analyst’s job more important than being they covered and have been Hong Kong Correspondent [email protected] months, the markets have more difficult. Many stock clever about sectors. required to place companies’ been in uncharted territory pickers look back wistfully to But when the credit performance in sector- and Fax +1 212 641 6544 and there has been a clear the first half of 2007 as a time squeeze began in the middle economy-wide contexts. FINANCIAL TIMES FRIDAY MAY 16 2008 3 World’s Top Analysts

Andrew Pitt, global head of “Their greater degree of sales service and corporate could lead to a structural research at Citigroup, says compliance has cut them off access. About a quarter of change in the industry, with the best portfolio managers from market intelligence. that was spent to pay for many experienced stock pick- of the past four years have The bulge bracket also analysts’ service. Only ers striking out on their own. been those who made big attracts more ‘me-too’ ana- slightly less, about 20 per “As analysts are let go, the calls on individual stocks, lysts who produce formulaic cent, of spending was made highly fragmented research and that remained true until research,” he says. “[Inde- to provide corporate access, markets will probably July 2007. pendent firms] are just which offers investors the become even more frag- “The conditions in the first clearer about what analysts chance to meet company mented,” says Patrick Shea, half of last year were such can do.” management teams. executive director of the that analysts were adding a Citi’s Mr Pitt says the suc- But if institutional inves- Investorside Research Asso- lot of value with individual cess of many of Europe’s tors and hedge funds con- ciation, which represents stock calls, but in the past local firms is largely a func- tinue to experience tough independent analysts. six to nine months, the driv- tion of their traditional domi- markets, suffer large losses If the financial crisis con- ers have become more sector- nance in the coverage of and face tighter budgets, tinues to take its toll, there specific.” small- and mid-cap compa- they may decide to spend could be a lot more couches, The analysts that did well nies, whose share prices are less on research. The laying and a lot more spreadsheets, last year were those who driven to a greater degree by off of hundreds of analysts in the waiting rooms of large were “fleet of foot” and were stock-specific factors. from large investment banks fund managers. Hot stock: solar cell maker Q­Cells AFP capable of modifying their “The local firms have good calls in response to a more access to smaller companies, volatile market, Mr Pitt says. and they can drive interest However, a striking feature in those names,” he says. of the StarMine results is Regardless of the size of that the US and European their employer and the scope analysts who performed best of their coverage, analysts in the changing markets of appear to agree on the priori- 2008 were less likely to be ties for the next few months. from “bulge-bracket” invest- As the liquidity squeeze ment banks that have the continues to dictate the per- most financial muscle. formance of both companies In Europe, for example, six and markets, research spe- of the top 10 earnings fore- cialists will have to focus on casters and eight of the top big themes, such as the fate 10 stock pickers came from of the US housing market, independent regional firms, commodity prices and often covering medium and growth prospects in emerg- small cap companies. ing economies. Indeed, Europe’s top five But there will also be con- stock pickers came from CA tinued investor demand for Cheuvreux, KBC Securities, the demystifying of the com- Natixis Securities, Carnegie plex financial instruments Investment Bank and Öhman Fondkommission. Cheuvreux’s Philipp Trying to gauge the Bumm, rated Europe’s best stock picker, earned his sta- pace of any decline tus with bold calls on in earnings growth Q-Cells, the German solar panel company, and the will be a central renewable energy companies preoccupation CropEnergies and Conergy. The US displayed a similar pattern, with five of the top 10 stock pickers coming from that are at the heart of the outside the bulge bracket. present troubles and that Analysts from firms such have rippled through to bil- as the San Francisco-based lions of dollars of losses and boutique JMP Securities, write-downs at banks around Simmons & Company, an the world. investment bank specialising “It has been very impor- in the energy sector, and tant to help explain what dif- Sterne, Agee & Leach, a ferent products mean. SIVs, century-old privately-held CDOs, CDSs – these are all investment bank, outper- instruments that many formed colleagues from investors were just not that household names such as familiar with,” says JPMor- Credit Suisse, UBS and Mor- gan’s Mr Schmidt. gan Stanley. Trying to gauge the pace of However, bulge bracket the expected decline in cor- firms took seven of the top 10 porate earnings growth and spots in the overall US the deleveraging of the finan- league table, which adds up cial sector will also be a cen- all the awards won by each tral preoccupation for ana- firm – a sign that size and lysts, particularly those cov- breadth of coverage are still ering the slowing US and an important part of a bank’s European economies. research arsenal. But perhaps the biggest Big banks also dominated battle for research depart- the overall table in Asia, a ments will be on the internal reflection of the fact that the front. region still lacks a robust Can they exploit their breed of independent invest- recent return to favour to ment firms. combat investment banks’ Nevertheless, Terry Smith, inevitable round of bear mar- former head of UK research ket cost-cutting? The signs at UBS Phillips and Drew are not good. Despite the and chairman of Collins heightened prestige of good Stewart, the UK stockbroker, research, the general envi- says the good showing ronment for the financial by independent firms is system is one of cutbacks. evidence that the tighter con- Greenwich Associates esti- flict of interest rules that fol- mates that, last year, US lowed the Enron-era excesses institutional investors paid have “neutered” bulge $5bn in equity trade commis- bracket firms. sions for sell-side research, 4 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts Steering a true course in a crisis

TOP GLOBAL BROKER With the possible exception of its GOLDMAN SACHS equity hedge funds, the Wall Street powerhouse has continued to report Anuj Gangahar on how impressive earnings across its the US firm has kept range of businesses. In the US in particular, the ability to analyse a ahead of the field volatile market that has been prone to sudden shocks borne of the credit crisis is vital. oldman Sachs tops the list The skillset that makes an out- of global brokers in the standing analyst these days is diffi- 2008 FT/StarMine awards, cult to define. They must predict a with its strength in depth company’s growth based on Banking on success: Goldman Sachs’ headquarters in New York Bloomberg Gacross a variety of sectors proving expected market demand for its the difference between it and many products and services, compare a “We are faced with a complicated main pillars of the research divi- Equipped with a fundamental of its peers. company’s current valuations with and rapidly evolving global envi- sion – namely, economic research, understanding of trends and issues, Goldman wins with 41 placings in its historic metrics, and compare ronment and, to understand that, it strategy and commodities research research teams then analyse com- the sector-specific and overall stock current valuations against those of is critical that the whole team of and credit research. panies within the context of their picker and earnings estimator individual peers or industry aver- economists, strategists and analysts The economic research group for- particular industry. tables, across all three regions. This ages. are really up to date,” he says. mulates macroeconomic forecasts The credit crisis of the past year ranks it just ahead of Merrill Lynch Also, they must trust their ana- “Credit and equity analysts have to for economic activity, foreign has been difficult to navigate for (39) in second and Citigroup (38) in lytical skills enough to stand by have more interaction, too.” exchange rates and interest rates most investors, and the research on third place. Credit Suisse (37) takes their calls – even if this means tak- The equity research function at based on the co-ordinated views of which many of them base their fourth place and JP Morgan (31) ing a directly opposite view to their Goldman focuses on company- its global and regional economists. decisions has similarly had to try to rounds out the top five. counterparts at other firms. specific research and analysis. The strategy and commodities predict – as far as it is possible – In the US, Goldman also wins, Steve Strongin, head of global Industry- and sector-specific teams research groups provide market how the crisis will impact different with 24 placings, one more than investment research at Goldman analyse companies in the stock views, forecasts and recommenda- areas of business and particular Merrill Lynch in second place. Citi- Sachs, says the complex set of rela- markets of the region to develop tions on asset allocation and sec- sectors. group and Credit Suisse tied for tionships and forces shaping the investment ideas. tors and investment strategies. Mr Strongin says that the ability third place, with 19 each and JP world that the bank’s analysts These sector teams also work The portfolio and quantitative to understand how events such as Morgan (18) completes the top five. cover makes it a constant challenge with macro, quantitative and deriv- strategy teams contribute addi- the credit crisis can and do spread Goldman has won the admiration to ensure they are working most atives research teams to identify tional insight and analysis, while to other areas is crucial to success. of its peers over the past year for effectively. Furthermore, the possible opportunities. credit research analysts assess cor- “Our analysis has to be able to its ability to navigate a credit crisis amount of crossover between sec- To accomplish the sort of interac- porate debt and cover specific understand how shocks roll that has made predicting the tors and their respective correla- tion that Mr Strongin refers to, the industry sectors to identify and through the whole system – we behaviour of markets such a lot- tions to the global economy must equity research function at Gold- communicate investment opportu- have had to co-ordinate our analy- tery. also be taken into consideration. man sits alongside the other three nities and make recommendations. sis to fully understand this.” No f lights of fantasy for airlines veteran

TOP ANALYST that, more than 50 years Mr Parker’s route to the behemoths. “They brought JIM PARKER after the start of the Jet BIOGRAPHY airlines industry was affordable air travel to the Age, still manages to steal equally unconventional. masses,” says Mr Parker. Justin Baer on the the hearts – and often dent Age 63 He was covering In focusing on this Raymond James the returns – of many Hometown Jasper, Georgia express-delivery companies nascent market, Mr Parker investors. when Robinson’s investment had found his own niche, analyst, who stays His track record for Company Raymond James bankers told Mr Parker too. “Some of the best down to earth steering clients toward the Industry coverage Airlines about a client who needed things in life happen to you stocks worthy of their Education MBA, University the firm’s help in raising by accident,” he says. affection has garnered Mr of Georgia; PhD, University $5m to start a commuter Twenty-six years later, Mr There is no jet fuel in Jim Parker this year’s of Georgia airline. Parker still follows the same Parker’s veins. FT/StarMine Award for Career Robinson­Humphrey It was 1982, just four subset of airlines, including Mr Parker, an analyst Excellence in Investment 1968­1999; SunTrust Equities years after the US industry’s Southwest, which remains with Raymond James, the Analysis. 1999­2000; Raymond James deregulation, and only one the US’s biggest low-cost US financial services StarMine has honoured Mr 2000­present upstart – Southwest Airlines carrier. But along the way, holding company, is not an Parker 11 times since it – had managed to find a he says, entrepreneurs from amateur pilot. And when began rating US analysts in lasting niche in a market Ireland to Brazil have airline executives he has 2001. This year, he was one dominated by legacy imported the Southwest known and covered over the of only 14 – out of a pool of recommendations include investment banking carriers such as American model to their home years have approached him more than 1,900 eligible Panama’s Copa Holdings boutique. He would give it Airlines. countries. with job offers, he has analysts – to earn five stars and Allegiant Travel, which 10 years, Mr Parker thought The start-up, Atlantic “My investor clients are politely declined. in both picking stocks and ferries small-town at the time, then return to Southeast Airlines, needed now looking for growth “I don’t care about forecasting earnings. Americans to vacation spots school to pursue a PhD. research coverage, and the airline situations all around aeroplanes,” Mr Parker says. Mr Parker focuses on in Las Vegas and Florida. He stuck with that plan, task fell to Mr Parker. ASA, the world,” he says. “I just care about picking so-called growth airlines: the His top pick is Ryanair, earning his doctorate in which flies commuter jets For Mr Parker, the search stocks and making money. upstarts that have emerged which he rates a “strong marketing from the for Delta Air Lines, is now a for the next Southwest clone Airlines just happen to be to challenge legacy carriers buy”. University of Georgia, but unit of SkyWest. has meant spending a lot of the sector I cover.” in the years following Mr Parker’s research soon found he preferred the By the 1990s, many more time on aircraft; he has Clients are thankful Mr commercial aviation’s career began in 1968, immediacy of stock research commuter and low-cost racked up 4.5m miles on his Parker holds no romantic deregulation. when he joined to the more measured carriers had joined frequent-flyer account with notions toward an industry Today his “outperform” Robinson-Humphrey, an academic world. Southwest in taking on the Delta. FINANCIAL TIMES FRIDAY MAY 16 2008 5 World’s Top Analysts Clients need ways to vet experts

BUY­SIDE COMMUNITY “The barriers to entry are better if, at a conference and economies across the With many areas of over- low, but the barriers to such as the one last month, globe, analysts have grabbed lap between the two firms, Aline van Duyn becoming successful are very there were 400 investors and more of the limelight. particularly in equity on why rankings high,” says Patrick Shea, 100 service providers.” Tom Schmidt, head of research, he has had to executive director of the It is clear that certain ana- equity and derivative decide which analysts to of analysts help Investorside Research Asso- lysts have loyal followings. research for the Americas at keep and which to lay off. investors evaluate ciation, which represents Particularly in recent JPMorgan Chase, says that “I have been pleased with independent analysts. months, as investors have buy-side clients have played the level of useful commen- research providers “The buy-side are standing struggled to make sense of a role in his recent delibera- tary from clients about ana- in front of a wide open fire enormous market fluctua- tions about which analysts to lysts,” says Mr Schmidt. “It hydrant [of information]. It tions and rapidly shifting keep, following the bank’s shows that they value what It is one thing having an takes a lot of time to evalu- assumptions about the acquisition of stricken rival the analysts provide to opinion about something. It ate research providers and health of the banking system Bear Stearns. them.” Revolving doorforanalysts? can be quite something else determine whether they to spread it around. are good or fit in with the Even Goldman Sachs, one investor’s own research,” he of the big investment banks says. with a large research and Not only do the smaller analysis effort, had to over- analysts often not have the come some logistical prob- support staff to organise lems in recent months events and conferences, it is related to communicating increasingly difficult for with its clients. them even to get a foot in With investors desperately investors’ doors. seeking answers to the many With such a proliferation questions hanging over the of research and information, markets, they wanted, more many investors are now than ever, to hear analysts’ using companies that effec- views. Usually, arranging a tively vet the analysts before conference call number for they are allowed through people to dial into would do the door of investment insti- the trick. tutions. With several hundred peo- “The buy-side is increas- ple listening in, it would only ingly finding ways to filter take a few minutes to get out and block any direct everyone connected. But communication,” says Mr once you have thousands of Shea. participants – a far from unu- Integrity Research, a com- sual occurrence in recent pany which filters research months – getting everyone to on behalf of investors, said in listen in is harder and can a report last year: “In the take a long time to set up. research market, there still are not many effective filters to help connect supply with ‘The buy­side are demand . . . “The dynamics of the standing in front of research market don’t easily a wide open fire support a ‘wisdom of crowds’ approach. Institutional inves- hydrant [of tors have neither the time information]’ nor the incentives to share their insights and opinions.” There are numerous rank- ings that are used by inves- Instead, webcasts are a bet- tors to determine who they ter option for mass communi- should be speaking to, cation, and that has recently including those compiled by become the preferred way for StarMine for this report. Goldman Sachs’ analysts to John Scott, managing brief their clients. director at Commerz Asset “Interest in macroeco- Management, says that one nomic research has gone up of the issues for investors is hugely,” says Steve Strongin, the question of how long head of global investment independent research compa- research at Goldman Sachs. nies will last. “Attendance on some of our “Many investors are disin- conference calls has gone up clined to do business with from hundreds to thou- someone who may not be sands.” around in a few years’ time,” The ability quickly to scale Mr Scott says. up communication efforts, So far, despite the calls for and tap the expertise of a more independent research robust IT department, is one following the Wall Street of the advantages of being an research scandals uncovered analyst at a large firm. by Eliot Spitzer when he was Although the big banks New York state attorney-gen- and brokerages dominate the eral, it has proved difficult research world, there are for many of the research many hundreds of small, companies to come up with a independent analysts and sustainable business model. researchers. Indeed, there are At a recent conference estimated to be some 1,700 with independent research independent research provid- analysts, says Mr Scott, 500 ers in the US market. people attended, of which The hurdle for them, how- about 100 were investors ever, is to get heard, without and the remainder service large marketing budgets or providers. connections to investors “The research business is through trading services or still trying to sort itself out,” other types of deal-making. says Mr Scott. “It would be 6 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts Outstanding in a smaller field

