Michael Linenberg |
First TeamMichael Linenberg Merrill Lynch Second Team Garrett Chase, Lehman Third Team Jamie Baker, JPMorgan |
Michael Linenberg, 37, who reclaims the top spot after dropping to second last year, demonstrates “a willingness to go against the consensus,” observes one client. The Merrill Lynch analyst showed his resolve last September when he urged investors to buy Houston-based Continental Airlines, at $28.87, and Fort Worth, Texas–based AMR Corp., parent of American Airlines, at $22.67, reasoning that the stocks were preparing to take off after being grounded by investors’ fears over soaring oil prices. In January, with the stocks up 78.8 and 77.5 percent, respectively, Linenberg affirmed his recommendations but cautioned investors to take a long-term view. The stocks began to slip in March, but Linenberg held firm, although he now admits “I overstayed my welcome”; by mid-September, Continental had given back all but 13.2 percent of its gains and American had coughed up all but 6.0 percent, still ahead of the sector’s 14.6 percent loss over the same 12-month period. Garrett Chase of Lehman Brothers, who leaps from runner-up to second, “tries to look at airlines with a longer perspective,” says one investor. One of the few analysts to champion UAL Corp., the Chicago-based parent of United Air Lines, after it emerged from bankruptcy, Chase urged investors to overweight the stock in February 2006, at $35.04, on its more disciplined cost structure. By mid-September 2007 the stock was up 30.9 percent, to $45.86. At No. 3 for a third year running, Jamie Baker of JPMorgan Securities is “unequivocally the best on modeling and earnings estimates,” declares one money manager. Baker downgraded Brazilian commercial carrier Gol Linhas Areas Inteligentes to sell last December, at $29.23, believing the company had ordered too many new planes. By mid-September the stock was down 30.5 percent. |
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Consumer: Airlines 2007
