Consumer & Pan-European Small- & Midcapitalization Stocks

Harald Hendrikse led the Credit Suisse team to No. 1 in 2006.

Autos & Auto Parts Harald Hendrikse & team BofA–Merrill Lynch

second team Arndt Ellinghorst & team Credit Suisse Credit Suisse

third team Adam Jonas & team Morgan Stanley Morgan Stanley

runner-up John Lawson & team Citi Citi

Harald Hendrikse led the Credit Suisse team to No. 1 in 2006. The following year he took charge of the Merrill Lynch team — now the Banc of America Securities–Merrill Lynch team — and, after a year in the runner-up spot, he steers the three-strong squad to the winner’s circle. Hendrikse, 40, “was the first auto analyst to warn about high valuations and the risk of a cyclical downturn in the car industry,” recalls one investor. In February 2008 the team turned negative on the entire sector, citing Germany’s Daimler as particularly vulnerable to a slowdown in sales. Shares of the luxury automaker skidded from €54.08 at the time of the report to €26.70 by year’s end. The 50.6 percent decline underperformed the sector’s drop by 12.5 percentage points. In second place is the Credit Suisse duo now guided by Arndt Ellinghorst , who joined the firm from Dresdner Kleinwort in July 2007. The pair provide “some of the best fundamental research on the sector,” insists one portfolio manager. In March they published a report warning that the credit crisis had sparked a sharp decline in sales of preowned vehicles, and that BMW, which sells many of the vehicles it leases after their contracts expire, would see its revenues drop precipitously. In April the automaker took a €236 million ($373 million) first-quarter charge, and by December 31 its share price had fallen 40.3 percent. Falling a notch to third is the Morgan Stanley duo directed by Adam Jonas . “Not shy of voicing strong opinions,” observes one buy-sider, the analysts also urged investors away from Daimler. The Morgan Stanley sell recommendation came in April; at year-end the stock was down 49.8 percent.



Nico Lambrechts & team BofA–Merrill Lynch

second team Trevor Stirling & team Sanford C. Bernstein

third team Alexandra Oldroyd & team Morgan Stanley

runners-up Philip Morrisey & team Citi; Michael Bleakley, Anthony Bucalo & team Credit Suisse; Simon Hales, Andrew Holland & team Dresdner Kleinwort; Michael Gibbs J.P. Morgan; Melissa Earlam & team UBS

Nico Lambrechts , 42, leads his two-member team to a repeat first-place finish. The Banc of America Securities–Merrill Lynch analysts earn praise for what one money manager calls the “depth of understanding” of the companies they cover. In November, after Belgium’s InBev completed its acquisition of U.S. brewer Anheuser-Busch Cos., the team urged investors to buy shares of the newly christened company, Anheuser-Busch InBev, saying the pretakeover sell-off of InBev’s shares had been unwarranted and that the stock, then at €10.32, was poised for a rebound. Through December, Anheuser-Busch InBev’s shares bubbled up 60.7 percent, to €16.58. Clients say the three-member Sanford C. Bernstein & Co. team led by Trevor Stirling , which leaps from runner-up to second place, produces research that is “absolutely top-drawer,” even if their stock recommendations “aren’t the best.” In January 2008 the team reiterated its buy call on Diageo, the world’s biggest wine and spirits distributor, citing the U.K.-based company’s strong balance sheet and rapid expansion into emerging markets. By the time the team downgraded the stock to neutral in December, the stock had slipped 9.0 percent, but it was still ahead of the sector by an impressive 19.7 percentage points. Diageo’s stock had inched up 3.4 percent by year-end. “Insightful reports on the industry and good, in-depth company research,” according to one investor, help the Morgan Stanley duo directed by Alexandra Oldroyd rise one notch to third. The team downgraded InBev to sell in September, owing to concerns about the financing risks associated with the Anheuser-Busch acquisition. The stock had slid 36.9 percent by year-end.