REGIONAL BROKERAGES while one of its energy ana- lysts worked on an oil rig in Hal Weitzman on the Gulf. how a focus on “We hire differently from the bulge-bracket firms,” he research helps the says. “We interview a lot of lesser­known names people inside industry and most of the people we hire are non-Wall Street types. mid the large and We teach them the mechan- well known invest- ics of Wall Street, but we ment houses that really rely heavily on their dominate the Star- industry expertise.” AMine awards, the lists of win- “When we get that level of ners are punctuated by knowledge, we can take it to repeated mentions of a few our clients and use it to our regional brokerages. advantage to understand and These, in spite of their interpret what’s occurring in smaller size and scope, have the industries. proved their ability to hold If you’re looking at a pro- their own with Wall Street’s posed acquisition, you can finest. say: ‘Here are the issues Among these specialists, you’ll run into; this is what Robert W Baird and Stifel management should expect’, Nicolaus have both appeared or: ‘This is why the timing is consistently in StarMine’s unrealistic’.” rankings of the best analysts At Baird, Mr Venable says in the US in recent years. an important strength has Both have their roots in been the ability to retain tal- the Midwest: Baird is head- Strong base in the Midwest: the skyline of Milwaukee, where Robert W. Baird is headquartered Alamy ent. “This is a business quartered in Milwaukee, Wis- where there are real advan- consin, while Stifel Nico- that, although Milwaukee it the largest analyst com- most important businesses. market companies, which tages to longevity,” he says. laus’s hometown is St Louis, remains Baird’s largest pany outside New York. That’s not always the case at can range from a market cap- “We believe we have far Missouri. office, more than half the Both firms are keen to bulge-bracket firms.” italisation of $250m up to and away the lowest turno- However, the two compa- company’s staff are in offices draw a contrast between “Most of the growth at $10bn. “We cover large caps, ver of any firm in our busi- nies have grown well beyond outside Wisconsin – with big themselves and their big those firms in the past sev- but it’s perhaps one-third of ness. Our senior analysts the “regional” tag to develop operations in Chicago, Nash- brothers on Wall Street by eral years has been outside our coverage, whereas many tend to average 10 years or industry specialisms that ville and McLean, Virginia. emphasising the centrality of their institutional sell-side of the bulge-bracket firms more of sell-side experience. have given them deservedly Similarly, Stifel Nicolaus is research to their overall busi- business – be it proprietary are more large-cap focused,” “We generally don’t have high reputations. more accurately categorised ness. trading, the prime brokerage says Mr Venable. people leave Baird to go to Bob Venable, director of as an industry specialist “We have a very small Baird specialises in serv- other firms to do the same equity research at Baird in rather than a regional spe- investment bank. Our core ices, industrials, technology, work. That longevity is a Milwaukee, stresses that the cialist. business is research,” says ‘Most of the people financial services, consumer positive in terms of knowing company is far from being Indeed, its capital markets Hugh Warns, Stifel Nico- industries and healthcare. the companies well and merely a Midwest specialist. team is based not in St Louis laus’s director of research. we hire are For its part, Stifel Nicolaus knowing the clients well.” “Ten years ago that would’ve but in Baltimore. “Our institutional business non­Wall Street concentrates on eight broad Mr Warns, who used to been true,” he says. Both companies have is significantly larger than areas: business and con- work at JP Morgan, suggests “But now it really is indus- grown fast in recent years. our investment banking busi- types’ sumer services, healthcare, that the key to the regionals’ try-focused and within those Baird’s research team has ness, whereas if you go to telecommunications and success is precisely in offer- industry groups our coverage doubled over the past seven the Goldman Sachs and Mor- Hugh Warns media, transportation, finan- ing what the larger New is national and in some cases years to 36 senior analysts gan Stanleys of this world, it Stifel Nicolaus cial services, industrials, real York outfits cannot. international. and more than 100 analysts is the exact opposite.” estate and technology. “We limit the number of Some of our industrial and in total, covering about 500 Mr Venable echoes that Mr Warns says Stifel Nico- companies that an analyst manufactured-products cov- stocks. sentiment. “The quality of business, principal investing laus’s different approach to can follow to about 13 or 14, erage has somewhat more of Stifel Nicolaus has ex- the research is ultimately a or what have you, whereas hiring has given it an edge: so we cover fewer names on a Midwest orientation panded even faster, doubling function of the focus of the this has truly been a growth about half its analysts have average than most of the because of where companies its number of analysts in the firm and the analysts,” he business for Baird. We’ve professional backgrounds in Wall Street firms,” he says. are headquartered, but we’re past three years alone. It says. grown this business 13 years the sectors that they cover. “We’re focused on a very much a national prac- now employs more than 60 “Sell-side research is a true in a row and we’re off to a For example, one of its smaller universe than some tice.” senior analysts who cover core competency for Baird. very strong start in 2008.” healthcare analysts ran nurs- of our competitors and that Mr Venable points out about 750 companies, making It’s one of our largest and Baird’s focus is middle- ing homes for nine years, definitely helps us.”

PROFILE RIKARD VABO, FERNLEY FONDS

Specialisation is the key to success to equities and bonds in the “You go from boom to bust in a cent. However, with a global focus indicators, growing tonnage miles for Rikard Vabo of Fearnley Fonds in shipping and marine market. very short period,” he says, “so you can draw conclusions across and moderate fleet growth. His Norway. He and Lars Erich Nilsen “The group has a long history, a timing is everything. You can borders and are able to see lagging “buys” on DryShips saw a 340 per are the two senior analysts on the global presence and a network of achieve fantastic returns on shares that might provide interesting cent increase in 2007 and STX Pan research team for shipping, yards experienced people,” says Mr Vabo. investment if you get it right. The investment opportunities.” Ocean 262 per cent. and marine equipment. “It is our main focus and we talk to call on the underlying shipping Mr Vabo became very optimistic The challenge is keeping in touch Mr Vabo is ranked fifth among US our colleagues in the wider group segment is 70­80 per cent, while about the dry bulk market in June with companies and brokers across stock pickers, outperforming his daily, sharing information and company specifics are 20­30 per 2006, with strong demand the world. Mr Vabo starts at 7am to marine oil, gas and consumable knowledge about the markets and talk to Asian companies and stays fuels industry benchmark by 21.4 how they will develop. We believe until 9pm or midnight. “We don’t per cent, and fourth among Asian this niche focus gives us an edge sleep very much here in Norway,” stock pickers, beating his and enables us to offer value.” BIOGRAPHY he says. benchmark for transportation of He points out that the shipping Age 27 His success comes from a strong machinery and materials by 15.3 per markets are truly global, with Career Joined Aon Grieg Investor, the focus on small sectors that he cent. shipping companies listed in Japan, Norwegian investment consultant, in believes are not well covered With 40 employees, Fearnley South Korea, Norway or the US 2002 as a part­time investment analyst. globally. “We have been able to see Fonds is an independent securities competing for the same cargoes in He moved in 2004 to Fearnley Fonds as opportunities earlier than others,” he firm within Astrup Fearnley Group, the same underlying market. These an equity analyst on global shipping and says, “through a strong tradition and one of the world’s leading ship and markets are more volatile than shipyards. He is now joint senior analyst experience.” rig brokers, with 350 employees. most, with a greater spread between on the global shipping, yards and Fearnley Fonds restricts its activities highs and lows. marine equipment research team Rod Newing FINANCIAL TIMES FRIDAY MAY 16 2008 7 8 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts Wide range of weapons in analysts’ armoury

the big picture and attention METHODOLOGIES to detail. When people talk Chris Hughes and about forecasting accuracy, they generally mean a very Francesco short-term activity. When Guerrera on the people ask if you got the earnings right, they are nor- tools of the trade mally talking about the quar- ter just gone rather than your longer term forecasts.” uck, astute judg- The new IFRS accounting Hard landing: a view of Heathrow Airport, owned by BAA, whose debt­funded purchase by Ferrovial was judged wrongly by many PA ment, clever model- standards have also intro- ling, visiting depart- duced much more “noise” operational gearing: how the Another analyst, who lar, or whether a new car is than would be the case for a ment stores and into quarterly earnings state- interplay between fluctuat- asked not to be named, good looking – but it may be company such as a bank or Ljumping on aircraft – there is ments, and this needs to be ing revenues and fixed costs agrees, saying: “I have been just as important as predict- insurer. no single recipe for predict- factored into forecasts, Mr determines profit. This is a given plenty of bum steers ing raw material costs. The credit crunch has ing a company’s earnings or Paulson says. crucial element of forecast- by companies about their “You have to put [research prompted many analysts to share price. “One example of this is the ing earnings, and one that earnings.” from the field] in context. If overhaul their methodolo- The weapons in the equity 40 per cent miss by Aegon analysts admit they fre- The fourth element you fly on an EasyJet plane gies. Some say that purely analysts’ armoury are many [the Dutch insurer] in the quently get wrong. A fall in involves being imaginative and it’s half empty, that quantitative research, which and varied. Nevertheless, first quarter, entirely driven revenues of 10 per cent about what constitutes quan- doesn’t mean that the same uses sophisticated models to there are some common tech- by short-term financial vari- rarely leads to a proportion- titative research. Top ana- goes for the entire fleet,” screen sectors for stock tips, niques that help the best ances rather than the under- ate drop in earnings. lysts supplement this with says Mr Crook. has decreased in importance make a more accurate call on lying business.” Terry Smith, author of more qualitative research. When it comes to predict- as once-reliable strategies the future. Analysts say the para- Accounting for Growth and ing share prices, the have been undone by the Predicting a company’s mount issue with forecasting chairman of Collins Stewart, approaches taken by success- financial turmoil. Moreover, earnings is a different skill earnings is good modelling. the UK stockbroker, says: The credit crunch ful analysts vary considera- analysts have had to become from forecasting how well its That does not necessarily “Operational gearing is the bly, according to each indus- more co-ordinated in their shares will perform. It is pos- mean complex modelling – a single biggest issue . . . [Ana- has prompted try’s valuation benchmarks. efforts, as the credit crisis sible – common even – for an model with more parameters lysts] are appalling at it. many analysts to Cyclical industrial compa- has spread across asset analyst to be a perfect fore- is not necessarily any more They just don’t get it.” nies tend to be priced off classes and geographies. caster of a company’s num- effective. But it does mean The third trick is not to overhaul their sales, whereas the consumer “You had to shape yourself bers but still get its share realistic modelling, which rely too much on guidance methodologies industry relies on earnings to events and the events had price wrong. requires the analyst to be from companies themselves. multiplies and telecoms more of a global texture than Colin Crook, industrials constantly checking whether Analysts are often criticised groups on earnings before is normally the case,” says analyst at UBS, says: the model is consistent with for expecting to be spoon-fed Retail analysts have no interest tax, depreciation and the head of research of a “There’s no magic formula. reality, even if in theory its earnings forecasts directly by excuse for failing to visit amortisation. Meanwhile, large US investment bank of It’s just hard work and using outputs should hold true. finance directors in the com- companies’ stores and the financial stocks are priced the last nine months. experience of what has hap- “Some models can become panies they cover. observations made there can relative to their book value. Mr Smith says the best pened in the past to under- too detailed,” says Mr Crook. “Company guidance often be an additional source of Strategic questions also stock pickers not only under- stand how macro factors “Models tell you what things underestimates the impact of quantitative data. carry greater weight in cer- stand the dynamics of opera- interact with how companies should happen; in reality, key factors, especially at But in some industries, the tain industries. tional leverage, but also operate, and how this feeds they often don’t. But having turning points in the earn- best analysts also take a sub- For a sector undergoing financial leverage. through to the reported num- a good model enables you to ings cycle,” says Mr Crook. jective view on whether radical changes, such as He cites the failure of bers.” challenge a company’s com- “Companies usually just products are going to capture media, identifying whether a many analysts to spot the Bruno Paulson, a senior ments when it has an earn- don’t know what their profits consumers’ imagination. company has the right strat- latent factors set to weigh on financials analyst at Sanford ings call.” are going to be at the end of This is more subjective – for egy may be a more important the share price of Ferrovial, C Bernstein, says: “It’s about Another important element the year. We question guid- example, judging whether a factor in forecasting its medi- the highly geared Spanish steering a course between is understanding so-called ance.” mobile handset will be popu- um-term stock performance infrastructure group, in the A choice selection of stock picks for 2008

TIPS FROM THE ANALYSTS to enthuse over when asked in Asia focus on the technol- His colleague Kenny Lau to go – many untapped stock pick “because it will for their 2008 selections. ogy sector for their 2008 goes for ASM Pacific. “As the growth opportunities are still benefit from the higher price Andrew Baxter on There is plenty of opti- stock picks. world’s largest semiconduc- out there.” of coal, specifically through the companies in mism, perhaps unsurpris- Felix Rusli goes for AU tor back-end equipment sup- And Kris Kippers of Peter- its Australian operations”. ingly, in Asia. Hornghan Optronics and Chi Mei Opto- plier, its business is set to cam goes for Grontmij, a In telecommunications, this year’s ‘buy’ Low, of Citi Investment electronics: “We are positive recover after the cyclical Dutch engineering company Eric Beaudet at Natixis Secu- and ‘sell’ calls Research, picks SembCorp on flat panel,” he says. downturn bottomed in the – “because it’s quite cheap rities selects Ericsson: Marine and Keppel Corp as “Even though there are a lot first quarter,” he says. (at a 20 per cent discount to “Three profit warnings in a his 2008 stockpicks: “The of concerns about demand, In Europe there are bullish its peers) and unlike most of row left it very oversold. World equity markets may demand for oil rigs will supplies are still limited. sentiments, too, for a wide its peers, its order book is They weren’t good, but the be going through a difficult extend beyond 2010, under- “Pricing is still holding up, range of companies. At full for 2008 and there’s good fundamentals are strong.” period, but the leading stock pinned by high oil prices and companies have done quite Exane BNP Paribas, Mathieu visibility for 2009”. For Patrick Comack pickers in the FT/StarMine a push towards deepwater well in terms of cost control Robilliard selects Eutelsat Meanwhile, in the US, of Zachary Investment awards – recognised for their exploration and production,” and are still very profitable. Communications. “It has Pearce Hammond at Sim- Research and Management, achievements in 2007 – can he says. Valuations of the stocks are been going up for two years mons and Company has Pea- Sprint Nextel is the number still find plenty of companies Analysts at Credit Suisse still reasonable.” but I think there’s a lot more body Energy as his 2008 one buy-rated pick with a $14 FINANCIAL TIMES FRIDAY MAY 16 2008 9 World’s Top Analysts How the rankings are compiled

StarMine objectively meas- tive to a regional industry- ● An analyst must have cov- ranks qualifying analysts SES is computed daily and ures the performance of ana- based benchmark. Industry ered at least five stocks in a based on their Industry Esti- aggregated to provide scores lysts based on the returns on Excess Returns are aggre- given industry throughout mate Score for the stocks in on individual stocks, indus- their buy/sell recommenda- gated into an overall excess 2007. If an industry has fewer a specific industry and tries (the Industry Estimate tions and the accuracy of return to identify the top 10 than 15 stocks, an analyst region. The 10 qualifying Score), and the analyst over- their earnings estimates. overall stock pickers in each must have covered a mini- analysts who have the high- all (the Overall Estimate The 2008 FT/StarMine Glo- region. mum of three stocks or one- est Overall Estimate Scores Score). bal Analyst Awards are All analyst returns are cal- third of those in the indus- in each region receive an FT/ To qualify for an industry based on the 2007 calendar- culated relative to the return try, whichever is greater. StarMine Overall Earnings ranking, an analyst must year performance of recom- on a market capitalisation- ● An analyst’s industry Estimate Award. have had coverage on at mendations and estimates on weighted portfolio of all the return must have exceeded StarMine’s proprietary least five stocks in a given companies domiciled in each stocks in a given industry the return of the relevant metric, Single-stock Estimate industry and region through- of the three awards regions: and region. industry benchmark. That is, Score (SES), measures the out 2007. If an industry has Asia, Europe and the US. For comparison purposes, his Industry Excess Return accuracy of each analyst’s fewer than 15 stocks, an ana- In each region, awards are StarMine builds a non-lever- must be positive. earnings forecasts. SES is a lyst must have covered a presented to the top three aged portfolio for each ana- ● An analyst must have measure of relative accuracy; minimum of three stocks or stock pickers and earnings lyst based on his or her rec- delivered at least a three-star that is, analysts are com- one-third of the stocks in the estimators in each industry, ommendations in each indus- performance on his overall pared against their peers. industry, whichever is to the top 10 stock pickers try. This portfolio is rebal- coverage (i.e., for all indus- An analyst’s SES can greater. and earnings estimators anced each month and tries covered), as measured range from 0 to 100, with 50 To qualify for StarMine’s overall, and to the 10 broker- whenever the analyst adds by StarMine’s Coverage-Rela- representing the average Top Ten list, an analyst must age firms that have won the coverage, drops coverage, or tive Rating. analyst. To get a score have had coverage on at most individual analyst changes a rating. To qualify for a region’s higher than 50, an analyst least five stocks in a specific awards. For each “buy” recommen- overall stock picking awards, must make estimates that region throughout 2007. The Top Global Broker dation, the portfolio is one an analyst must have cov- are both significantly differ- award is given to the broker- unit long the stock and ered at least five stocks in ent from and more accurate Non­participating firms Hard landing: a view of Heathrow Airport, owned by BAA, whose debt­funded purchase by Ferrovial was judged wrongly by many PA age that has won the most simultaneously one unit the region. StarMine also than other analysts’ esti- The following firms did not analyst awards in multiple short the benchmark. This requires analysts to have mates. participate in the 2008 FT/ wake of its debt-funded pur- awards regions. gives the analyst credit for earned at least a five-star rat- SES takes into account StarMine Global Analyst chase of BAA, the UK air- the amount by which the ing on their overall coverage many factors: the analyst’s Awards: Buckingham Re- ports operator, in 2006. While Data source stock outperformed the as measured by StarMine’s absolute forecast error, the search, CLSA, Han- debt was cheap then, greater The FT/StarMine awards benchmark. Coverage-Relative Rating. analyst’s error compared delsbanken Capital Markets, gearing is risky and are based on the estimates “Strong buys” get a larger with other analysts, the vari- Lehman Brothers, Sanford C. increases the return and recommendations as investment of two units long Earnings estimating ance of the analysts’ errors, Bernstein and Sidoti. demanded by equity inves- recorded in the Thomson the stock and two units short To determine the regional the timing of the estimates, tors. Reuters I/B/E/S database. the benchmark. “Holds” winners of Industry Earnings and the absolute value of the Mary Morgan, “They’d see a load of debt StarMine uses the GICS (Glo- invest one unit in the bench- Estimate Awards, StarMine actual earnings for the stock. StarMine and say: ‘It’s cut the com- bal Industry Classification mark (i.e., for an excess pany’s cost of capital’. They System) for its industry defi- return of zero). “Sells” are forget to factor in that the nitions. the reverse: long the bench- cost of equity will have gone In some instances in mark and short the stock. up,” he says. Europe and Asia, the GICS “Strong sells” get a larger Above all, it seems that the has resulted in industries investment of two units long best forecasters of both earn- that are not large enough for the benchmark and short the ings and share prices are ranking purposes. When this stock. those who trust their own has been the case, StarMine The portfolio return is experience. has combined multiple indus- opportunity-adjusted to give Mr Crook says: “I do think tries to reflect the way a fair comparison of analyst history is a good guide to the regional analysts organise performance regardless of future. The cycle happens. their coverage. which stocks they cover in a Experience definitely helps.” For example, StarMine’s given industry. This adjusted Mr Paulson adds: “The key “Financial Services” industry return is an analyst’s Indus- thing is not to panic. Some in Europe is a composite of try Excess Return. financials are facing a seri- the following GICS indus- To calculate overall excess ous deterioration in their tries: Capital Markets, Con- return, StarMine uses the fundamentals, but not all. sumer Finance and Diversi- weighted average of each There was a similar situation fied Financial Services. analyst’s Industry Excess in 2002 and 2003 with the fear Returns, where weighting is around the insurers. Stock picking awards based on the number of “It is crucial not to be For industry awards, ana- stocks the analyst covers in swayed too much by short- lysts are ranked according to each industry. term sentiment, as excessive their Industry Excess To qualify for a 2008 FT/ fears in the market can cre- Return, computed from a StarMine Industry Stock ate real opportunities for portfolio simulation that Picking Award, an analyst long-term investors.” measures each analyst rela- must meet three criteria:

