Corporate Canada and the institutional investor crowd have very different views of what makes a good analyst, according to the latest research rankings out of consulting firm Brendan Wood International. For 40 years, Brendan Wood has canvassed the buy side of the Street - the money managers - to find the "Top Gun" analyst in every sector of the market. For the financial crowd, these awards hold considerable significance, as an all star rating can translate into all-star compensation.
This year, Brendan Wood freshened up the format, asking both portfolio managers and executives at public companies to rank the sell side's analysts, at domestic dealers. (The shift comes as the consulting firm dives deeper into investment banking, from its traditional focus on equity sales, trading and research.)
The broadened approach courts controversy, as recent Wall Street scandals highlighted the perils of linking research coverage to corporate finance assignments. However, in talking to all the sources of revenue for a dealer, Brendan Woods is acknowledging the way the industry really works.
In theory, an analyst should be able to bridge the needs of institutions and corporate clients, by providing unbiased insight into a company and its industry. In practice, analysts and dealers struggle to square this circle. There's an unavoidable conflict between the dealer's dual role of sales agent on corporate transactions, such as stock sales, and purveyor of investment advice. The best analysts, and dealers, are those that do the best job of handling this conflict of interest.
Brendan Wood's survey shows the majority of analysts, intentionally or accidentally, gravitate to either investors or corporate clients. Knowing a great many analysts, I'd say the move tends to be unconscious. And the consulting firm found a select few sell side analysts have fans across all sectors.
In its latest survey, a quarterly update that features the three "Top Guns" in 11 different sectors, Brendan Wood names a total of 66 analysts who were judged among the top three in their fields. (Traditionally, the consulting firm produced just one ranking each year, naming the top three analysts in 30 sectors, all nominated by the buy side.)
Just 14 analysts were highlighted as best in class by both institutions and corporations. The consultants said the survey takes in views from 245 professionals at money managers, and executives at more than 500 public companies. Brendan Wood called these the "SuperLeague" analysts, and here is that short list, sector by sector:
Gold & Silver
Tanya Jakusconek - National Bank Financial
Barry Cooper - CIBC World Markets
Forestry
Richard Kelertas - Dundee
Sean Steuart - TD Securities
Industrial Products
Randy Cousins - BMO Nesbitt Burns
Income Trusts - Royalty
Gordon Tait - BMO Nesbitt Burns
Roger Serin - TD Securities
Oil & Gas (E&P)
Martin Molyneaux - FirstEnergy Capital
Utilities
Linda Ezergailis - TD Securities
Insurance
Tom MacKinnon - BMO Nesbitt Burns
REITs
Michael Smith - Macquarie
Sam Damiani - TD Securities
Telecom
Greg Macdonald - National Bank Financial
High Tech
Michael Urlocker - GMP Securities
Andrew Willis