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Wednesday, January 09, 2008
Best of the Buy Side Analysts
New York - The Institutional Investor magazine's article "The Best Investment Banks 07", also highlights the buy-side's analytical firepower. Given that an increase in buy-side research, is part of the Integrity Research forecast, it is interesting to observe that the buy side has been building analytical bandwidth over the last several years.
T. Rowe Price has increased its equity analyst team by 15% over the past year. Given that the current number of analysts is 200, that would mean roughly 30 new hires over the year, allowing the firm to cover about 1700 stocks internally. Also hiring over the year was Fidelity Investments, who also increased their analytical team by 15% to the current headcount of 350. Amid this kind of hiring the buy-side is ready to replace some of its outsourced research needs with internal resources.
What this means is that the sell-side supermarket model is become much less of a input into money manager decisions and more of price check on investment already undertaken or under consideration. To be sure, the buy side will still need to purchase external research, but these purchases will become much more granular and specific to particular stocks and/or sectors.
This dovetails nicely with the vastly increasing calls for primary research we have seen, including channel checks, supply chain analysis, access to management, data mining, searched -based research, expert networks and market research. As well, there is a growing demand for industry consultants, especially those that consult for their own industry, but which have not yet fully integrated their market information into stock calls.
As part of the II survey, the sell side was asked for its opinion of the best buy side analysts. The following table, recreated from the article, is a summary of that survey:
Sector
| Analyst
| Firm
|
Basic Materials
| Rasmus Gerdeman
| Neuberger Berman
|
Cap Goods/Industrials
| Peter Bates
| T. Rowe Price
|
Consumer
| Joseph Fath
| T. Rowe Price
|
Energy
| Denis Walsh
| Blackrock
|
Financials
| Paul Stocking
| Riversource
|
Heathcare
| Jay Nogueira
| T. Rowe Price
|
Media
| Henry Ellenbogen
| T. Rowe Price
|
Technology
| Peter Wright
| Fidelity
|
Telecommunications
| Vincent Rivers
| Pyramis Global
|
Source: Institutional Investor, Dec 1007, " The Best Investment Banks '07"
Scoring tops marks on the buy side was T. Rowe Price, which received top grades in Capital Goods/Industrials, Energy, Healthcare and Media. Also honored in the survey were: Fidelity Investments for Technology, Pyramis Global Advisors for Telecommunications, Riversource for Financials and Neuberger Berman for Basic Materials.
Posted at 08:19 am by Thomas Hutchinson
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