target price. The sector is so ing selections in the financial gage products similar to competitive that the only services sector. David Hilder those on the group’s balance stocks worth buying are at Bear Stearns has Bank of sheet saw massive cumula- takeover targets, he suggests. New York Mellon as his 2008 tive loss rates,” he says. Mergers are also influenc- stock pick. The merger In the US, Ed Najarian at between BoNY and Mellon Merrill Lynch selects Wacho- allows them to be even more via as a sell – based on the competitive, he says, in an belief that its credit issues environment that already related to Golden West favours their strengths in Financial, the California back office, trust services mortgage lender which it and processing. bought in 2005, run very The two “sell” selections deep. The “sell” is in place come – inevitably maybe – in until 2010. this sector. Jonathan Pierce of Credit Reporting by Justine Lau, Suisse has a “sell” on Brad- Sarah O’Connor and Anuj ford & Bingley as his 2008 Gangahar. There are more pick. “We expect a signifi- 2008 stock picks in the cant fall in UK house prices, biographies at David Hilder: merger benefits and in the early 1990s mort- www.ft.com/topanalysts2008. 10 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts | US Coping calmly in crisis conditions

TOP 10 STOCK PICKERS Crucially, she also with a “buy” and maintained try benchmark by 50 per remained bullish on Apple US KEY POINTS that call for the rest of the cent. Anuj Gangahar on for the full year, as the year, as the stock shot up He was also bullish on the different routes shares soared 133 per cent. ● 1,922 stock pickers and 1,908 estimators qualified in at from $32.79 to $71.43, or 118 CME Group for most of the She also maintained a lucra- least one awards category by covering a sufficient number of per cent. year, as it gained 24 per cent to success followed tive “market underperform” stocks The top five in the table for and outperformed its indus- by leading analysts on RealNetworks from the ● US stock pickers underperformed their industry 2007 is rounded out by Rik- try benchmark by 40 per start of 2007 until the begin- benchmarks by an average of 0.2 per cent last year. In ard Vabo at Fearnley Fonds cent. The merger between ning of May, as the stock 2006, on average they outperformed their industry (see profile on Page 6). the Chicago Mercantile he top 10 US stock dropped from 10.94 to 8.26 benchmarks by 2.4 per cent David Hilder takes his Exchange and Chicago Board pickers in the 2008 and underperformed its ● In 2007, US stock pickers turned in their top average sixth place mainly because of Trade cemented its place FT/StarMine awards benchmark by 31 per cent. performance on Diversified Financial Services. In the previous he showed extraordinary as the dominant force in span a wide variety Ms Ebeling joined JMP year, they had added the most value in Consumer Finance foresight with his “sell” calls futures trading. Tof sectors, from software to Securities in June 2003 and is in the industries that have Shalini Mahajan and Ron- oil, healthcare equipment to a vice-president and senior suffered most from the ald Barone of UBS claim mortgage finance, telecoms research analyst covering recent credit crisis in the US their eighth spot with some to commercial banks. consumer technology and – which engulfed his own successful calls on stocks All 10 come from different digital media. company, Bear Stearns. including Public Service firms. These include bulge She previously spent three Mr Hilder has used only Enterprise Group and Con- bracket players such as Mer- years covering the infrastruc- “buy” or “sell” recommenda- stellation Energy Group rill Lynch and Morgan ture software sector for JMP tions since 2002, saying this among others. These saw Stanley, and smaller special- as a research associate. gives him the ability to think them outperform their ist outfits such as Fearnley The second placed stock more like a fund manager benchmark in the Electric Fonds and Sterne, Agee and picker, Mike Shafir of Sterne, and clarifies his thinking. Utilities sector by 16.8 per Leach. Agee & Leach, one of the old- This year, he remained cent. All coped admirably during est and largest remaining bearish on Washington Glenn Reicin, healthcare a year in which their uni- privately-held brokers, out- Mutual throughout 2007, as it equipment analyst at Morgan verse of stocks was affected performed his industry tumbled from $42.49 to $13.49 Stanley, ranks ninth, outper- by conditions that owed as benchmark by 27.8 per cent. and underperformed its foming his benchmark by much to the crisis in the That was in a year in which industry benchmark by 34 16.6 per cent, with a combi- credit markets and its subse- the mortgage finance busi- per cent. He also held an nation of great “overweight” quent fallout as they did to ness that he covers was in “underperform” on Hunting- and “underweight” recom- company- or sector-specific the eye of the storm that ton Bancshares for the full mendations. His most profita- fundamentals. engulfed capital markets. year, as it fell 34 per cent. ble “overweight” call was on The winning stock picker He accomplished this pri- Mr Hilder also had some Hansen Medical from early of last year, Ingrid Ebeling, marily on the basis of his prescient “buy” recommen- January to the end of Octo- software analyst at JMP “buy” calls. For example, he dations, most notably State ber as the stock rocketed 202 Securities of San Francisco, covered Beneficial Mutual Street Corporation and Bank per cent. outperformed her industry Bancorp from July to the end of New York Mellon. This Mr Reicin was “under- benchmark by 29.5 per cent. of last year with a “buy”, as was because their sets of weight” on Edwards Lifesci- Ms Ebeling led the pack of it outperformed its industry businesses, which he charac- ences from March until the US stock pickers primarily benchmark by 42 per cent. terises more as “trust and end of 2007, as it fell 8 per by making some exceptional Mr Shafir also initiated processing” than pure lend- cent and underperformed its “buy” calls. Among her best coverage on ESSA Bancorp ing, were able to weather the industry benchmark by 22 upside recommendations was in mid-June with a “buy” credit market storm better per cent. He maintained a a “market outperform” on that he maintained for the than others. full-year “overweight/attrac- Navteq for the first nine remainder of the year. Dur- Howard Chen of Credit tive” on Abbott Laboratories months of 2007, as the map- ing the coverage period, Suisse takes seventh place as it rose 18 per cent. ping company shot up 145 ESSA also outperformed its among the overall stock pick- Patrick Comack’s collec- per cent and outperformed industry benchmark by 42 Ingrid Ebeling of JMP Securities Mark Murrmann/ZUMA Press ers because all his “outper- tion of good “overweight” its industry benchmark by per cent. form” and “underperform” and “underweight” calls 135 per cent. Edward Najarian of Merrill year, as NCC slid 55 per cent, able fuels and electrical calls hit the mark in a cover- landed him the 10th spot. She further cemented her Lynch covers the commercial underperforming its bench- equipment analysis by 21.4 age universe that has seen The wireless and telecoms top ranking by initiating cov- bank sector and, unlike Mr mark by 37 per cent. He also per cent. For example, he rapid consolidation, particu- analyst at Zachary Invest- erage in January on Garmin Shafir, earned his third place had a 12-month “sell” on had an “overweight” on Sun- larly among exchanges. ment Research made bullish with a “market outperform” in the table because of sev- Fifth Third Bancorp as it fell Power for more than 11 For example, he initiated recommendations on Sun- and maintaining that call for eral astute “sell” recommen- 35 per cent. months in 2007, as it shot up coverage on Intercontinent- Com Wireless Holdings and the remainder of the year as dations. He downgraded his Pearce Hammond of Sim- 221 per cent and outper- alExchange with an “outper- SkyTerra Communications. the maker of portable naviga- recommendation on National mons and Company wins formed its industry bench- form/marketweight” in June His “overweight” on TPC for tion devices shot up 95 per City Corporation from a fourth place mostly on the mark by 170 per cent. and maintained that call for most of the year came as the cent and outperformed its “hold” to a “sell” in late strength of his “buy” calls, Mr Hammond also initiated the remainder of the year as stock rose 166 per cent and industry benchmark by 115 April last year and kept that which saw him outperform coverage on Consol Energy the stock climbed 29 per cent outperformed its industry per cent. call for the remainder of the his peers in oil, gas, consum- in mid-January last year and outperformed its indus- benchmark by 156 per cent.

Top 10 Stock Pickers-US SELECTED BIOGRAPHIES – more on FT.Com Rank Analyst Broker Industry Primary Coverage Industries (Coverage of Mike Shafir Glenn Reicin Excess two or more companies in the Industry) Company Morgan Stanley Return(%) Age 32 Company: Sterne, Agee & Career Joined the firm in 1 Ebeling, Ingrid JMP Securities 29.5 Software Leach 1993, covering the areas of 2 Shafi r, Mike Sterne, Agee & Leach 27.8 Mortgage Finance Career Joined Sterne Agee hospital supply, medical technology, and 3 Najarian, Edward Merrill Lynch 24.0 Commercial Banks as a research analyst, focusing on northeast pharmaceuticals. 4 Hammond, Pearce Simmons & Company 21.4 Oil, Gas & Consumable Fuels; Electrical banks and thrifts, in April 2006 after working Previously, he was a senior vice­president at Equipment as an analyst at Moors & Cabot since 2004. Oppenheimer & Co. 5 Vabo, Rikard Fearnley Fonds 21.4 Marine; Oil, Gas & Consumable Fuels Patrick Comack 6 Hilder, David Bear Stearns 20.8 Commercial Banks; Capital Markets; Diversi- Ed Najarian fi ed Financials Age 44 Age 42 7 Chen, Howard Credit Suisse 17.4 Capital Markets; Diversifi ed Financials Company Merrill Lynch Company: Zachary Career Joined the Merrill Investment Research and Mahajan, Shalini and Electric Utilities; Independent Power Produc- Management 8 Barone, Ronald UBS 16.8 ers & Energy Traders; Multi-Utilities Lynch equity research department in March 2000. Career Prior to founding 9 Reicin, Glenn Morgan Stanley 16.6 Healthcare Equipment; Pharmaceuticals Now a managing director, Zachary, he spent more he took charge of covering the large­cap than four years as the telecommunications 10 Comack, Patrick Zachary Investment 16.0 Wireless Telecommunications Services; Research Diversifi ed Telecommunications Services regional bank group in 2004. service analyst at Guzman & Company Source: StarMine FINANCIAL TIMES FRIDAY MAY 16 2008 11 World’s Top Analysts | US

Top Stock Pickers by Industry-US

Rank Industry Analyst Broker Rank Industry Analyst Broker 1 Aerospace & Defense Quilty, Chris Raymond James 1 Food & Staples Retailing Caicco, Perry CIBC World Markets 2 Groh, J.B. D. A. Davidson & Co. 2 Wiltamuth, Mark Morgan Stanley 3 Lewis, Michael BB&T Capital Markets 3 Heinbockel, John Goldman Sachs 1 Air Freight & Logistics Campbell, David Thompson, Davis, & Co. 1 Food Products Ramey, Timothy D. A. Davidson & Co. 2 Seidl, Jason Credit Suisse 2 Geissler, Diane Merrill Lynch 3 Paterson, Rick UBS 3 Wood, Oliver* Stifel Nicolaus 1 Airlines Parker, James Raymond James 1 Gas Utilities Brothwell, Sam Wachovia Capital Markets 2 Higgins, James Soleil-Solebury Research 2 Heim, Michael* Wachovia Capital Markets 3 Derchin, Michael FTN Midwest 3 Barone, Ronald UBS 1 Auto Components Tynan, Kevin Argus Research 1 Healthcare Equipment & Supplies Reicin, Glenn Morgan Stanley 2 Steinmetz, Jonathan Morgan Stanley 2 Matson, Michael Wachovia Capital Markets 3 Lache, Rod Deutsche Bank Securities 3 Nelson, Timothy* Piper Jaffray 1 Automobiles Aaron, Edward RBC Capital Markets 1 Healthcare Providers & Services Baker, Michael Raymond James 2 Badishkanian, Gregory Citigroup 2 Davides, Constantine** Susquehanna Financial Group Only two analysts qualifi ed. 3 Goldwasser, Ricky UBS 1 Beverages Swartzberg, Mark Stifel Nicolaus 1 Healthcare Technology Halper, Steven Thomas Weisel Partners 2 Torres, Lauren HSBC Only one analyst qualifi ed. 3 Hong, Judy Goldman Sachs 1 Hotels & Leisure Logsdon, Jeffrey BMO Capital Markets 1 Biotechnology Aberman, Michael Credit Suisse 2 Farley, Robin UBS 2 Duncan, Charles JMP Securities 3 Gianoukos, Dean* J.P. Morgan 3 Stewart, Caroline Piper Jaffray 1 Household Durables Puryear, Paul and Horne, Raymond James Building Products No analysts qualifi ed. Buck 1 Capital Markets Bove, Richard Punk, Ziegel & Co. 2 Gieber, Gregory* Wachovia Capital Markets 2 Mayer, Cynthia Merrill Lynch 3 Mohsenian, Dara J.P. Morgan 3 Bhatia, Prashant Citigroup 1 Household Products Hott, Justin Bear Stearns 1 Chemicals Ahmed, Hassan HSBC 2 Smith, Erin Argus Research 2 Carson, Donald Merrill Lynch 3 Altobello, Joseph*** CIBC World Markets 3 McNulty, John Credit Suisse 1 Independent Power Producers & Energy Lapides, Michael Goldman Sachs 1 Commercial Banks Graseck, Betsy Morgan Stanley Traders 2 Najarian, Edward Merrill Lynch 2 Kiani, John Deutsche Bank Securities 3 Hilder, David Bear Stearns 3 Eggers, Daniel Credit Suisse 1 Commercial Services & Supplies Ursaner, Arnold CJS Securities 1 Industrial Conglomerates Sprague, Jeffrey Citigroup 2 Sutherland, William Boenning & Scattergood 2 Inch, John Merrill Lynch 3 Fisher, William Raymond James Only two analysts qualifi ed. 1 Communications Equipment McIlree, James Collins Stewart 1 Insurance O’Donoghue, Kevin Banc of America Securities 2 Robison, Matthew Ferris, Baker Watts 2 Meredith, Brian UBS 3 Wilson, Samuel JMP Securities 3 Schuman, Jeffrey Keefe, Bruyette & Woods 1 Computers & Peripherals Embersits, Jeff Shareholder Value Manage- 1 Internet & Catalog Retail Mahaney, Mark Citigroup ment 2 Noto, Anthony* Goldman Sachs 2 Fearnley, Jr., William R. (Bill) FTN Midwest 3 Devitt, Scott Stifel Nicolaus 3 Mai, Hugh Broadpoint Capital 1 Internet Software & Services Brown, Derek Cantor Fitzgerald 1 Construction & Engineering Hussey, Chris Goldman Sachs 2 Bannister, Barry Stifel Nicolaus 2 Weinstein, Steve Pacifi c Crest Securities Only two analysts qualifi ed. 3 Khan, Imran J.P. Morgan 1 Construction Materials Grooms, Trey Stephens Inc. 1 IT Services Embersits, Jeff Shareholder Value Manage- ment Only one analyst qualifi ed. 2 Maurer, Craig Calyon Securities 1 Consumer Finance Fotheringham, James Goldman Sachs 3 Murphy, Charles Morgan Stanley 2 Coffey, Henry Ferris, Baker Watts 1 Leisure Equipment & Products Hovorka, Joseph Raymond James Only two analysts qualifi ed. Only one analyst qualifi ed. 1 Containers & Packaging Manuel, Christopher KeyBanc Capital Markets 1 Life Sciences Tools & Services Wood, Jon Banc of America Securities 2 Thein, Timothy Citigroup 2 Windley, David Jefferies & Co. 3 Hueston, Claudia Shank J.P. Morgan 3 Coldwell, Eric Robert W. Baird Distributors No analysts qualifi ed. 1 Machinery Bannister, Barry Stifel Nicolaus 1 Diversifi ed Consumer Services Greendale, Corey First Analysis 2 Varano, Yvonne Jefferies & Co. 2 Gubins, Sara Merrill Lynch 3 Junker, Amy Robert W. Baird 3 Duignan, Ann Bear Stearns 1 Diversifi ed Financial Services Repetto, Richard Sandler O’Neill 1 Marine Mavrinac, Douglas Jefferies & Co. 2 Allen, Christopher Banc of America Securities 2 Nokta, Omar Dahlman Rose & Co. 3 Vinciquerra, Michael BMO Capital Markets 3 DnB NOR Shipping Team DnB NOR Markets 1 Diversifi ed Telecommunication Services Lundberg, Gregory Soleil-Communications Equity 1 Media Bonner, Joe Argus Research Research 2 Greenfi eld, Richard Pali Research 2 Armstrong, Jason Goldman Sachs 3 Spring, Kit Stifel Nicolaus 3 Atkin, Jonathan RBC Capital Markets 1 Metals & Mining Parr, Mark KeyBanc Capital Markets 1 Electric Utilities Kalton, Neil Wachovia Capital Markets 2 Tharani, Sal Goldman Sachs 2 Eggers, Daniel Credit Suisse 3 MacGregor, David Longbow Research 3 Arnold, Jonathan Merrill Lynch 1 Multiline Retail Exstein, Michael Credit Suisse 1 Electrical Equipment Stone, Robert Cowen and Company 2 Weinswig, Deborah Citigroup 2 Pichel, Jesse Piper Jaffray 3 Sosnick, Bernard* Oppenheimer & Co. 3 Schneider, Michael Robert W. Baird 1 Multi-Utilities Mullin, Brooke Glenn J.P. Morgan 1 Electronic Equipment & Instruments Fox, Steven Merrill Lynch 2 Fremont, Paul Jefferies & Co. 2 Coster, Paul J.P. Morgan 3 Parker, David Robert W. Baird 3 Eastman, Richard Robert W. Baird 1 Oil, Gas & Consumable Fuels Kessler, Robert Simmons & Company 1 Energy Equipment & Services Syed, Waqar Tristone Capital 2 Leggate, Doug Citigroup 2 Pollard, Kevin J.P. Morgan 3 Carroll, Kenneth Johnson Rice & Company 3 Slorer, Ole Morgan Stanley 12 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts | US