Food Producers

Charles Mills & team Credit Suisse

second team Andrew Wood & team Sanford C. Bernstein

third team Alan Erskine UBS

runners-up Nicolas Sochovsky & team BofA–Merrill Lynch; Michael Steib, Daniel Wakerly & team Morgan Stanley

Charles Mills , 51, steers the three-analyst Credit Suisse team up one notch, returning it to the top spot for the first time since 2003. The team, which one client praises for its “ability to tune out the noise and focus on what drives stock prices,” downgraded Unilever to underperform last February, at €21.71, reasoning that the Anglo-Dutch conglomerate was losing market share and that management’s case for a turnaround was far from compelling. By the end of the year, Unilever’s shares had slid to €17.68, a fall of 18.6 percent that surpassed the sector’s drop by 1.8 percentage points. Working solo, Andrew Wood of Sanford C. Bernstein & Co. spent the past five years in first place; this year the New York–based analyst leads a crew of four that finishes in second. Wood, who also captains the No. 3 team in Household & Personal Care Products, “has impeccable intellectual honesty,” declares one client. The team reiterated its sell recommendation on French yogurt producer Groupe Danone in January 2008, calling the stock overvalued at €60.57. In July, after the share price had dropped 31.8 percent, to €41.31, they urged investors to buy on the dip. By year-end the stock had climbed 4.5 percent, to €43.18. Alan Erskine , who led the UBS team to runner-up last year, is now working solo and claims the No. 3 spot. In a June report he made what one investor describes as a “prescient call” in downgrading Danone to sell, on the belief that the strong growth the company had enjoyed since the launch of its Activia product three years earlier was beginning to wane. By the end of December, the share price had fallen 18.1 percent.

Household & Personal Care Products

Eva Quiroga UBS

second team Harold Thompson Deutsche

third team Andrew Wood & team Sanford C. Bernstein

runner-up Nicolas Sochovsky & team BofA–Merrill Lynch

Eva Quiroga — “the gold standard of analysts who cover the personal care space,” according to one money manager — is No. 1 for a third consecutive year and for the fifth time in the past six years. The 38-year-old UBS researcher, who works solo, made only one buy call in 2008: a January reiteration of her long-standing support of Reckitt Benckiser Group. She called the U.K.-based manufacturer of household cleaning products a good defensive stock in the face of a consumer spending slowdown. The stock had dropped from £26.64 at the time of her reiteration to £25.78 by the end of year, a loss of 3.2 percent that paled in comparison with the sector’s 18.0 percent plunge. Harold Thompson vaults from runner-up to second place. A one-man band for Deutsche Bank, Thompson garners praise from clients for his January 2008 sell recommendation on France’s L’Oréal Group, at €92.59, on declining sales. By the end of December, the stock had fallen 32.7 percent, to €62.30. Last year’s second-place winner, solo analyst Andrew Wood of Sanford C. Bernstein & Co., is now the leader of a two-member team that finishes third; the New York–based researcher also heads up the No. 2 team in Food Producers. Applauded for what one investor describes as a “rigorous analytical approach,” the team reiterated its sell recommendation on Germany’s Beiersdorf in January 2008, at €49.11, on valuation. Shares of the personal-hygiene-products manufacturer ended the year down 14.5 percent, at €42.00.

Leisure & Hotels

Jamie Rollo & team Morgan Stanley

second team Simon Champion & team Deutsche

third team Leslie Zarka & team Citi

runners-up Ian Rennardson & team BofA–Merrill Lynch; James Ainley & team J.P. Morgan


In first place for a fifth year running is the Morgan Stanley foursome directed by Jamie Rollo , 36. Praised by clients for their “sound global view” and “uncanny foresight,” the researchers told investors to buy France’s Accor in October, at €31.67, owing to the hotel operator’s strong balance sheet and attractive valuation. By the end of December, the stock had jumped to €35.11, a gain of 10.9 percent that beat the sector’s by 7.3 percentage points. In second place for a third straight year is the now–seven-strong Deutsche Bank squad led by Simon Champion , who is hailed by one backer as “an independent thinker.” In September the team downgraded cruise operator Carnival to sell, at £17.24, calling the company’s focus on asset acquisition misguided. The stock had sunk 21.4 percent, to £13.55, by early November, and the group upgraded it to neutral. It finished the year at £15.09. The now–three-member Citi team overseen by Paris-based Leslie Zarka , which repeats in third place, impresses investors with its “exceptional insight” and “exceptional grasp on the sector.” Throughout 2008 the team reiterated its long-standing buy recommendation on U.K.-based catering-services provider Compass Group, on strong growth prospects. The stock gained 11.5 percent last year.

