The research must come first, says A.M. (Toni) Sacconaghi, 46.
If you do truly great research, good and even great stock
calls will come as a natural result, he explains.
As an analyst the goal should be to deliver outstanding
research that your clients can depend upon and use to make
their own decisions whether or not their ultimate
conclusion agrees with yours.
Sacconaghi has a reputation for delivering outstanding
research, and he shares the credit for his success with his
employer, Sanford C. Bernstein & Co. We
dont have banking or other distractions to divert our
attention from the research, he says. He sees the firm as
a perfect fit for the way he prefers to work.
He joined Bernstein in 1998 after working as a technology
consultant at McKinsey & Co. and launched
coverage of the IT hardware sector in the fall of 1999. The
following year, in June, he made one of the first great
contrarian calls of his career when he downgraded
Hewlett-Packard Co. from outperform to market perform and
cut his earnings forecast after meeting with executives of the
Palo Alto, Californiabased manufacturer of computers and
peripherals. He thought their growth forecasts were too
optimistic and believed the shares, then at a
split-adjusted $55.13, were fully valued. The stock price
slid nearly 7 percent on the day of Sacconaghis
downgrade; thats when it became clear to me that
investors were listening, he says. At ensuing
company meetings more and more investors wanted to speak with
That came as a bit of a surprise. As an analyst you
learn pretty quickly if you are right or wrong, he says.
I thought things were going well at the beginning of my
career, but I didnt know that until the market is
listening to you in real time, stock prices dont begin
moving the way you thought they would and the things you
believe begin to materialize.
In November, HP stunned the Street when it reported that
results for that years fiscal fourth quarter, which ended
in October, fell 10 cents per share short of consensus
expectations. By then the stock had plummeted 45.7 percent, to
$29.96; during the same period the sector declined by 20.6
percent. Investors showed their appreciation by voting
Sacconaghi straight in to second place in the Enterprise
Hardware sector of the 2001 All-America Research Team. He
has ranked every year since twice in 2004, when he was
No. 1 in IT Hardware and a runner-up in Imaging
Technology for a total of 12 appearances to date.
This year marks his tenth consecutive first-place finish in IT
Sacconaghi made another great contrarian call in 2005. At
that time IBM Corp. had a reputation for being opaque,
slow growing and a company that did a lot of financial
engineering, he says. Even so, he believed that the
Armonk, New Yorkbased technology and computer consulting
outfit was compellingly valued, would show improvement in
its services business and had several positive forces that
should help results. He upgraded the stock from market
perform to outperform in July of that year, at $72.36, and
again the market responded immediately. By the time he moved it
back to market perform, in March 2011, the shares had rocketed
117.8 percent, to $157.63, trumping even the sectors
impressive 102.5 percent gain over that period.
Similar great calls pepper his career today, and he credits
them all to his intense focus on research and a fluid
adaptation to responses he receives from many sources. I
embrace and find nourishing all feedback and find it the
ultimate platform on which to improve my performance, he
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