Top Stock Pickers by Industry-US

Rank Industry Analyst Broker Rank Industry Analyst Broker 1 Paper & Forest Products Atkinson, Stephen BMO Capital Markets 1 Software Lederman, Laura William Blair & Company 2 Hueston, Claudia Shank J.P. Morgan 2 Ernst, Tom Deutsche Bank Securities 3 Skidmore, Richard Goldman Sachs 3 Terry, Heath Credit Suisse 1 Personal Products Chappell, William SunTrust Robinson Humphrey 1 Specialty Retail Stephens, Brad Morgan Keegan 2 Nicholson, Wendy Citigroup 2 Ma, Vivian*** CIBC World Markets 3 Chasen, Amy Low Goldman Sachs 3 Wewer, Dan Raymond James 1 Pharmaceuticals Rubin, Jami Morgan Stanley 1 Textiles, Apparel & Luxury Goods Klinefelter, Jeffrey Piper Jaffray 2 Fernandez, Seamus Leerink Swann 2 Slater, Todd Lazard Capital Markets 3 Risinger, David Merrill Lynch 3 McGough, Brian Morgan Stanley 1 Real Estate Investment Trusts (REITs) Mains, Robert Morgan Keegan 1 Thrifts & Mortgage Finance Shafi r, Mike Sterne, Agee & Leach 2 Doctrow, Jerry Stifel Nicolaus 2 Peterson, Ronald* Sterne, Agee & Leach 3 Davis, Anthony Stifel Nicolaus 3 Krewson, Stephanie Janney Montgomery Scott 1 Tobacco Adelman, David Morgan Stanley Real Estate Management & Development No analysts qualifi ed. 2 Hong, Judy Goldman Sachs 1 Restaurants Wiltamuth, Mark Morgan Stanley 3 Herzog, Bonnie* Citigroup 2 Staszak, John Argus Research 1 Trading Companies & Distributors Manthey, David Robert W. Baird 3 Ivankoe, John J.P. Morgan Only one analyst qualifi ed. 1 Road & Rail Tynan, Kevin Argus Research 1 Water Utilities Gaugler, Michael Brean Murray, Carret 2 Hoexter, Ken Merrill Lynch 2 Coy, Debra Janney Montgomery Scott 3 Wolfe, Edward# Bear Stearns Only two analysts qualifi ed. 1 Semiconductors & Semiconductor Maccagno, Pierre Needham & Company 1 Wireless Telecommunication Services Atkin, Jonathan RBC Capital Markets Equipment 2 Comack, Patrick Zachary Investment Research 2 Covello, James Goldman Sachs 3 Roe, Kevin Roe Equity Research 3 Jankowski, Simona Goldman Sachs *Currently inactive **Now at JMP Securities ***Now at Oppenheimer & Co # Now at Gilford Securities ##Now at Wolfe Research Source: StarMine Goldman Sachs topples Citigroup

TOP 10 BROKERS they cover, rather than ing, figuring in the top three Despite the undoubted because it tops every cate- in sectors as diverse as bev- strength of Goldman, it only Top Brokers-US Calling the credit gory that it covers. erage and construction, con- just pips Merrill Lynch in the For example, of the top 10 sumer finance and diversi- US. Indeed, Merrill misses crunch influences Rank Broker Total Number of earnings estimators, two are fied telecommunications out on sharing the top rank- Awards rankings, writes from Goldman Sachs – services. It also features ing with Goldman Sachs by Anuj Gangahar namely Thomas Cholnoky, heavily in the table of indus- just one analyst placing. 1 Goldman Sachs 24 the insurance analyst who is try-specific earnings estima- Among Merrill’s most nota- 2 Merrill Lynch 23 ranked fourth best earnings tors. ble achievements this year Goldman Sachs, the leading estimator – and Brian Singer, Goldman’s victory marks were several correct calls on 3 Citigroup 19 global broker, also takes the the oil and gas analyst who the first time in five years companies directly or indi- 3 Credit Suisse 19 top spot on the table of bro- comes ninth in the estima- that Citigroup has failed to rectly affected by the US 5 J.P. Morgan 18 kers covering stocks in the tors table. claim the top spot for bro- credit crunch. US. But the competition is Goldman does not figure at kers covering stocks in Edward Najarian, commer- 6 Morgan Stanley 17 snapping at its heels. all in the top 10 US stock North America. Citigroup cial banks analyst at Merrill, 7UBS 15 Goldman wins by virtue of pickers, but makes up for equalled its total of 19 says this was based on the its impressive range of cover- this with a strong perform- awards for 2006 last year, but thesis – decided more than a 8 Stifel Nicolaus 14 age and the strength of its ance across the board in this was good enough only year ago – that credit quality 9 Banc of America Securities 13 analysts across all the areas industry-specific stock pick- for joint third place. due to mortgage-related 9 Raymond James 13 loans would deteriorate at a rapid pace. 9 Robert W. Baird 13 He remains bearish on the Source: StarMine sector. “I still believe that the credit cycle we are expe- riencing is going to be more accelerating market share are Stifel Nicolaus, which severe and last longer than gains in the near-term amid comes eighth and Raymond the market seems to be antic- the broader turmoil in finan- James and Robert Baird, ipating,” he says. “I see it cial services,” says Mr Chen. which tie for ninth place lasting well into 2009.” “Through this credit crisis, alongside Banc of America Merrill Lynch also demon- management have proven to Securities. strates a range of coverage be disciplined risk managers Smaller firms such as and depth that is just as and very active managers of Stifel Nicolaus and Raymond impressive as Goldman’s. their capital.” James seem to win their Citigroup shares third Places six and seven in the placings in the list of top bro- place with Credit Suisse, and table go to Morgan Stanley kers, not unexpectedly, the top five is rounded out by and UBS respectively, dem- because of pockets of excel- JP Morgan with 18 placings. onstrating that while bou- lence rather than breadth of Credit Suisse analyst tique research houses have coverage. Howard Chen contributes to undoubtedly made an impact For example, Stifel has the the bank’s strong showing since the $1.4bn Wall Street number-one gas and utilities through his seventh place in settlement of 2002, the power analyst, Selman Akyol, and the table of top US stock still resides with those bro- Robert Baird employs pickers. kers able to devote resources Michael Schneider, the His top stock pick for this to attracting the best talent number-one ranked electrical year is Charles Schwab, and covering the greatest equipment analyst. which he describes as an breadth of sectors. The rankings are based on “asset-gathering machine” Several smaller firms fig- the number of individual and another company that ure heavily in the overall awards employee analysts has succeeded in negotiating estimating categories and to won for picking stocks or the credit crisis better than a lesser extent in the top estimating earnings, either most. stock-pickers categories. for their respective indus- Top spot lost: the Citigroup Center in New York Bloomberg “We see the company Most notable among these tries or as one of the top 10 analysts overall. FINANCIAL TIMES FRIDAY MAY 16 2008 13 World’s Top Analysts | US

Top Earnings Estimators by Industry-US Rank Industry Analyst Broker Rank Industry Analyst Broker

1 Aerospace & Defense von Rumohr, Cai Cowen and Company 1 Food & Staples Retailing Kelly, Edward Credit Suisse 2 Nadol, Joseph J.P. Morgan 2 Currie, Neil UBS 3 Gremmels, David* Thomas Weisel Partners 3 Heinbockel, John Goldman Sachs 1 Air Freight & Logistics Paterson, Rick UBS 1 Food Products Serotta, Eric Merrill Lynch 2 Flower, Scott Banc of America Securities 2 Geissler, Diane Merrill Lynch 3 Langenfeld, Jon Robert W. Baird 3 Aslam, Farha Stephens Inc. 1 Airlines McKenzie, Daniel Credit Suisse 1 Gas Utilities Akyol, Selman Stifel Nicolaus 2 Higgins, James Soleil-Solebury Research 2 Barone, Ronald UBS 3 Parker, James Raymond James 3 Followill, Rebecca Tudor Pickering 1 Auto Components Ceraso, Chris Credit Suisse 1 Healthcare Equipment & Supplies Cranna, Bruce Leerink Swann 2 Steinmetz, Jonathan Morgan Stanley 2 Kammerman, Eli Cowen and Company 3 Kwas, Richard Wachovia Capital Markets 3 Weinstein, Michael J.P. Morgan 1 Automobiles Badishkanian, Gregory Citigroup 1 Healthcare Providers & Services Goldwasser, Ricky UBS 2 Thompson, Kathryn Avondale Partners 2 Carroll, Thomas Stifel Nicolaus 3 Diffendal, John BB&T Capital Markets 3 McDonald, Carl*** CIBC World Markets 1 Beverages Pecoriello, Bill Morgan Stanley 1 Healthcare Technology Kumpel, James FBR Capital Markets 2 Swartzberg, Mark Stifel Nicolaus 2 Wieland, Sean Piper Jaffray 3 Faucher, John J.P. Morgan 3 Mannheimer, Eugene* Caris & Company 1 Biotechnology Zavoico, George Cantor Fitzgerald 1 Hotels & Leisure Hovorka, Joseph Raymond James 2 Seiler, Sharon Punk, Ziegel & Co. 2 Forst, Dennis KeyBanc Capital Markets 3 Sargent, William* Banc of America Securities 3 Curtis, Harry* J.P. Morgan Building Products Too few analysts qualifi ed. 1 Household Durables Kim, Stephen* Citigroup 1 Capital Markets Hecht, Michael Banc of America Securities 2 Oppenheim, Daniel Banc of America Securities 2 Vinciquerra, Michael BMO Capital Markets 3 Darkatsh, Sam Raymond James 3 Carrier, Mike UBS 1 Household Products Ferrara, Chris Merrill Lynch 1 Chemicals Ludwig, Saul KeyBanc Capital Markets 2 Scee, April Banc of America Securities 2 Koort, Robert Goldman Sachs 3 Gere, Jason Wachovia Capital Markets 3 McCarthy, Kevin Banc of America Securities 1 Independent Power Producers & Eggers, Daniel Credit Suisse 1 Commercial Banks Milsaps, Brad Sandler O’Neill Energy Traders 2 Najarian, Edward Merrill Lynch 2 Kiani, John Deutsche Bank Securities 3 McEvoy, Terry Oppenheimer & Co. 3 Johong, Lasan RBC Capital Markets 1 Commercial Services & Supplies Morin, Michel Merrill Lynch 1 Industrial Conglomerates Dray, Deane Goldman Sachs 2 Kundtz, Theodor Needham & Company 2 Sprague, Jeffrey Citigroup 3 Wilson, James JMP Securities Only two analysts qualifi ed. 1 Communications Equipment Leopold, Simon Morgan Keegan 1 Insurance Cholnoky, Thomas Goldman Sachs 2 Chopra, Rohit Wedbush Morgan 2 Kumar, Amit and Yankus, Fox-Pitt Kelton Cochran Caronia Bill Waller 3 Rao, Santosh* Broadpoint Capital 3 Glasspiegel, Robert Langen McAlenney 1 Computers & Peripherals Seyrafi , Shebly Caris & Company 1 Internet & Catalog Retail Mahaney, Mark Citigroup 2 Cross, Shannon Cross Research 2 Kessler, Aaron Piper Jaffray 3 Gardner, Richard Citigroup 3 Friedland, James Cowen and Company 1 Construction & Engineering Hussey, Chris Goldman Sachs 1 Internet Software & Services Patel, Jeetil Deutsche Bank Securities 2 Paget, Richard Morgan Joseph & Co 2 Mastin, Troy William Blair & Company 3 Cook, Jamie Credit Suisse 3 Mahaney, Mark Citigroup 1 Construction Materials MacGregor, David Longbow Research 1 IT Services Perlin, Daniel Wachovia Capital Markets 2 Kasprzak, John BB&T Capital Markets 2 Grossman, David Thomas Weisel Partners Only two analysts qualifi ed. 3 Dodd, Robert Morgan Keegan 1 Consumer Finance Valentin, Scott FBR Capital Markets 1 Leisure Equipment & Products Aaron, Edward RBC Capital Markets 2 Hochstim, David Bear Stearns 2 Hovorka, Joseph Raymond James 3 Fannon, Daniel Jefferies & Co. 3 Gikas, Anthony Piper Jaffray 1 Containers & Packaging Manuel, Christopher KeyBanc Capital Markets 1 Life Sciences Tools & Services Groberg, Jonathan Merrill Lynch 2 Wilde, Mark Deutsche Bank Securities 2 Coldwell, Eric Robert W. Baird 3 Panjabi, Ghansham Wachovia Capital Markets 3 Marshbanks, Tracy and First Analysis Distributors Too few analysts qualifi ed. Leonard, Dan 1 Diversifi ed Consumer Services Herman, Jerry and Craig, Stifel Nicolaus 1 Machinery Casey, Andrew Wachovia Capital Markets Robert 2 Lisnic, Peter Robert W. Baird 2 Gubins, Sara Merrill Lynch 3 Woodworth, Curtis J.P. Morgan 3 Beland, Paul* Citigroup 1 Marine Lewis, Gregory Credit Suisse 1 Diversifi ed Financial Services Fannon, Daniel Jefferies & Co. 2 Mavrinac, Douglas Jefferies & Co. 2 Repetto, Richard Sandler O’Neill 3 Boyden, Natasha Cantor Fitzgerald 3 Alexander, Niamh** CIBC World Markets 1 Media Reif Cohen, Jessica Merrill Lynch 1 Diversifi ed Telecommunication Breen, James Thomas Weisel Partners Services 2 Choi, Karl Merrill Lynch 2 Flannery, Simon Morgan Stanley 3 Searby, Frederick* J.P. Morgan 3 McCormack, Michael Bear Stearns 1 Metals & Mining Tanners, Timna UBS 1 Electric Utilities Gordon, Greg Citigroup 2 Chen, Kuni Banc of America Securities 2 Barone, Ronald UBS 3 Hayes, Timothy and Davenport & Co. O’Carroll, Lloyd 3 Eggers, Daniel Credit Suisse 1 Multiline Retail Weinswig, Deborah Citigroup 1 Electrical Equipment Schneider, Michael Robert W. Baird 2 Clark, Michelle Morgan Stanley 2 Pichel, Jesse Piper Jaffray 3 Augustine, Christine Bear Stearns 3 Glynn, Christopher*** CIBC World Markets 1 Multi-Utilities Fremont, Paul Jefferies & Co. 1 Electronic Equipment & Instruments Pai, Ajit Thomas Weisel Partners 2 Dwivedi, Vikas Morgan Stanley 2 Ricchiuti, James Needham & Company 3 Parker, David Robert W. Baird 3 Paris, Sr., Alexander Barrington Research 1 Oil, Gas & Consumable Fuels Singer, Brian Goldman Sachs 1 Energy Equipment & Services Pollard, Kevin J.P. Morgan 2 Kistler, David Simmons & Company 2 Simpson, Kevin Miller Tabak 3 Dietert, Jeff Simmons & Company 3 Sill, Ken Credit Suisse 14 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts | US

