First Team
Gabriela Baez, Maneesh Deshpande, Evren Ergin & team
Lehman
Second Team
Maria Grant & team, Goldman Sachs
Third Team
Edward Tom & team, Credit Suisse
Runners-Up
Leon Gross & team, Citi; Heiko Ebens & team, Merrill Lynch
Moving into the top spot from second last year is the eight-member Lehman Brothers team co-headed by Gabriela Baez, Evren Ergin and Maneesh Deshpande, who publish “the most methodical studies of tender and exchange offers,” according to one buy-sider, citing the team’s February analysis of a private equity bid for Biomet, a Warsaw, Indiana–based medical-devices manufacturer. The Lehman team concluded that a review of Biomet’s backdated stock options would not adversely affect the acquisition, and they were right: In August shareholders approved the $11.4 billion deal. Baez, 29, who joined Lehman in 2000 after graduating from Yale University with a master’s degree in economics, heads index and portfolio analysis. Ergin, 36, who leads risk arbitrage research, got on board in 1999, armed with a Ph.D. in economics from Stanford University. Derivatives strategist Deshpande, 39, who earned a Ph.D. in theoretical physics from the University of Pennsylvania in 1995, arrived from Goldman Sachs’ trading desk in February to replace Ryan Renicker. The 16-member Goldman Sachs team, led by Maria Grant, slips to second. “They guide us like B-school professors, which is very helpful,” says one investor. Also helpful was the team’s January recommendation to buy puts on Countrywide Financial Corp., based on a prescient negative view of the subprime mortgage sector. Five months later the Calabasas, California–based lender became the poster child for the credit crunch; shares tumbled from $42.07 at the time of the team’s recommendation to $19.42 by mid-September. In third is the two-member Credit Suisse team headed by Edward Tom, whose “sometimes unorthodox views helped us make money in an unusual market environment,” says one client. In May the duo predicted June’s steep jump in mortgage delinquencies and the subsequent market volatility. Accordingly, the team recommended buying puts on Standard & Poor’s 500 index options.
