Before joining Sanford C. Bernstein & Co. as an
Internet analyst in 2010, Carlos Kirjner-Neto enjoyed
success in not one but three fields of professional endeavor.
He spent nearly a decade as a technology and telecommunications
industry consultant with McKinsey & Co. in New York; then
directed business development at Vodafone Group, a
multinational telecom giant headquartered in the U.K., and at
Sunnyvale, Californiabased software developer
Telegent Systems; and finally in 2009 was tapped by the U.S.
Federal Communications Commission to help create a national
Kirjner-Netos impressive résumé he
also holds a Ph.D. in computer science from the University of
California, Berkeley caught the eye of talent
scouts at Bernstein, which hires established consultants
and industry experts and trains them to become equity analysts
rather than enticing researchers away from other sell-side
firms or promoting from within its own ranks.
Its really about finding great people and
facilitating them, says New Yorkbased Daniel Dowd,
director of equity research. Its not like
Bernstein makes them stars. We provide the platform for
great people to become stars.
Money managers agree. Each year when Institutional
Investor asks buy-siders to indicate who among their
sell-side counterparts merits inclusion on the
All-America Research Team, we also ask them to
identify the Rising Stars of Wall Street Research
analysts who have been publishing research for less than three
years but already appear destined for greatness. Five of the
nine Bernstein analysts who were dubbed Rising Stars in 2011
have risen to the 2012 team.
What about this year? Morgan Stanley leads the lineup,
with eight of its analysts considered among the best
up-and-comers. Bernstein lands in second place, with
seven Rising Stars. (Last year these two firms shared the top
spot; two of Morgan Stanleys 2011 stars have advanced to
the 2012 team.) Barclays, which tied for 15th place last year,
rockets to share the third tier with Credit Suisse, which jumps
from No. 6. These banks are home to five standout analysts
each for Barclays that is a net increase of four; for
Credit Suisse a gain of two.
Kirjner-Neto, 46, acknowledges that his experience accords
him insights that other analysts dont have. For example,
I understand the details of Googles page-rank
algorithm. This isnt crucial to the analysts job,
because I think there are several analysts who [cover the
Mountain View, Californiabased company] very well
and dont understand these issues, but it is
helpful, he says.
The Bernstein analyst raised eyebrows in May when he
launched coverage of Facebook just ahead of its initial public
offering with an underperform rating, valuing shares of the
Menlo Park, Californiabased social networking site
operator at just $25 apiece a lower estimate than those
offered by other Wall Street analysts, most of whom predicted
the shares would fetch between $28 and $35. The stock opened at
$38 and by the end of its first full day of trading had tumbled
10.4 percent, to $34.03. The shares are still a long way from
recovering their IPO price.
In July Kirjner-Neto upgraded Facebook to market perform, at
$21.71, and lowered his target price from $25 to $23 but
noted that investors might want to wait until the shares fall
below $20 before buying. In mid-August they did just that. The
stock was trading at $21.11 in late October.
Another analyst who attributes his current success to a
background in industry is Tudor, Pickering, Holt &
Co.s Brian Lively, a Rising Star in Oil & Gas
Exploration & Production. The Houston-based researcher
earned a bachelor of science degree in petroleum engineering at
Louisiana State University, then joined Exxon Mobil Corp.
in Irving, Texas, as a senior project manager.
I didnt graduate from college thinking I was
going to do equity research, he says. I had
absolutely no idea what equity research was. I was focused on
working at an oil company and being
In 2005, Lively moved to Houston-based engineering
consulting firm Netherland, Sewell & Associates and
enrolled in night school at the University of Houston to earn
an MBA, expecting that the degree would help him realize his
goal of launching his own business.
had this idea that I wanted to start an exploration and
production company at some point, says Lively, 35.
When I think about why I did what I did along the way, it
was kind of a function of trying to learn more about how
companies grow so I could build an E&P
That quest for knowledge led him to his current post.
What I had done before coming over to Tudor
Pickering was value the underlying assets of actual
E&P companies, so I had that experience in terms of how to
look at all the different basins and plays that companies were
involved in, Lively explains. Just knowing those
assets from a geologic and engineering perspective is the
starting point to valuing these companies from an equity
Thats not to say that investment research offered no
new challenges. When he joined the firm in 2008, Lively had to
learn how to translate a deep knowledge of assets and company
valuation to the market context. Good companies
dont necessarily mean good stocks, he notes.
Understanding how the market values companies and how it
pays for those companies in terms of the stock price was really
something I had to learn on the job.
Of course, analysts can achieve success without having
worked in a particular industry or government entity. Morgan
Stanley has a program in which each new hire is paired
with a mentor who guides his or her development, according
to Stephen Penwell, director of U.S. equity
The mentorship is very important for bouncing ideas,
crafting product everything that goes into an initiation
or launch and postlaunch, says Penwell, who is
headquartered in New York. That mentor process is
And it has worked well for Matthew Kelley, a Rising
Star in Brokers, Asset Managers & Exchanges. The
34-year-old had planned to pursue a career in journalism, but
midway through his undergraduate studies at
Virginias University of Richmond, he changed tack
and earned a bachelors degree in business administration.
He accepted a position as account executive at Grey Worldwide,
an advertising and marketing outfit headquartered in New York,
where his duties included writing creative briefs and ad
After two-and-a-half years Kelley decided to further his
education. He earned an MBA at the Kenan-Flagler Business
School at the University of North Carolina at Chapel Hill in
2006, and the following year joined Citi as an associate
analyst covering asset managers and online brokers. I had
a writing background, and research was the perfect fit for me
because I like understanding companies and industries from the
top down and bottom up, he explains.
Kelley moved to Morgan Stanley in 2009 and Betsy Graseck, a
runner-up in Banks/Large-Cap on the All-America Research
Team for the past four years, became his mentor; he began
publishing research in November 2011. I helped
[Graseck] launch coverage on credit card companies, and I
helped build models from the ground up because I knew how the
business worked inside out.
Wedbush Securities Sarah James, a Rising Star in
Managed Care, also appreciates the value of having a
coach. When I was looking for my first job out of
undergrad, I was just looking for good training and a good
mentor, she says. The analyst I found who I thought
would be a great mentor Edmund Kroll happened to
cover managed care. I didnt know anything about the
insurance sector at the time, but the person I wanted to work
with covered that sector, so I took the job.
James, 32, earned a bachelors degree in finance at
Florida State University in Tallahassee. She then began her
career as a research associate at Tucker Anthony Sutro, leaving
after only a few months when that firm was acquired by Royal
Bank of Canada. James moved to Cowen and Co., where she met
Kroll (who had been a member of the All-America Research
Team five years earlier, in 1996, when he was with Lehman
Brothers). She worked at UBS and Lehman, earned an MBA from the
Anderson School of Management at the University of California,
Los Angeles, and joined Wedbush in 2009. She began publishing
research the following April the month after President
Obama signed the Patient Protection and Affordable Care Act
Over the past year theres been more change in
the managed care sector than ever before, says James, who
works out of Los Angeles. Its probably helped me
that I was coming to it with fresh eyes and a new approach. In
some aspects the fact that it was changing so much leveled the
Offering a unique perspective also helps Lucas Pipes
distinguish himself from his peers. The Brean Murray,
Carret & Co. researcher, a Rising Star in Metals
& Mining, says that at the outset of his career he decided
to offer something that had never been attempted: a means of
predicting price movements for domestic coal producers.