Top Earnings Estimators by Industry-US Rank Industry Analyst Broker Diligence 1 Paper & Forest Products Hueston, Claudia Shank J.P. Morgan 2 Schneider, Richard* UBS 3 Skidmore, Richard Goldman Sachs 1 Personal Products Chappell, William SunTrust Robinson Humphrey and instinct 2 Dionisio, Rommel Wedbush Morgan 3 Weiser, Linda Bolton# Oppenheimer & Co. 1 Pharmaceuticals Amsellem, David FBR Capital Markets are the keys 2 Goodman, Marc Credit Suisse 3 Piros, Elemer Rodman & Renshaw 1 Real Estate Investment Trusts Loeb, David Robert W. Baird (REITs) 2 Delaney, Steven JMP Securities to success 3 Fandetti, Donald Citigroup Real Estate Management & Develop- Too few analysts qualifi ed Updating estimates rapidly ment TOP 10 ESTIMATORS when new information sur- 1 Restaurants Rothman, Rachael Merrill Lynch Jeremy Lemer on faces and picking out new 2 Derrington, Robert Morgan, Keegan the traits shared by trends ahead of the pack is 3 Elliott, Bryan Raymond James especially important, ana- the leading analysts lysts say – especially in a 1 Road & Rail Langenfeld, Jon Robert W. Baird hedge fund- driven world 2 Jones, Chaz Morgan Keegan where big players pile in and 3 Wadewitz, Thomas J.P. Morgan he top 10 US earn- out of stocks quickly. ings estimators cover At Goldman Sachs, quanti- 1 Semiconductors & Semiconductor Benjamin, Adam Jefferies & Co. different sectors and tative modelling and system- Equipment represent various atic study are given particu- 2 Balaraman, Suresh ThinkEquity Partners Tcompanies, but they share lar weight, says Brian 3 Dhanda, Sumit Banc of America Securities a number of traits and Singer, an oil and gas spe- attribute their success to cialist ranked number nine 1 Software Pachter, Michael Wedbush Morgan similar tricks of the trade. for 2007. The firm also takes 2 Weller, Todd Stifel Nicolaus A readiness to strike out in advantage of its wide range Calculating a return: number crunching still counts even if novel sources of information are gaining in importance Getty 3 Weiss, Matthew Maxim Group an independent direction and of geographical and sector stand by tough calls is a pre- coverage to cross-check its impact numbers and what 1 Specialty Retail Lakner, Dorothy* CIBC World Markets requisite, says Jessica Reif estimates and give them isn’t,” says Thomas Chol- 2 Cristello, Anthony BB&T Capital Markets Cohen, a media analyst with more coherence. noky, who has spent 22 years 3 Montagna, Mark CL King Merrill Lynch, and number None of that technical vir- as an insurance analyst with three in the FT/StarMine tuosity would be of much use Goldman Sachs and was 1 Textiles, Apparel & Luxury Goods Mintz, Jeff Wedbush Morgan rankings, which cover per- without a fair amount of ranked number four on this 2 Ohmes, Robert* Banc of America Securities formance in 2007. shoe-leather – the unglamor- year’s list. 3 Tracy, Eric BB&T Capital Markets “No company likes to have ous work of collecting, Indeed, for many analysts, a negative report, so we have untangling and evaluating despite its scientific veneer, 1 Thrifts & Mortgage Finance Miller, Paul FBR Capital Markets been blacklisted a number of the jumbled mass of mislead- the process of estimating 2 Shaw, Jared* Keefe, Bruyette & Woods times – but that comes with ing and revealing clues. earnings is more of an art 3 Napoli, Robert Piper Jaffray the territory,” Ms Cohen “The most important tools form. says. are diligence and a willing- “As you get some experi- 1 Tobacco Modi, Nik UBS In one case that made the ness to put in the time to ence with the companies and 2 Hong, Judy Goldman Sachs newspapers, Ms Cohen and read all of the filings [and] how their business models 3 Adelman, David Morgan Stanley her colleagues downgraded transcripts, and dissect all work, you get to the point AOL Time Warner, prompt- the data,” says Rachael Roth- where things either make 1 Trading Companies & Distributors Poliniak, Allison Wachovia Capital Markets ing angry reactions from man, a restaurants analyst sense or they don’t,” says 2 Lewis, Holden BB&T Capital Markets executives and, reportedly, with Merrill Lynch and this Chris Ceraso, an automotives 3 Germanotta, Jeffrey William Blair & Company cancelled meetings and year’s top earnings estima- analyst with Credit Suisse, would not return phone calls tor. who is ranked number six in 1 Water Utilities Coy, Debra Janney Montgomery Scott in retaliation. the 2007 league table. Only one analyst qualifi ed. Still, Ms Cohen had the “So even if the model 1 Wireless Telecommunication Services Nelson, Michael Stanford Group last laugh. A management When predicting mechanically spits out a reshuffle removed her oppo- number you can say: ‘Well, 2 Armstrong, Jason Goldman Sachs nent shortly thereafter. the performances wait a minute.’” 3 Barden, David Banc of America Securities Sometimes, though, it pays of companies, Where official information * Currently inactive **Now at Keefe, Bruyette & Woods *** Now at Oppenheimer & Co. #Now at Caris & Company to be nice. Tact, a reasoned is unavailable, improvisation Source: StarMine argument, a respectful a dose of good is vital. Sources can help. A demeanour and a fair wind fortune cannot Rolodex well stocked with can help avoid confrontation, contacts can overcome gap- analysts say. but help ing holes in a data set, says David Kistler, an analyst Merrill’s Ms Cohen. Surveys, Top 10 Earnings Estimators-US with Simmons & Company, chats with private competi- ranked number five on the Then too, instinct pared to tors and other “channel Rank Analyst Broker Primary Coverage Industries (Coverage of two or list, says that the oil and gas the quick by years of experi- checks” are also invaluable. more companies in the Industry) sector has been experiencing ence is crucial. Embedded in Indeed, novel sources of boom times in recent years, each of the models that ana- information have become 1 Rothman, Rachael Merrill Lynch Restaurants reducing opportunities for lysts use are assumptions even more significant since 2 Goodman, Marc Credit Suisse Pharmaceuticals; Healthcare Equipment conflict. about past performance and Eliot Spitzer shook up equity “When companies do well, predictions about probable research while he was New 3 Reif Cohen, Jessica Merrill Lynch Media management tends to be futures – conjectures given York state attorney-general 4 Cholnoky, Thomas Goldman Sachs Insurance happy. It is when results weight only by long practice. in the early 2000s. Mr move sideways or down that To estimate future earn- Spitzer’s reforms forced ana- 5 Kistler, David Simmons & Company Oil, Gas & Consumable Fuels they get bent out of shape.” ings per share accurately, lysts to improve disclosure, 6 Ceraso, Chris Credit Suisse Auto Components; Automobiles The right tools are another analysts must sieve cut down on clubby, off-the- must-have. The well-prepared and weigh company-specific record briefings with man- 7 Poliniak, Allison Wachovia Capital Trading Companies analyst has at his fingertips issues, industry trends and agement and rely more on Markets Porter’s Five Forces – a mod- macro-economic data. Will their own insights. 8 Hovorka, Joseph Raymond James Hotels & Leisure; Leisure Equipment; Media elling framework devised by management deliver? How For every team leader that 9 Singer, Brian Goldman Sachs Oil, Gas & Consumable Fuels the US academic Michael will competitors react? Will tops the ranking, there are a Porter, a strong grasp of the the economy hold up? number of associates that 10 Herman, Jerry and Stifel Nicolaus Diversifi ed Consumer Services basics of finance, and an “At the end of the day, make the team work. Few Craig, Robert understanding of the drivers some of it really comes down are quite as clear-cut a dou- Source: StarMine of demand and costs. to your gut…having a good ble act as Jerry Herman and Speed, too, is a weapon. sense of what is going to Bob Craig, ranked joint-10th FINANCIAL TIMES FRIDAY MAY 16 2008 15 World’s Top Analysts | US

SELECTED BIOGRAPHIES – more at www.ft.com/topanalysts2008

Jessica Reif Cohen Allison Poliniak Jerry R. Herman Age “40­ish” Age 37 Age 49 Career Joined Merrill Position Senior equity Career Joined the Stifel Lynch in 1994 as analyst at Wachovia Nicolaus research team managing director. Capital Markets in the in 2005. Before that he Previous affiliations diversified industrial worked at Legg Mason include Oppenheimer sector

Tom Cholnoky Joseph Hovorka Robert L. Craig Age 52 Age 35 Age 52 Career Joined Goldman Career Joined Career Joined Stifel in 1986 and became a Raymond James in Nicolaus in 2005. Prior senior analyst for non­life June 2000. Before that, to that he worked at insurance stocks in 1992. he was at A.G. Edwards Legg Mason

Calculating a return: number crunching still counts even if novel sources of information are gaining in importance Getty

in this year’s list, for thing – how to predict the research on education serv- weather. ices at Stifel Nicolaus. When the dust settles, the “We spend more time with winners and losers are pain- each other than we do with fully clear. Research goes out our spouses,” jokes Mr Her- with a name on it and there man. is little room to recant, says As a partnership, the two Mr Kistler. Frequent changes say they can cover more of heart undermine confi- research ground than they dence, so conclusions must would otherwise, reach a be decisive and positioned wider array of clients and for the long run. tag-team management into Some take pleasure in the providing more revealing high stakes. “There is always answers. validation,” says Mr Ceraso. Of course, regardless of tal- “You make an analysis, come ent, in predicting the per- up with a conclusion and formances of companies, a then you find out if you are dose of good fortune cannot right or wrong.” but help. “It’s always better But, as every seasoned to be lucky than good,” says analyst knows, the ‘right Mr Kistler of Simmons. answer’ is not always the The corollary is that right answer. Even after col- chance also plays a role. Mr lating the data, making the Cholnoky at Goldman Sachs phone calls and crunching has been covering insurance the numbers, things can go companies for more than two badly awry. Earnings esti- decades, but he admits he mates are only the first step has not quite cracked one in picking the best stocks.

BIOPGRAPHIES – more at FT.Com

Rachael Marc Rothman Goodman Age 37 Age 42 Career Position Is Formerly at a managing Morgan director of Stanley, she the US joined Merrill Lynch in 2002. equity research team at Was appointed senior US Credit Suisse, covering US restaurants analysts in 2004. specialty pharmaceuticals.

David Kistler Christopher J. Ceraso Age 40 Age 36 Career Joined Simmons & Career Mr Ceraso has been Company in 2006 and covering the automotive covers oil, gas and sector for Credit Suisse consumable fuels. Was since 2000. Previously he formerly at Enron developing worked for six years at commodity trading and risk Merrill Lynch in the private management businesses client division 16 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts | Europe

Top 10 Stock Pickers-Europe

Rank Analyst Broker Excess Primary (coverage of Primary Countries Return two or more companies (coverage of two or Proactive stance (%) in the industries) more companies in the countriesx) 1 Bumm, Philipp CA Cheuvreux 41.1 Industrials; Business Germany; Austria & Consumer Services; Energy pays dividends 2 Samoy, Kristof KBC Securities 36.3 Media Belgium; The Netherlands 3 Beaudet, Eric Natixis Securities 36.2 Technology Hardware; France TOP 10 STOCK PICKERS says it is as important as por- decided the political support Media ing over balance sheets and could not last. He made bear- 4 Nilsson, Martin Carnegie Investment 35.5 Technology Hardware; Sweden; Finland Sarah O’Connor on studying price/earnings ish calls on two biofuel com- Bank Industrials the importance of ratios. panies – CropEnergies and 5 Nilhov, Fredrik Öhman Fondkom- 33.2 Household & Leisure Sweden “Politics is important for Biopetrol – and then watched mission Goods; Machinery looking beyond my sector. It’s not the scien- the shares tumble 42 per cent tists making the laws and and 58 per cent respectively 6 Exane BNP Paribas Exane BNP Paribas 30.6 Telecommunication Italy; France balance sheets Telecom Operators Services; Media regulation on renewable in 2007. Team energy, it’s politicians want- “I never believed that bio- ondering if ing to be elected again,” says fuels would be good for the 7 Manolopoulos, ESN Partnership 30.3 Banks Greece; Turkey Konstantinos (Marfi n Analysis) Barack Obama Mr Bumm. He watches elec- environment; they were com- will beat Hillary tions carefully across Europe peting with the food sector. 8 Pierce, Jonathan Credit Suisse 28.5 Banks United Kingdom Clinton – and if but also in the US, to try to Now they’ve lost the support 9 Kippers, Kris Petercam 27.5 Construction & Materi- Belgium; The Netherlands Weither could take on John judge how political support of the people,” he says. als; Food & Household McCain – does not sound like for the companies he covers Mr Bumm trained as an Products; Paper & Packaging a top priority for a European might change. industrial engineer. After renewable energy analyst. The key is to be proactive, graduating in 2005 he joined 10 Logan, Richard Goldman Sachs 26.6 Chemicals United Kingdom But Philipp Bumm of CA not reactive, he says. When CA Cheuvreux as an analyst, Source: StarMine Cheuvreux, the top stock most people were raving but his degree helps him spot picker in Europe last year, about biofuels, Mr Bumm exciting technologies.