Luxury Goods

Antoine Colonna & team BofA–Merrill Lynch

second team Melanie Flouquet & team J.P. Morgan

third team Yasuhiro Yamaguchi UBS


For a sixth straight year, the top spot is claimed by the Banc of America Securities–Merrill Lynch quartet captained by Paris-based Antoine Colonna , 40. “The team is a bit like a luxury goods product — does everything you expect and a little bit more,” cheers one buy-sider. The analysts made an early contrarian downgrade of Cie. Financière Richemont to neutral way back in January 2007 and have highlighted the call repeatedly since, warning that the Swiss jeweler would be adversely affected by a consumer spending slowdown. The stock dropped 50.6 percent last year. The two-member J.P. Morgan Securities team led by Melanie Flouquet , in second place for a third consecutive year, provides “good company access, detailed models and constant availability,” according to one investor. In October the pair informed investors that “the sector is set for a deceleration” in the second half of 2008. They were right. The sector, which slid 21.3 percent in the first half of 2008, tumbled 31.0 percent in the second half. Yasuhiro Yamaguchi repeats in third place. The UBS analyst, who works solo, “made great contrarian calls, well ahead of the market,” says one client. Case in point: Yamaguchi downgraded U.K.-based fashion retailer Burberry Group to sell last February, at 440.00p, citing margin pressures. By year-end the stock had unraveled 49.6 percent, to 221.75p.

Pan-European Small- & Midcapitalization Stocks

Pedro Baptista & team UBS

second team Flavio Cereda & team BofA–Merrill Lynch

third team Carole Rozen & team CA Cheuvreux

runner-up Eduardo Lecubarri & team J.P. Morgan


Extensive coverage combined with a rigorous fundamental research approach,” according to one fund manager, helps keep the now–23-member UBS troupe on top for a fifth consecutive year. Led by Porto, Portugal–based Pedro Baptista , 40, the team added coverage of about 50 stocks in the past year, for a total of 600. Successful calls included a January 2008 sell recommendation on Spain’s NH Hoteles, at €11.82, on concerns about falling occupancy rates. The share price had plunged to €3.69 by year-end, a loss of 68.8 percent that trailed the small-caps subsector’s by 20.3 percentage points. Unranked since 2004, the seven-strong Banc of America Securities–Merrill Lynch team, now under the direction of Flavio Cereda , finishes in second place. The team, which tracks 60 stocks, upgraded French digital-security-services provider Gemalto to buy in June, at €23.45, on strong growth prospects. The share price had soared 27.2 percent by late August, to €29.83, at which point the team stopped publishing formal ratings because the company established a banking relationship with Merrill. Praised by one satisfied client for its “locally based, broad coverage,” with 20 analysts in nine cities, the Crédit Agricole Cheuvreux squad piloted by Paris-based Carole Rozen advances from runner-up to third. Attractive valuations prompted the team to issue buy recommendations in February on a pair of railway equipment manufacturers: France’s Faiveley, at €32.70, and Italy’s Ansaldo STS, at €8.62. By year-end the stocks had steamed ahead 47.1 and 16.2 percent, respectively, to €48.09 and €10.02.

