second team Sunil (Nik) Modi UBS
third team Christine Farkas BofA Merrill Lynch
Morgan Stanley’s David Adelman, in the winner’s circle for a seventh straight year, “is quite possibly the most thoughtful and insightful tobacco analyst,” declares one client, noting that Adelman’s coverage of Altria Group’s dispute with the Internal Revenue Service, detailed in a May report, was “especially compelling.” Although Adelman, 42, maintained his long-standing equal-weight rating on the Richmond, Virginia–based cigarette manufacturer’s stock, he highlighted the potential downside risks Altria faced in seeking a return of $24 million in taxes and interest it paid after the IRS disallowed deductions the company took for lease-in/lease-out and sale-in/lease-out tax shelters. In July a federal jury rejected Altria’s claim; as of late August the company was still considering whether to appeal the ruling. Altria’s stock surged 28.6 percent year-to-date through August; during the same period the sector gained 10.7 percent.
Sunil (Nik) Modi rises one rung to second place. The UBS analyst named Lorillard his top pick in January, calling shares of the Greensboro, North Carolina–based manufacturer of Newport and other cigarette brands attractively valued at $56.35. The stock had risen to $72.77 by August 31, for a gain of 29.1 percent. “Modi spends a lot of time in the trenches where the shelf wars are fought and often provides early reads on changes in competitive dynamics,” cheers one appreciative investor.
Christine Farkas slips one notch to third. In January the BofA Merrill analyst reiterated her buy rating on Philip Morris International, first recommended in March 2008, on improving earnings at the New York–based company. The stock gained 7.9 percent year-to-date through August.
Click here to see the All-America Research Team rankings.