Top Stock Pickers by Industry-Europe

Rank Industry Analyst Broker Rank Industry Analyst Broker 1 Aerospace & Defence Philips, Harry Evolution Securities 1 Insurance Hebgen, Ralph Keefe, Bruyette & Woods 2 Numis Aerospace & Defence Team Numis Securities 2 Paterson, Greig Keefe, Bruyette & Woods 3 East, Stephen Credit Suisse 3 Mattioli, Enrico Landsbanki Kepler 1 Automobiles Neuberger, Alexander CA Cheuvreux 1 IT Services Exane BNP Paribas IT Services & Soft- Exane BNP Paribas 2 Pieper, Jürgen Bankhaus Metzler ware Team 3 Punzet, Michael DZ Bank 2 Imlah, Jonathan Altium Securities 1 Banks Manolopoulos, Konstantinos ESN Partnership (Marfi n Analy- 3 Crozier, Jonathan WestLB Capital Markets sis) 1 Machinery Häcki, Fabian Bank Vontobel 2 Pierce, Jonathan Credit Suisse 2 Augustin, Stefan BHF-Bank 3 Formanko, Paul J.P. Morgan 3 Varesko, Julia J.P. Morgan 1 Beverages & Tobacco Natixis Food, Beverages & Tobacco Team Natixis Securities 1 Media Samoy, Kristof KBC Securities 2 Fell, Jonathan Deutsche Bank Securities 2 Slob, Hans Rabo Securities 3 Ruiz, Francisco Fortis Bank 1 Biotechnology White, Brian Deutsche Bank Securities 3 Simon, Sarah Morgan Stanley 2 ABG Sundal Collier Health Care Team ABG Sundal Collier 1 Metals & Mining Fairclough, Daniel Merrill Lynch 3 Fuchs, Patrick DZ Bank 2 Gidley-Kitchin, Tom Charles Stanley & Company 1 Business & Consumer Murphy, Michael Panmure Gordon & Co. 3 Galloway, Paul and Sporre, Grant UBS Services 1 Non-Food Retail Karp, Rolf Öhman Fondkommission 2 Castle, Jarrod UBS 2 Chamberlain, Richard J.P. Morgan 3 Rae, Richard ABN Amro 3 Schwesig, Holger DZ Bank 1 Chemicals Logan, Richard Goldman Sachs 1 Paper & Packaging Melbye, Martin ABG Sundal Collier 2 Benson, Andrew Citigroup 2 Keitaanniemi, Katja eQ Bank 3 Heine, Andreas UniCredit Markets & Investment 3 Kjellberg, Lars Credit Suisse Banking 1 Construction & Materials Dörper, Ralf WestLB Capital Markets 1 Personal & Luxury Clemente, Nicola Actinvest Group Products 2 Stockdale, Mark and Campbell, Charlie UBS 2 Exane BNP Paribas Luxury Goods Team Exane BNP Paribas 3 Pereda, Alejandra Morgan Stanley 3 Carboni, Paola Euromobiliare 1 Energy Lucas, Fred Cazenove 1 Pharmaceuticals Scheunemann, Karl-Heinz Bankhaus Metzler 2 First Securities Energy Team First Securities 2 Saurymper, Dani Goldman Sachs 3 Dobbing, Andrew Cazenove 1 Financial Services Garrod, Daniel Citigroup 3 CA Cheuvreux Pharmaceuticals Team CA Cheuvreux 2 Kalbermatten, Thomas Credit Suisse 1 Real Estate van der Loos, Herman ING Financial Markets 3 Hamilton, Bruce Morgan Stanley 2 Henry-Diesbach, Samuel Landsbanki Kepler 1 Food & Household Mills, Charlie Credit Suisse 3 Van den Hauwe, Mickael Dexia Bank Belgium Products 1 Software & Internet Cazenove Software & IT Services Team Cazenove 2 Prêtre, Francis ESN Partnership (CM-CIC Services Securities) 2 Natixis Software & IT Services Team Natixis Securities 3 Langlois, Arnaud J.P. Morgan 3 Imlah, Jonathan Altium Securities 1 Food & Staples Retail CA Cheuvreux Retail Team CA Cheuvreux 1 Technology Hardware Schnitzer, Harald DZ Bank 2 Exane BNP Paribas Food Retail Team Exane BNP Paribas 2 Choi, Wing-Yen Theodoor Gilissen 3 Johnston, Alastair J.P. Morgan 3 von Stackelberg, Nicolas Oppenheim Research 1 Healthcare Thomas, Chris Arden Partners 1 Telecommunication Leal, Ivón BBVA Bolsa 2 Capdeville, Frédéric Landsbanki Kepler Services 3 Ganet, Christophe-Raphaël Oddo Securities 2 Wright, David** J.P. Morgan 1 Hotels & Leisure Lee, Andrew Dresdner Kleinwort 3 Natixis Telecommunication Services Natixis Securities 2 Desmarais, Matthias* SG Securities Team 3 Natixis Hotels, Tourism & Leisure Team Natixis Securities 1 Transport Pareto Shipping Team Pareto 1 Household & Leisure Stewart, Alastair Dresdner Kleinwort 2 Vabo, Rikard Fearnley Fonds Goods 3 Knutsen, Bjørn First Securities 2 Emsellem, Sarah Natixis Securities 1 Utilities Becker, Ingo Landsbanki Kepler 3 Cazenove Building & Construction Team Cazenove 2 CA Cheuvreux Utilities Team CA Cheuvreux 1 Industrials Rauhala, Hannu OKO Markets 2 Bishop, Alastair Dresdner Kleinwort 3 Schumacher, Lüder Dresdner Kleinwort 3 Kluftinger, Benjamin Citigroup * Now at Exane BNP Paribas ** Currently inactive. Source: StarMine FINANCIAL TIMES FRIDAY MAY 16 2008 17 World’s Top Analysts | Europe

He decided at the begin- and grain, it is the food com- ning of 2006 that Q-Cells, a EUROPE KEY POINTS panies that preoccupy him. German solar cell manufac- “How well they cope with turer, had great potential. ● 1,790 stock pickers and 2,223 average outperformed their industry 2007 they had the best performance on food price inflation depends “The market did not estimators qualified in at least one benchmarks by 2.4 per cent. In 2007, average in Aerospace & Defence on what kind of company believe me,” he says, but he awards category by covering a sufficient this number dropped to 0.7 per cent they are,” he says. Those stuck with his bullish call. In number of stocks ● In Europe, the number of brokerages that cannot pass on the ris- 2007, Q-Cells’ production lev- ● In 2006, European stock pickers tracked through StarMine’s system ing cost of raw materials to els surged and investors ● In 2006, European stock pickers on added the most value in Transport. In slipped from 200 to 199 retailers will see their profit came round to Mr Bumm’s margins wither. way of thinking. The stock “But if you have very gained 187 per cent. strong brands, you can even The second-placed analyst, ranked sixth along with the “I don’t think this will be an in a precipitous market. He Kris Kippers, ranked ninth, cut out a big retailer and pull Eric Beaudet from Natixis rest of the Exane BNP Pari- easy year for the Greeks.” made prescient bearish calls is also trying to judge how a your products from its Securities, says his challenge bas telecom operators team, The banks Mr Pierce cov- at the start of 2007 on North- global crisis will affect the stores. If customers really last year was to pick winners is a bit more hopeful. ers for Credit Suisse were at ern Rock – which had to be stocks he covers. Mr Kippers want your product, the in a struggling sector. “The emerging markets the epicentre of the credit nationalised after a run on analyses a raft of sectors for retailer will have to come “Even in difficult years, that are rich in commodities, squeeze, proving that you the bank – and Alliance & Belgian bank Petercam, but back and negotiate,” he says. the idea is to find one or two such as Latin America, can be a great analyst even Leicester. with rising prices for rice “It’s an interesting time.” stocks that won’t follow the should weather the storm trend,” says Mr Beaudet, very well,” he says. whose “buy” call on Norwe- Banking analysts, such as gian digital broadcasting seventh- and eighth-ranked company Tandberg Televi- stock pickers Konstantinos sion proved highly lucrative. Manolopoulos and Jonathan “2007 was my first bearish Pierce, are more concerned year. I think it did me some with how the financial crisis good to realise not every of 2007 will play out. year is bullish,” he adds. Mr Manolopoulos, whose Martin Nilsson, fourth in Greek brokerage is part of the StarMine rankings and the ESN Partnership federa- also a technology hardware tion, earned his place with analyst, says it is easy for some bullish calls on the young guns to get carried National Bank of Greece and away. “You can quite easily the Bank of Cyprus Public get ‘tech romantic’. Volumes Co. are rising every year, but Greek banks performed prices are also falling. We well, Mr Manolopoulos says, have been more afraid of in large part because they price erosion than our did not buy the mortgage- peers,” he says. backed debt that bit chunks Mr Nilsson worked for four from other banks’ balance- years as a mobile phone engi- sheets. neer; he says it helps him But the secondary effects keep his head. “If you know are filtering through, with how a mobile phone or base the cost of money increasing: station is constructed, it’s easier to come to conclusions on pricing – how much com- ponents cost, how much they’ll sell for.” He had an “outperform” on Nokia for more than eight months in 2007 as the shares added 60 per cent, but this year reversed the call, wor- ried about slowing growth in emerging markets, as food price inflation takes its toll on consumers. It is a theme he thinks will knock the entire sector, although Mathieu Robilliard, Philipp Bumm: bold call

BIOGRAPHIES – more on FT.Com

Martin Jonathan Nilsson Pierce Age 34/35 Age 32 Career Career He Joined worked in Carnegie corporate Investment finance at Bank in 2001 covering Rothschild from 1997 to 1998, telecoms equipment vendors. then joined HSBC James Previously worked at Allgon Capel as a banks analyst. Systems (today Powerwave) Joined Credit Suisse in 2002. on the 3G mobile networks

Konstantinos Kris Manolopoulos Kippers Age: 32 Age 27 Career Junior Education equity and career analyst at Masters in Diolkos Asset financial Management until 2006, management at Vlerick then joined the Investment Management School from Bank of Greece as a sell­side 2002­2003. Spent two years banks analyst at subsidiary at KPMG; has been a Marfin Analysis (member of sell­side analyst at Petercam ESN Partnership federation). for two and a half years 18 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts | Europe

Top 10 Earnings Estimators-Europe

Rank Analyst Broker Primary Industries Primary Countries (coverage of two or (coverage of two or Winners stress more companies in more companies in the industry) the country) 1 Lépine, Vincent and Brunet, Exane BNP Paribas Metals & Mining Austria; UK Sylvain 2 Sabbione, Paola Deutsche Bank Securities Banks Italy impact of costs 3 Norrby, Lars CA Cheuvreux Business & Con- Sweden sumer Services; Non-Food Retail TOP 10 ESTIMATORS arnings estimator costs, as well as commodity awards recognise supply, demand, prices and 4 Baiker, Nina* Zürcher Kantonalbank Chemicals Switzerland Rod Newing finds analysts who have trends. 5 Tappeiner, Michael** WestLB Capital Markets Metals & Mining; Germany the leading analysts made accurate esti- They see a tendency for Industrials Emates earlier than their analysts and investors to get 6 Ibbotson, Aaron Goldman Sachs Banks Sweden; Ireland have a wide range peers. None of the previous excited by rising commodity 7 Cabeza Jareño, David ESN Partnership (Caja Food & Household Spain of approaches year’s top 10 made it into the prices and to underestimate Madrid Bolsa) Products; Biotech- latest rankings, but the large the associated cost increases. nology pool of qualifiers makes it Forecasting costs involves very difficult to appear in looking at higher energy 8 Spiliopoulos, Panagiotis Bank Vontobel Industrials; Technol- Switzerland ogy Hardware consecutive years. costs, rising wage inflation The top performers for 2007 and stronger extracting cur- 9 UBS Aerospace & Defence UBS Aerospace & Defence UK; France were Sylvain Brunet and rencies, such as Australian Team Vincent Lépine of the metals and Canadian dollars. 10 Sánchez de Lamadrid, ESN Partnership (Caja Media; Telecommu- Spain and mining team at Exane “It helps that we cover Nahum*** Madrid Bolsa) nication Services BNP Paribas. They attribute both steel and mining,” says *Currently inactive ** Now at UniCredit Markets & Investment Banking. *** “Now at Landsbanki Kepler. Source: StarMine their success to monitoring Mr Brunet. “The mining side

Top Earnings Estimators by Industry-Europe Rank Industry Analyst Broker Rank Industry Analyst Broker 1 Aerospace & Defence UBS Aerospace & Defence Team UBS 1 Insurance Cavalleri, Marco ESN Partnership (Banca 2 Meinertz, Micha* Goldman Sachs Akros) 3 Tusa, Sash Goldman Sachs 2 Cales, Emmanuelle SG Securities 1 Automobiles Punzet, Michael DZ Bank 3 Pearce, James Cazenove 2 Bosio, Monica Banca IMI 1 IT Services Beucher, Michaël CA Cheuvreux 3 Neuberger, Alexander CA Cheuvreux 2 Daure, Laurent Landsbanki Kepler 1 Banks Sabbione, Paola Deutsche Bank Securities 3 Briest, Michael UBS 2 Perini, Elena Dresdner Kleinwort 1 Machinery Ivek, Maria Credit Suisse 3 Ibbotson, Aaron Goldman Sachs 2 Adams, Tim Citigroup 1 Beverages & Tobacco Tovar, David Merrill Lynch 3 Rothenaicher, Peter UniCredit Markets & 2 Oldroyd, Alexandra Morgan Stanley Investment Banking 3 Lambrechts, Nico Merrill Lynch 1 Media Egusquiza, Iñigo Grupo Santander 1 Biotechnology ABG Sundal Collier Health Care Team ABG Sundal Collier 2 Angelini-Hurll, Rogan Citigroup 2 Metzger, Markus Bank Vontobel 3 Zomer, Konrad CA Cheuvreux 3 Frohnmeyer, Hanns LBBW 1 Metals & Mining Lépine, Vincent and Brunet, Sylvain Exane BNP Paribas 1 Business & Consumer Steegers, Paul Merrill Lynch 2 Willis, Tama Deutsche Bank Securities Services 3 Fairclough, Daniel Merrill Lynch 2 Grobler, Andrew Goldman Sachs 1 Non-Food Retail Hubbard, Bruce Citigroup 3 Cummins, John W.H. Ireland 2 Baillie, John SG Securities 1 Chemicals Baiker, Nina* Zürcher Kantonalbank 2 Faitz, Christian Oppenheim Research 3 Rudman, Philip Exane BNP Paribas 3 Heine, Andreas UniCredit Markets & 1 Paper & Packaging Toorabally, Eshan Goldman Sachs Investment Banking 2 Coelho, Eduardo Banco Português de Inves- 1 Construction & Materials Betts, Michael J.P. Morgan timento 2 Moros, Gonzalo Ahorro Corporación 3 Nilsson, Richard SEB Enskilda 3 Pujal, Josep Landsbanki Kepler 1 Personal & Luxury Products Rotelli, Chiara Mediobanca 1 Energy Bensoussan, Stéphane Exane BNP Paribas 2 Pecciarini, Paola Gruppo Banca Leonardo 2 Wood, Adrian UBS 3 Belge, Antoine HSBC 3 Heister, Wolfgang DZ Bank 1 Pharmaceuticals Berton, Jérôme Aurel Securities 1 Financial Services Becker, Dirk Landsbanki Kepler 2 Maul, Thomas DZ Bank 2 Gallagher, Michael* Citigroup 3 Saurymper, Dani Goldman Sachs 3 Darwish, Elie-Laurent Exane BNP Paribas 1 Real Estate Natixis Real Estate Team Natixis Securities 1 Food & Household Products Coelho, Eduardo Banco Português de Inves- 2 Hodosi, Alexander UniCredit Markets & timento Investment Banking 2 Ruiz, Francisco Fortis Bank 3 Spearing, Chris Merrill Lynch 3 UBS Food Manufacturing Team UBS 1 Software & Internet Services Morland, Paul Arbuthnot Securities 1 Food & Staples Retail van Daele, Frederic ABN Amro 2 Brennan, Charles ABN Amro 2 Kasoulis, Andrew Credit Suisse 3 Woller, Knut UniCredit Markets & 3 Kershaw, John Merrill Lynch Investment Banking 1 Healthcare Guekam, Arsene and Hamon, François ESN Partnership (CM-CIC 1 Technology Hardware Choi, Wing-Yen Theodoor Gilissen Securities) 2 Schaumann, Malte SES Research 2 Wang, Yi-Dan Deutsche Bank Securities 3 Wyman, William Cazenove 3 Sumar, Stéphane Exane BNP Paribas 1 Hotels & Leisure Zarka, Leslie Citigroup 1 Telecommunication Services Berkelder, Thijs Petercam 2 Scobie, Alistair Dresdner Kleinwort 2 Borscheid, Stefan WestLB Capital Markets 3 Rennardson, Ian Merrill Lynch 3 Wright, David* J.P. Morgan 1 Household & Leisure Goods Jones, William ABN Amro 1 Transport Avery, Chris J.P. Morgan 2 Millington, Chris and Seymour, Bridgewell Securities 2 Copp-Barton, Joel Dresdner Kleinwort Howard** 3 Knutsen, Bjørn First Securities 3 Codling, Anthony and Green, Jeremy Cazenove 1 Utilities Wirtz, Peter WestLB Capital Markets Withers 2 Turner, Iain Deutsche Bank Securities 1 Industrials Heslop, Mark Citigroup 3 Ruiz Fernández, José Javier Exane BNP Paribas 2 Kluftinger, Benjamin Citigroup *Currently inactive ** Now at Numis Securities, Source: StarMine 3 Stettler, James Dresdner Kleinwort FINANCIAL TIMES FRIDAY MAY 16 2008 19 World’s Top Analysts | Europe provides us with part of the She sees loan growth for costs of the steel companies, Italian banks coming from BIOGRAPHIES – more on FT.Com which distinguishes us from corporate clients this year, a number of competitors who rather than from individuals. Sylvain David focus on either steel or min- “The decline in retail busi- Brunet Cabeza ing.” ness growth should be tem- Age 32 Jareño StarMine says that the porary,” she says, “as Italy Position Age 31 Exane team beat 27 analysts remains a low-leverage coun- Head of Position on Rio Tinto and 22 on SSAB. try.” Exane BNP Covers They claim not to have had Completing the top three is Paribas metals and mining Spanish smaller cap stocks any more information than Lars Norrby, Swedish non- equity research team at Caja Madrid Bolsa. their competitors on Rio food retail analyst at CA Tinto, but they saw that Cheuvreux. StarMine says he Vincent Panagiotis SSAB had made a number created the most accurate Lépine Spiliopoulos of brownfield investments estimates of 19 analysts on Age 20 Age 38 which led to higher fixed Securitas and 11 analysts on Position Has Position costs and production disrup- Securitas Systems. been equity covers the tions. Ironically, they were Fourth was Nina Baiker, research technology not keen on either stock. Swiss chemicals analyst at analyst at Exane BNP and telecommunications Their earnings outlook for Zürcher Kantonalbank, who Paribas in Paris since 2004. sectors at Bank Vontobel the sector is bright. There beat 17 analysts on CIBA have been very sharp Holding and 16 on Clariant. Paola Nahum increases in iron ore, coal Michael Tappeiner, who Sabbione Sánchez de and steel prices and Chinese was German metals and min- Age 26 Lamadrid consumption is still high. ing analyst at WestLB Capi- Position Age 36 “Supply and demand remain tal Markets, came fifth. He Since April Position pretty tight,” says Mr Lépine, beat 28 analysts on Thys- 2006 she has Was at Caja “so we can see pretty good senkrupp and 18 on Salzgit- lead coverage of small cap Madrid Bolsa, has just joined earnings growth in steel and ter. and Popolari banks for Landsbanki Kepler as head mining companies in 2008 Next is Aaron Ibbotson, Deutsche Bank Securities of telecoms research team and even more in 2009.” Nordic and Irish bank ana- Second was Paola Sabbi- lyst at Goldman Sachs. He one, who specialises in Ital- beat 27 analysts on Skandi- Steeled for success: focusing on costs pays off Reuters ian banks at Deutsche Bank naviska and seven on D. Securities. She attributes her Carnegie. ness; and marketing and Temenos. He put ABB on €600m-€800m, due to a sud- away from aerospace, which success to in-depth study of Seventh on the list is operating expenses,” he buy in May 2005 because den deterioration in aircraft faces downside risk as the all information disclosed by David Cabeza Jareño, Span- explains. markets, investors and ana- pricing, they analysed its world economy slows. banks, visits to understand ish biotechnology analyst at Panagiotis Spiliopoulos, lysts were underestimating delivery flow and backlog. Just making the top 10 is their strategy and results Caja Madrid Bolsa. He Swiss technology hardware its operating leverage poten- They forecast that the deteri- Nahum Sánchez de Lama- trends and testing against closely monitors the underly- analyst at Bank Vontobel, is tial. oration would not take place drid, who was Spanish tele- the European banking team’s ing fundamental information number eight on the list. “I The aerospace and defence and were proved correct. communications analyst at macro-themes for competi- on both the sector and the try to keep close contact to team at UBS, consisting of The team beat 24 analysts Caja Madrid Bolsa. tiveness in the sector across company and tries to be the management,” he says, Colin Crook, Avi Hoddes and on Finmeccanica, 17 on Cob- Mr Sánchez earned a five- countries. accurate on both revenues “but I use my network to Stephan Puetter, came in ham and 15 on Safran. They star rating for earnings accu- She earned five stars on and costs. double check and verify the ninth. “We make a point of believe that the more visible racy on Antena 3 de TV, Banca CR Firenze, Banco He beat 16 analysts on assumptions made in my not sticking religiously to and secure future earnings Sogecable, Jazztel and Voda- Popolare and UBI Banca, the Zeltia, which did not com- model. I put a lot of empha- guidance,” says Mr Crook. “If streams on the defence side fone. Media companies last two of which are the mercialise its first drug until sis on management’s track the fundamentals are telling are attractive, although the require a strong knowledge result of two recent mergers. the fourth quarter of 2007. “I record of delivering – or not us something different, we US presidential election of the Spanish advertising “We had also to assess had to project earnings of the delivering!” are prepared to stick our result could affect the UK market and telecommunica- all the potential integration chemical business; research Mr Spiliopoulos beat 14 necks out.” companies towards the end tions companies require good impacts, without strong his- and development expenses analysts on ABB, 12 on Log- When EADS forecast miss- of the year. knowledge of competitors’ torical data,” she says. for the biotechnology busi- itech International and 11 on ing earnings guidance by They have a current bias plans and market positions.