Retailing/Food & Drug Chains

Jaime Vazquez & team J.P. Morgan

second team James Anstead & team Citi

third team Andrew Kasoulis & team Credit Suisse


The three-member J.P. Morgan Securities team climbs one notch to claim first place for the first time since 2000. Under the direction of Jaime Vazquez , the analysts “dig deep and uncover all kinds of useful information,” asserts one portfolio manager. In August they urged investors to buy Netherlands-based supermarket operator Royal Ahold, at €8.34, saying the company’s repositioning of its U.S. operations would result in a healthier bottom line. By the end of the year, Ahold’s shares had risen to €8.79, gaining 5.4 percent at a time when the sector lost 8.8 percent. Vazquez, 39, who earned a bachelor’s degree in economics at Universidad Pontificia Comillas de Madrid in 1992, worked as an analyst at Cazenove and Salomon Smith Barney before joining J.P. Morgan in 2003. After three years on top, the two-member Citi team, now steered solely by James Anstead following the July departure of David McCarthy, slips to second place. Praised for research that “goes far beyond commenting on quarterly results,” according to one client, the team downgraded Belgium-based Colruyt to sell in October, deeming the stock fully valued at €171.50. Through December the supermarket operator’s shares tumbled 10.3 percent, to €153.75. In third place for a third straight year is the Credit Suisse trio led by Andrew Kasoulis . The team upgraded U.K.-based Wm. Morrison Supermarkets to outperform in May, saying the retailer’s strong balance sheet left it better positioned to weather a market downturn than its rivals. By December 31 the stock had outperformed the sector by 17.4 percentage points.


Simon Irwin & team J.P. Morgan

second team Richard Edwards & team Citi

third team Rodney Whitehead & team Deutsche

runners-up Luca Solca & team Sanford C. Bernstein; Anthony Shiret & team Credit Suisse; Andrew Hughes & team UBS


Catapulting from runner-up to first place is the J.P. Morgan Securities duo led by Simon Irwin , 44. The analysts “are very good at detailed thematic research and communicate their research very well,” says one buy-side enthusiast. In January 2008 the analysts downgraded U.K. clothing retailer Marks & Spencer Group to sell, at 408.50p, anticipating a slowdown in consumer spending. The stock had plunged 48.5 percent, to 210.25p, by early October, and the team upgraded it to hold, on valuation. M&S shares had inched up 2.1 percent by year-end, to 214.75p. Irwin, who earned bachelor’s degrees in law and history at the University of Exeter in 1995,worked as a retail analyst at Goldman Sachs International in London before joining J.P. Morgan in July 2007. The two-man Citi team, now directed solely by Richard Edwards following the May departure of Bruce Hubbard, climbs one rung to second place. Praised by one investor for their “valuable insights,” the analysts downgraded DSG International to sell in June, at 57.75p, citing high debt levels and dwindling sales at the U.K.-based electronics retailer. The stock nosedived 69.7 percent, to 17.50p, through December. After two years in second place, the Deutsche Bank foursome guided by Rodney Whitehead slips to third, but it continues to provide research that is “thoughtful and often contrarian,” according to one money manager. In May the team reiterated its buy recommendation on Kingfisher, at 137.30p, calling the U.K.-based chain of home improvement stores a great turnaround story, thanks to a new management team. By year-end the stock had held its ground against a 23.7 percent sector plunge, ending the year at 135.00p.


Adam Spielman Citi

second team Erik Bloomquist & team J.P. Morgan

third team Jonathan Leinster UBS


Citi’s Adam Spielman , who captures the crown for a third consecutive year, “produces very good models that are very easy to use, and his broad knowledge of the sector makes him a reference point,” avows one investor. The 42-year-old analyst, who works solo, reiterated his buy recommendation on British American Tobacco in March, at £18.95, citing the U.K.-based cigarette manufacturer’s cost-cutting initiatives and growth prospects. By year-end the share price had slipped to £18.00, a decline of 5.0 percent that outperformed the sector’s loss by 3.9 percentage points, and Spielman says the stock remains a viable long-term opportunity. Erik Bloomquist guides the J.P. Morgan Securities trio from runner-up to second place. The analysts, who “focus on fundamentals rather than market noise,” according to one client, highlighted their sell recommendation on Swedish Match in January 2008. Shares of the Stockholm-based snuff manufacturer were overvalued at 159.10 Swedish kronor, they reasoned, because the price was based on rumors of a takeover by U.S.-based cigarette maker Altria Group that was unlikely to happen — and it hasn’t. Swedish Match shares ended the year down 29.8 percent, at Skr111.75. Although he drops one rung to third place, solo analyst Jonathan Leinster continues to impress investors with his “rigorous fundamental approach and in-depth knowledge of companies covered,” in the words of one satisfied buy-sider. The UBS researcher upgraded Imperial Tobacco Group to neutral in August, saying a recent sell-off had left shares of the U.K.-based cigarette manufacturer reasonably valued at £19.55. The stock had dipped to £18.50 by year-end, but Leinster remains bullish.

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