Top Brokers-Europe

No magic, just hard work Rank Broker Total number of Awards 1 Exane BNP Paribas 11 TOP BROKERAGES headache for the French ture at Exane also spurs developed, says Andrew Pitt, 2 Citigroup 10 bank, which took a 50 per them on. Key people in global head of research, so it 2 Goldman Sachs 10 cent stake in Exane’s holding Exane – managers, experts – makes more sense to cut Sarah O’ Connor 4 CA Cheuvreux 9 on the contrasting company. become partners that back there than in emerging The new partnership gave between them hold 60 per markets. 4 J.P. Morgan 9 strengths of the Paris-based Exane, which cent of the voting rights in But the cuts will not be as 6 Credit Suisse 8 top­ranked firms remained in control of the the holding company. BNP severe as they were when the 6 Dresdner Kleinwort 8 venture, the financial muscle Paribas has the rest. dotcom bubble burst in 2001, 6 Merrill Lynch 8 to expand. Its aim was to “It makes it a very fair he adds. “As an industry we 6UBS 8 When stock markets turn become a “strong and recog- place to work, where per- are leaner and sharper now – 10 Cazenove 7 sour and brokerages cast nised European equities formance and results do equity research staffing did 10 Deutsche Bank Securities 7 around for ways to cut costs, research brand within five yield the level of recogni- get overinflated at the peak 10 DZ Bank 7 equity analysts usually get a years”. Four years on, its 85 tion,” says Mr Laurencin. of the market back in 2000.” bit jumpy. analysts in London, Paris Hiring new staff takes up a Mr Pitt pins Citigroup’s 10 ESN Partnership 7 But those at Exane BNP and Milan have outper- lot of his time. “By year end, success on its rigorous meth- 10 Landsbanki Kepler 7 Paribas have little to worry formed the major European we aim to be at least 90 ana- ods. Treating the analysts’ 10 Natixis Securities 7 about. Not only does their and US investment banks. lysts,” he says. “We try to coverage as if it was one big Source: StarMine exuberant boss plan to “Research requires a mix invest through cycles, in portfolio, Citi’s investment expand rather than trim his of hard work and passion order to steadily build our committees weed out calls team this year, but 11 of over a long period of time – pan-European platform, that are going bad in the DZ Bank, ESN Partnership companies but of everything them have just won StarMine unfortunately there is no instead of investing in the same way a fund manager and Natixis Securities all that surrounds it,” says José awards, making their broker- room for magic or secrets bull market and divesting in would. took top 10 spots, benefiting Antonio Hernandez, co-head age house the best in devel- there!” says Vincent Lau- the bear market.” Stuart McLean, European from close relationships with of equity brokerage at multi- oped Europe. rencin, head of research. Citigroup, which shares director at StarMine, says the companies they cover. local broker Landsbanki The continent’s new star, “That said, I believe there second place with fellow US brokerages with robust sys- This helps them particularly Kepler. third in the previous year’s are significant strengths that investment bank Goldman tems consistently perform when choosing stocks, where Along with Exane BNP awards, was formed in 2004 set us apart.” Sachs, is dancing more to the well in the rankings. Big they often outperform. Only Paribas, Mr Hernandez after Exane – a small but Being part of an equity market’s tune. firms with strong oversight two of the top 10 stock pick- believes top-quality analysts ambitious equities boutique – house makes analysts feel In spite of its StarMine over their analysts ranked ers in 2007 were from big are more important in tough bought out the cash equity they are “at the centre of the plaudit, Citi is cutting jobs in highly in 2007. investment banks. market conditions. assets of the much bigger engine, not in a satellite European equity research as But small European bro- “Our analysts are locally “You’re not doing the right BNP Paribas. Cash equities business”, he says, adding it tries to slim down. The kers are still jostling with based, so they have in-depth thing if you downsize now – had become an unprofitable that the partnership struc- European market is more the big boys. CA Cheuvreux, knowledge not just of the and we don’t plan to.” 20 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts | Asia ‘Buy’ calls not the only way to shine

TOP 10 STOCK PICKERS Justine Lau on why ASIA KEY POINTS timing was the key ●834 stock pickers and 1,038 estimators qualified in at least to outperformance one awards category by covering enough stocks ●Asian stock pickers on average underperformed their industry benchmarks by 2.1 per cent last year, compared s Asian stock with 1.4 per cent in 2006 indexes soared by as much as half in 2007 ●Asian stock pickers added the most value in and share prices Semiconductors last year. In 2006 they did best in Utilities. Arushed to hit all-time highs, ●Countries covered are China, Hong Kong, South Korea, analysts who identified the Malaysia, Taiwan and Singapore. Japan, India and Australia companies that would out- are excluded perform the markets obvi- ously did well. Rising high: optimism on Hong Kong’s property market helped Keith Yeung Bloomberg Simply following the mar- kets, however, was not the best stock pickers in 20 Mr Vabo covers the global “Being an analyst is a very two companies because of most sensitive to changes in enough. Many analysts who sectors in Asia last year shipping, yards and marine hard job. You really have to their exposure in China, home prices in terms of both shone in stock picking were came from lesser-known equipment industries in 13 be very keen on your sector where they have been devel- profits and net asset value. those who placed timely houses such as China’s TX countries, including four in to keep going,” he says. oping projects for some time. For every 10 per cent jump in “sell” calls, according to the Investment Consulting, Asia. Mr Yeung’s best recom- Another big reason for his residential prices, he expects FT/StarMine survey of the Kuala Lumpur-based RHB “Big banks tend to have mendation last year was bullish calls was his opti- Sino Land’s earnings to rise best analysts in the region. Investment Institute and Tai- geographical limitations. If maintaining a “buy” on mism on Hong Kong’s prop- 12.9 per cent and net asset “The analysts who ranked wan’s Sinopac Securities. you are in the US, then you Henderson Land Develop- erty market. He forecasts value 5.3 per cent. for stock picking are not “Smaller firms tend to be cover US stocks. But ship- ment, the developer control- that residential prices will “[The increases are] the there because they had all more aggressive in bull mar- ping is a very global busi- led by tycoon Lee Shau-kau, surge more than 50 per cent highest among all blue-chip ‘buys’ on the portfolio of kets and focus more on rec- ness,” he says. for the full year as its share from November 2007 to the developers,” says Mr Yeung. stocks they cover,” says Greg ommendations,” says Mr Another analyst from a price climbed 73 per cent end of next year. In spite of strong perform- Tarver, StarMine’s Asia- Tarver. smaller firm who did well Since he made his calls ances in the property sector Pacific regional manager. Rikard Vabo, senior ana- last year is Peter Auo at Kim about half a year ago, home in Asia last year, Mr Yeung “They did a great job of lyst at Fearnley Fonds, the Eng Securities, one of Singa- ‘Smaller firms tend prices in Hong Kong have is the only real estate analyst timing and differentiating Oslo-based independent secu- pore’s biggest independent shot up nearly 20 per cent. to get into the top 10. their calls, including the use rities firm, is ranked fourth brokerages. Mr Auo, who to be more Mr Yeung’s star performance In fact, only Mr Yeung and of ‘sells’, which played an out of 834 analysts in the covers machinery and mate- aggressive in was also helped by a 25 per William Dong, UBS’s Taiwan- important part of doing well region (see profile on Page 6). rials, construction and engi- cent surge in home prices in based semiconductors ana- in 2007.” He says that smaller firms neering as well as automo- bull markets’ Hong Kong in 2007. lyst, are among the 10 best Between the top 10 stock tend to perform better biles, is ranked fifth, but is “There is a structural stock pickers who do not pickers in Asia, there were because they are more no longer with the firm. Greg Tarver shortage of residential units cover the machinery and eight “sell”, “underperform” focused. Even so, Keith Yeung from StarMine in Hong Kong. Our land pol- materials industries, which and “reduce” recommenda- Analysts from independent one of the biggest Wall Street icy is increasingly affected include shipbuilders, indus- tions among their 20 best houses are also likely to banks – Merrill Lynch – man- by environmental matters trial conglomerates and some calls last year. know their industries better aged to top the list. Mr from HK$42.58 to HK$73.45. and even heritage conserva- electronics companies. Another trend spotted by because they usually have Yeung, head of greater China Another profitable call tions. “You have sectors which the stock picker survey is fewer constraints on travel to property research, beat his from him was a 12-month “These issues are going to have one or two stocks that that independent research different countries and even benchmark by 19.1 per cent. “buy” on Cheung Kong, bil- have an impact on develop- did well but [machinery and houses did better than bulge- continents, according to Mr He attributes his success to lionaire Li Ka-shing’s prop- ment capacity,” says Mr materials] did very well as a bracket firms in selecting Vabo. He says this is espe- his fondness of the sector. erty company, whose share Yeung, who remains comfort- whole,” says StarMine’s Mr companies that would outrun cially important to analysts Having covered Hong price gained 53 per cent from able with his projection. Tarver. “There were many the market, according to Mr who cover industries that Kong’s property market for HK$93.95 to HK$144.2 during This year, Mr Yeung’s pick outperforming stocks. Some Tarver. depend on global trends and 16 years, Mr Yeung, 43, says the period. is second tier developer Sino rose more than 100 per cent At least three-quarters of climates, as in his case. he is still in love with it. Mr Yeung says he liked the Land because, he says, it is and even 200 per cent.”

Top 10 Stock Pickers-Asia SELECTED BIOGRAPHIES – more on FT.Com

Rank Analyst Broker Excess Primary Industries (coverage of two or Keith Yeung Rikard Vabo Return more companies in the industry) Age 43 Age 27 (%) Company Merrill Lynch Company Fearnley Fonds 1 Yeung, Keith Merrill Lynch 19.1 Real Estate (including REITs) Career Joined CLSA in Education Rikard Vabo holds a Masters in 2000; moved to Merrill business and economics at the Norwegian 2 Low, Hornghan Citigroup 15.8 Computers & Communications Equipment; Lynch in 2006 as head of School of Management (see picture and Electronic Equipment; Machinery & Materi- greater China property career details in profile on Page 6) als; Semiconductors research. 3 Dong, William UBS 15.6 Semiconductors 4 Vabo, Rikard Fearnley Fonds 15.3 Machinery & Materials; Transportation Hornghan Low Felix Rusli Age 33 Age 35 5 Auo, Peter* Kim Eng Securities 15.2 Machinery & Materials; Construction & Company Citi Investment Company Credit Suisse Engineering; Automobiles Research Career Joined Credit Suisse 6 Rusli, Felix Credit Suisse 15.0 Computers & Communications Equipment; Career Moved to Citi in in June 1999 and is a Electronic Equipment; Consumer Goods & 2004; appointed member of the Asia arm’s Services; Machinery & Materials vice­president in 2007 technology research team 7 Liu, Patty** Citigroup 14.6 Computers & Communications Equip- ment; Electronic Equipment; Machinery & William Dong Materials Patty Liu Age 39 Company BNP Paribas 8 Lau, Kenny Credit Suisse 14.1 Machinery & Materials; Electronic Equip- Company UBS Securities (Taiwan) ment Career Joined UBS in Career Has been at BNP 9 Lu, Min Merrill Lynch 13.1 Machinery & Materials; Computers & Com- 1999 as research analyst, Paribas in Taipei since April, munications Equipment appointed head of Asia (ex covering PC hardware Japan) technology research companies. Ex­Citigroup 10 Chong, Kevin* Citigroup 12.7 Machinery & Materials in 2005 *Currently inactive **Now at BNP Paribas. Source: StarMine FINANCIAL TIMES FRIDAY MAY 16 2008 21 World’s Top Analysts | Asia Regional firms mount growing challenge

TOP 10 BROKERS and retaining talented and very short period of time. A learn from bulge bracket made estimates and stock learning experience for nas- experienced analysts, how- lot of people are chasing firms. “Our main advantage picking difficult. cent Chinese brokerages. Robin Kwong on ever, is growing, as more after that,” he says. is in our observations of the The Shanghai composite “When the market is chang- the big names and firms focus on the region and “Our competition strategy development of the Chinese index, for example, began ing very quickly, it is impor- as each firm expands its cov- is quite simple. We’re a spe- economy, and in our under- 2007 at 2,675, rose to a tant to remain calm and rivals snapping erage. In 2006, Credit Suisse cialist company. We don’t try standing of Chinese compa- peak of 6,096 in October, and objective,” he says. at their heels covered 542 stocks in the to compete with [the bulge nies,” he says. now stands at around 3,500. StarMine’s Mr Tarver says region, Mr Naqvi says. That bracket firms] on a global One major theme that “It was very difficult for the large swings in the mar- number is now up to 730. basis,” he says. began last year was the everyone. No one could ket separated the best ana- Biggest is still the best in This has prompted the firm Yang Ye, the research head roller coaster-like rise and make sense of it,” Mr Naqvi lysts from the merely good Asia, as bulge bracket firms to focus more on internal of China Merchants Securi- fall of the Chinese and Hong says. ones: “The volatility made it take home the most prizes in training, and also on improv- ties, says there is still a lot Kong stock market, which Mr Ye says the volatile clear who the standout ana- the 2008 Financial Times/ ing the ways in which ana- that Chinese companies can most firms and analysts say market provided a good lysts were.” StarMine awards. lysts work and interact with Credit Suisse topped the each other. list of award-winning broker- These include instituting a ages in Asia with 10 gongs, panel process that encour- followed by Citigroup, Mer- ages more internal discus- rill Lynch and Goldman sion before research is pub- Sachs. Merrill Lynch also lished. “You cannot make it produced the year’s top stock bureaucratic because . . . we picker as well as the top are not in control of market earnings estimator. events. We are in a reactive The year’s winning ana- business,” says Mr Naqvi. lysts were chosen from 834 Apart from the dominance stock pickers and 1,038 earn- of bulge bracket firms, the ings estimators representing rankings also reveal a rap- 104 brokerage firms in Asia. idly rising class of local bro- While this is the first year kerages, particularly from the FT has co-operated with South Korea and China. StarMine on a global award, Korea Investment & Securi- StarMine’s past rankings ties grabbed five awards, and also show that bulge bracket Samsung Securities had four, firms tended to produce the enough for both to make it best research in Asia. into the top 10. Greg Tarver, StarMine’s This continues a three-year regional director for Asia, rise through the rankings for says this consistently good Korean firms, says Mr performance partly reflects Tarver. “We attribute their the size of bulge bracket great performance to the fact firms and the resources that that Korean analysts know they can devote to the the companies they are cov- region, and partly to their ering very well and are will- better-established analytical ing to stand aside from the structures. consensus,” he says. Ali Naqvi, head of equity The big surprise in 2007, research in non-Japan Asia according to Mr Tarver, was at Credit Suisse, says the glo- how well Chinese brokerages bal nature of large firms is of performed. Bank of China benefit. “Our information International Research, base has global reach. Our China Merchants Securities analysts in Asia can find out and Beijing-based TX Invest- quickly, for example, what ment Consulting all had five steel prices in Latin America awards. are doing,” he says. Anthony Lok, managing Another advantage is that director of research at Bank bulge bracket firms also tend of China International, to be able to hire more expe- attributes the rise of Chinese rienced analysts. Credit brokerages to the increase in Suisse, for example, has importance of the Chinese about 30 analysts in Asia, market over the past couple each of whom has more than of years. “From relative 10 years experience. obscurity, China is now The challenge of hiring becoming very large in a

Top 10 Brokers-Asia Rank Broker Total number of awards 1 Credit Suisse 10 2 Citigroup 9 3 Merrill Lynch 8 4 Goldman Sachs 7 5 BOCI Research 5 5 China Merchant Securities 5 5 Korea Investment & Securities 5 5 TX Investment Consulting 5 5UBS 5 10 J.P. Morgan 4 10 Kim Eng Securities 4 10 Samsung Securities 4 Source: StarMine 22 FINANCIAL TIMES FRIDAY MAY 16 2008 World’s Top Analysts | Asia

Top Stock Pickers by Industry-Asia Top Earnings Estimators by Industry-Asia

Rank Industry Analyst Broker Rank Industry Analyst Broker 1 Automobiles Zhu, Kate Morgan Stanley 1 Automobiles TX Investment Consulting Automo- TX Investment Consulting biles Team 2 Hu, Eric BOCI Research 2 Zhu, Kate Morgan Stanley 3 Ho, Gerwin Bear Stearns 3 Wang, Liu Sheng China Merchant Securities 1 Banks Goh, Danny Credit Suisse 1 Banks TX Investment Consulting Banks TX Investment Consulting Team 2 China International Capital China International Capital Corporation Corporation Banking Team 2 Luo, Yi China Merchant Securities 3 Lum, David Daiwa Institute of Research 3 Wang, Victor (UBS Bank Team) UBS 1 Computers & Communica- Tseng, Tony Merrill Lynch 1 Computers & Communica- Tseng, Eddy SinoPac Securities tions Equipment tions Equipment 2 King, Henry Goldman Sachs 2 Liao, Jonathan SinoPac Securities 3 Lu, Yvonne KGI Securities 3 Yang, Kirk* Citigroup 1 Construction & Engineering Nam, Keith Nomura 1 Construction & Engineering Mak, Hoy Kit BNP Paribas 2 Cho, Brian Citigroup 2 Choi, Nayoung Woori Investment & Securities 3 Ng, Joshua CY RHB Investment Institute 3 Lee, Sun-Il** Daewoo Securities 1 Consumer Goods & Services TX Investment Consulting Consumer TX Investment Consulting 1 Consumer Goods & Services Lee, Sang Koo SK Securities Goods & Services Team 2 Lai, Alain UBS 2 Su, Ping China Merchant Securities 3 Loke, Foong Wai Credit Suisse 3 Park, Ally Citigroup 1 Electronic Equipment Lin, Liang-Chun J.P. Morgan 1 Electronic Equipment Lin, Liang-Chun J.P. Morgan 2 Huang, Maggie Fubon Securities Investment 2 Park, Kang Ho Daishin Economic Research Institute Trust 3 Yoo, Jongwoo Korea Investment & Securities 3 Su, Jeffrey Merrill Lynch 1 Energy & Chemicals Liu, Grace Guotai Junan Securities 1 Energy & Chemicals Gokhale, Prashant Credit Suisse 2 Lee, Hee-Cheol CJ Investment & Securities 2 Lu, Ping China Merchant Securities 3 Cha, Hong-Sun Hanwha Securities 3 Ni, Xiaoman BOCI Research 1 Financial Services Lee, Chul-Ho Korea Investment & Securities 1 Financial Services Seo, Bo Ick Hannuri Investment And Securities 2 Shim, Kyu Sun CJ Investment & Securities Only one analyst qualifi ed. 3 Jang, Hyosun Samsung Securities 1 Food, Household & Personal Loke, Foong Wai Credit Suisse 1 Food, Household & Personal Ng, Ivy CIMB-GK Products Products 2 Greenall, Michael BNP Paribas 2 Deng, Yifan Goldman Sachs 3 TX Investment Consulting Food, TX Investment Consulting Household & Personal Products Team 3 Ratnam, James* TA Securities 1 Healthcare Du, Dong Song Ping An Securities 1 Healthcare Lim, Jin Kyun Daewoo Securities 2 Park, Nam HSBC 2 Ha, Taegi SK Securities Only two analysts qualifi ed. 3 Chen, Vicky Yun UBS 1 Insurance Gu, Choel-Ho Hyundai Securities 1 Insurance Song, Inchan* Hana Daetoo Securities 2 Lee, Chul-Ho Korea Investment & Securities 2 Gu, Choel-Ho Hyundai Securities 3 Cho, Yong-Hwa Daishin Economic Research 3 Cho, Yong-Hwa Daishin Economic Research Institute Institute 1 Machinery & Materials Wang, He Xu Ping An Securities 1 Machinery & Materials Lau, Kenny Credit Suisse 2 Cho, Yong Jun Shinyoung Securities 2 Suppiah, Rohan Kim Eng Securities 3 Yoon, Pil Joong Samsung Securities 3 Yoon, Pil Joong Samsung Securities 1 Media Chong, Tjen San AmResearch 1 Media Quek, Sean Credit Suisse 2 Ho, Tommy UOB Kay Hian 2 Han, Ik Hee Hyundai Securities 3 Mitchell, James Goldman Sachs 3 Ching, Clare Chin Kit* RHB Investment Institute 1 Metals & Mining Le, Yukun BOCI Research 1 Metals & Mining Park, Kee-Hyun Tongyang Investment Bank 2 Peng, Bo Ping An Securities 2 Chan, Belle BOCI Research 3 TX Investment Consulting Metals & TX Investment Consulting Mining Team 3 Zhang, Feng J.P. Morgan 1 Real Estate (including Yeung, Keith Merrill Lynch 1 Real Estate (including Wang, Yi Goldman Sachs REITs) REITs) 2 Wey, Jangiyh Fubon Securities Investment 2 Liew, Wilson Kim Eng Securities Trust 3 Bai, Peter China International Capital Corporation 3 Bon, Melissa* Credit Suisse 1 Semiconductors Kwock, Alvin J.P. Morgan 1 Semiconductors Kim, Iksang CJ Investment & Securities 2 An, Sung Ho KB Investment & Securities 2 Lin, Jimmy Fubon Securities Investment Trust 3 Wong, Roxy Bear Stearns 3 Lea, Robert (UBS Semiconductors UBS 1 Software & IT Services Brueschke, Jason Citigroup Team) 2 Sung, Jong Hwa Meritz Securities 1 Software & IT Services Yap, Huey Chiang RHB Investment Institute 2 Zhao, C. Ming Susquehanna Financial Group 3 Park, Jay Samsung Securities 3 Brueschke, Jason Citigroup 1 Telecommunications Yang, Jong-In Korea Investment & Securities 1 Telecommunications Ng, Allan BOCI Research 2 Law, Coo Way* Goldman Sachs 2 Wong, Gordon South China Research 3 Jung, Stan Woori Investment & Securities 3 Grinnan, Tucker HSBC 1 Transportation Huang, Wendy*** Evolution Securities 1 Transportation Hu, Chia Ming Capital Securities Shanghai 2 Ng, Vince KAF Seagroatt & Campbell 2 Niu, Yuming Haitong Securities 3 Dewberry, Paul Merrill Lynch 3 Ryu, Jay JH Mirae Asset Securities 1 Utilities Lau, Pierre Citigroup 1 Utilities Peng, Jin** China Merchant Securities 2 Yew, Chee Yoon Kim Eng Securities 2 Wang, Jia Capital Securities Shanghai 3 Yip, David* Merrill Lynch 3 Chiu, Gary ABN Amro *Currently inactive **Now at Goodmorning Shinhan Securities ***Now at Sinopac Securities. Source: StarMine * Now at Morgan Stanley **Currently inactive. Source: StarMine FINANCIAL TIMES FRIDAY MAY 16 2008 23 World’s Top Analysts | Asia Winners maintain upbeat outlook

In Korea’s media market, Lim TOP 10 ESTIMATORS Jin-Wook, NH Securities analyst, Robin Kwong on the predicts that Korea’s internet com- panies will continue their rapid continued optimism of growth. Mr Lim, the third ranked the number crunchers analyst, was the most accurate pre- dictor of the earnings of CJ CGV, the multiplex cinema chain, and sia’s top earnings estima- Webzen, the game company, last tors remain upbeat on the year. region’s growth prospects, “Korean internet portal compa- despite recent signs of a nies have used online advertise- AUS recession and the expectation of ments, such as those used by further macro-economic tightening Google or Yahoo, as their main in China. earnings models,” he says. “They The 10 analysts who most accu- are making inroads into the adver- rately predicted companies’ earn- tising market that was traditionally ings last year covered a variety of the domain of existing media such sectors in the region, ranging from as newspapers or TV.” Mr Lim pre- Chinese real estate developers to dicts that Korea’s online advertis- South Korean media companies and ing market will grow by 30 per cent Taiwanese steel manufacturers. this year. Most say a US recession would Even bigger changes are afoot in have only a limited impact on the Korea’s telecommunications sector, industry they cover. Denise Chai of according to Jong-In Yang, analyst Merrill Lynch, who covers Chinese at Korea Investment and Securities. consumer goods and services and is Ripe for investment: customers at a fruit market in Shanghai Reuters With fully-fledged convergence of this year’s top earnings estimator, different media starting this year, says she remains positive on the on the Korean market and one These banks’ profits rose rapidly tions and Bank of China. They he predicts, “telcos should compete sector’s fundamentals. “Monthly looked at Taiwanese stocks. last year, but they also faced ranked sixth overall. not only with other telcos but also retail sales growth is now at a Most of the top analysts also echo increasingly tough measures from a Yi Wang, who covers Chinese with cable TV operators”, making 12-year high, and even volume Mr Li’s view of the resilience of the government looking to cool down real estate companies at Goldman intra and inter-industry mergers growth has been very strong Chinese economy. Kenny Lau, a the economy and limit inflation. Sachs, is flagging caution on the and acquisitions a main theme for despite high inflation,” she says. machinery, materials and elec- Chinese banks have mostly sector, however, in the wake of a the sector. Mr Yang, ninth-ranked Although she expects a modest tronic equipment analyst at Credit escaped unscathed from the sub- record rise in real estate prices overall, was the best earnings esti- slowdown in the sector towards the Suisse, is the second-best earnings prime crisis so far and Ms Fan throughout most of last year. mator in the telecommunications end of this year, Ms Chai says that estimator this year. believes that will continue to be the For the second and third quarters industry this year. “double-digit wage growth, a key “There was a lot of worry at the case. “The effect of [the subprime of this year, Ms Wang expects Chi- In Taiwan, Peter Tzeng of Polaris part of the redistribution of wealth, end of last year [about a possible lending crisis] on China was not nese developers to be squeezed by Securities, who covers non-technol- seems to be outweighing the impact US slowdown], but I am not so pes- falling prices and further tighten- ogy sector exporters, says any of a US slowdown, macro tighten- simistic,” he says. According to Mr ing measures such as restrictions impact from a détente in the rela- ing and inflation, at least for now”. Lau, many US companies had Most analysts say that on bank loans and mortgages. tionship between Taiwan and Keith Li, a Chinese consumer already scaled back orders from fac- “Developers will need to focus on China would be likely to be felt in goods and services analyst at CIMB, tories in China early last summer, a US recession would execution, and there will likely be the long term rather than immedi- echoes those sentiments. “I don’t in the initial stages of the subprime have only a limited intensified industry consolidation. ately, but adds that “for the past see any signal that there will be a crisis. Those with strong balance sheets eight years, both sides have been slowdown,” he says. “The funda- Because of this early adjustment, impact on the industry will take advantage,” she says. She quite closed to each other. mentals are very good.” “trade volume may actually grow that they cover adds, however, that she is “very “So any loosening, for example Mr Li was the seventh-ranked this year, as companies replenish bullish” in the long run, as the sec- encouraging an increase in the flow estimator in the FT/StarMine rank- inventory”, Mr Lau says. tor is “on a structural bull run”. of people, would be rather positive ing, and was the most accurate Julia Fan, part of China Interna- Ms Wang, the fourth-ranked esti- news for the Taiwanese compa- earnings predictor of retail groups tional Capital Corporation’s bank- that big, because Chinese banks mator, was the top real estate earn- nies.” Parkson Retail, Sa Sa International ing team, says she remains “quite still mostly conduct local and ren- ings estimator in Asia, and was par- Mr Tzeng, the 10th-ranked earn- and Golden Eagle as well as con- positive” on the upward trend for minbi business,” she says. ticularly accurate on Guangzhou R ings estimator, was the top-ranked glomerate Beijing Enterprises. mainland Chinese banks because of The CICC banking team, which & F Properties, China Resources, analyst for earning accuracy on Seven of the top 10 analysts cov- continued strong demand for credit also includes analyst Mao Junhua, Shanghai Forte Land and Beijing eight stocks. These included Tai- ered mainland China and Hong within China and booming retail had the most accurate estimates Capital, where she beat all other wan Cement, U-Ming Marine Trans- Kong companies, while two focused banking and fee-based businesses. last year for Bank of Communica- analysts. port and Yulon Motor.

Top 10 Earnings Estimators-Asia SELECTED BIOGRAPHIES – more on FT.Com

Rank Analyst Broker Primary Industries (coverage of two Primary Countries Denise Chai Yi Wang or more companies in the industry) (coverage of two or Age 39 Age 36 more companies in Company Merrill Lynch Company Goldman Sachs the country) Career Joined Cazenove as Career Joined Gao Hua 1 Chai, Denise Merrill Lynch Consumer Goods & Services; Food, Hong Kong a research analyst in 1998 Securities, Goldman Sachs’ Household & Personal Goods and made director in 2003; joint venture partner in 2 Lau, Kenny Credit Suisse Machinery & Materials; Electronic Hong Kong moved to Merrill Lynch in China, in 2005 and covers Equipment 2005 as a senior director the China property sector 3 Lim, Jin-Wook NH Investment & Software & IT Services; Media Korea Securities Tin Hung Kenny Lau Age 31 4 Wang, Yi Goldman Sachs Real Estate (including REITs) Hong Kong Age 40 Company KGI 5 Hung, Tin* KGI Securities Machinery & Materials; Food, Hong Kong Company Credit Suisse Career moved to Oriental Household & Personal Products Career Joined Credit Patron as vice­president for 6 China International China International Banks Hong Kong Suisse in 2004 and is a research in 2005, and to Capital Corpora- Capital Corporation director and head of small KGI in 2006. Recently tion Banking Team caps research in non­Japan joined Vigor Capital 7 Li, Keith CIMB-GK Consumer Goods & Services Hong Kong Asia 8 Law, Coo Way** Goldman Sachs Telecommunications Singapore; Malaysia Lim Jin­Wook Julia Fan 9 Yang, Jong-In Korea Investment & Telecommunications; Media Korea Age 34 Age 35 Securities Company NH Investment Company CICC 10 Tzeng, Peter Polaris Securities Metals & Mining; Automobiles; Taiwan Career Joined Woori Career Joined CICC in Transportation; Construction & Securities in 2003; moved Engineering 1998. Now executive in 2005 to NHIS as senior director of CICC Research * Now at Vigor Capital **Currently inactive Source: StarMine analyst 24 FINANCIAL TIMES FRIDAY MAY 16 2008