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UBS, KBC Home to Europe’s Most Lucrative Sales Ideas
London-based TIM Group evaluated some 235,000 stock calls to determine which firms and individuals excel at alpha capture.
Equity salespeople provide a number of valuable services to the buy side news updates, access to corporate leaders, interviews with analysts, etc. but few have the potential to impact a clients portfolio more than the investment ideas that salespeople generate. To find out which firms and individuals provide the most profitable suggestions, TIM Group, a London-based operator of the worlds largest network connecting investors with institutional brokerages trading ideas, assessed the roughly 235,000 equity recommendations it distributed to hedge funds and traditional investment management firms last year.
A primary goal of TIM Group is to help funds find and connect with brokers who have great track records in the markets that interest them most, and therefore evaluating performance is central to our mandate, explains William Herkelrath, New Yorkbased head of business development. Publicly celebrating excellence within our network was a logical step.
Contributors are evaluated on the basis of idea performance, volume and consistency, among other factors, and rankings are compiled for each of the markets that TIM Group serves: Asia, Australia and New Zealand, Europe, Japan and North America.
Using a regional benchmark allows us to judge an individuals potential impact on a traditional market-relative fund, adds Robert Schuessler, director of analytics. We ensure that we are highlighting consistent performers, rather than individuals who might have had one or two exceptionally lucky ideas, by requiring a minimum number of ideas and scaling overall return by the number of ideas submitted.
UBS is TIM Groups top bulge-bracket performer in Europe for a fourth consecutive year. Eighteen of its salespeople met the eligibility criteria, and they produced nearly 2,600 trade ideas, with an average return of 2.10 percent. Just behind, with an average return of 2.08 percent, is the team at Bank of America Merrill Lynch; some 25 participants offered nearly 3,400 suggestions. At No. 3 is Morgan Stanley, with 30 people whose 4,100 ideas generated returns averaging 1.73 percent.
The MSCI Europe index tumbled 2.34 percent in 2015, in dollar terms.
Among midtier and boutique firms, Belgiums KBC Securities repeats in first place, with ten qualified contributors serving up 686 ideas, with an average return of 4.55 percent.
TIM Group recognizes only the top three among large firms; however, it ranks the ten best performers among the smaller brokerages. Here is the full list, with the average returns included parenthetically:
KBC Securities (4.55 percent)
Hauck & Aufhäuser (4.27 percent)
Equinet (3.86 percent)
Carnegie (3.04 percent)
DnB Markets (3.02 percent)
ING Financial Markets (3.01 percent)
MainFirst Bank (2.73 percent)
Rabobank (2.61 percent)
Numis Securities (2.30 percent)
ABG Sundal Collier (2.27 percent)
Here are the ten top-performing individuals among European equity salespeople at bulge-bracket firms:
Tatiana Volochkovich, Morgan Stanley (8.36 percent)
Michael Moizant, Goldman Sachs International (6.55 percent)*
Louise Hough, UBS (6.92 percent)
Brian Robinson, Goldman Sachs International (5.76 percent)
Marina Zavolock, Morgan Stanley (4.94 percent)*
Viktor Danielson, Goldman Sachs International (4.82 percent)*
Rasmus Bertsch, Bank of America Merrill Lynch (4.96 percent)
Sarah Murray, Goldman Sachs International (4.50 percent)*
Jan-Willem Brand, Credit Suisse (4.83 percent)
Timothy Cross, Bank of America Merrill Lynch (4.01 percent)
And the winners among the midtier and boutique institutions:
Anders Knudsen, SEB Equities (9.74 percent)*
Sebastien Fuki, KBC Securities (10.86 percent)
Konrad Lieder, Equinet (8.22 percent)
Morten Halle, DnB Markets (7.48 percent)*
Laurent Kieffer, HSBC (11.98 percent)
Jonathan Loubser, Numis Securities (8.47 percent)
Fabien El Haik, Oddo Securities (8.35 percent)
Andrea Bottaro, Intermonte (6.46 percent)*
Lara Delgado, Canaccord Genuity (8.49 percent)
Philipp Stoecker, Exane BNP Paribas (7.21 percent)
* Outperforms salespeople ranked lower owing to having provided a higher number of profitable calls and/or those of a longer duration.
SEBs Anders Knudsen can sum up his source of inspiration in one word: change. That can be any event that causes a significant change in the perception of an investment, from end markets to discounted cash flow or many other factors, he contends. But change in dynamics for a company is the best source for capturing alpha if we are talking about long or short ideas.
Case in point: The Copenhagen-based head of equity sales buy recommendation on Swedens Invisio Communications, a designer and manufacturer of headphones, headsets and radios.
There is no sell-side coverage of the stock, so I had to do a bit of digging myself, Knudsen explains. I found a hidden gem after meeting with company management. Invisio has a unique product and market position, but obviously no one in the market cared about the company given the valuation of the stock at the start of 2015.
Thats when Knudsen began urging clients to buy it, making the case that Invisios technological advances would enable it to win business from various members of the North Atlantic Treaty Organization. He was right. In August its Marlborough Communications affiliate secured a contract to supply the U.K. Ministry of Defense with hearing-protection equipment, and in October its Australian partner was selected to provide similar products to that countrys defense department.
The stock shot up an eye-popping 491.8 percent last year, from 12.80 Swedish kronor to Skr75.75, and he continues to recommend it.
Knudsen, who earned a graduate degree in business administration from the Copenhagen Business School, worked in the communications department of the Danish Ministry of Foreign Affairs before joining SEB in 2000.
Sebastien Fuki says his inspiration comes from a desire to not disappoint the money managers who place their trust in him.
I really have the deepest respect for the buy-side community. After almost 20 years of experience on the sell side, I am still very much impressed by them, the KBC Securities salesperson attests. Because of the amazing time constraints of investors, I do not want them to lose time when they speak to me. So Im constantly studying and updating myself on the listed companies.
One that caught his attention at the start of last year was Delhaize Group, a multinational convenience store and supermarket operator headquartered in Belgium.
Our case was based on the improvement of free-cash-flow generation and supported by a drastic improvement of its working capital, reports Fuki, who is based in Brussels. In addition, his assessment of managements efforts to remodel its Food Lion stores in the U.S. and strengthen its position in its home market prompted him to conclude that the stock was trading at an unwarranted discount to its peers.
The shares, which were valued at 59.27 in early January 2015 when he began to promote them, had surged to 88.03 by late June, when Dutch rival Royal Ahold agreed to buy Delhaize for 26.1 billion ($29.1 billion). They ended the year at 89.79 up 51.5 percent and remain recommended.
Fuki received a masters degree in business engineering at ICHEC Brussels Management School. The business engineering program consists of a mix between some economics and finance courses and, as the name suggests, some courses leaning more toward engineering chemistry, mechanics, physics, electrotechnology, he explains. The combination serves as a great basis in this field of work, especially since we cover companies in many industries.
He joined KBC in 2008 as head of the firms equity sales and sales trading teams. Prior to that he held various positions at Petercam (now Degroof Petercam), including head of institutional sales.
I strongly believe that hard work on a file makes a difference in the quality of the recommendations. I look for opportunities in small-, mid- and large-cap stocks, and I really find deep pleasure in each and every investment opportunity I identify, he says. Actually, every opportunity I find just increases my motivation to find a new one.
TIM Groups recognition of excellence in equity sales, now in its fifth year, has enabled Schuessler to discern common traits among the winners. Top performers include brokers who consistently enter more ideas than average, and they also consistently enter ideas of longer duration, he notes. Top performers ideas remain active 30 percent longer than the rest of the universe, which suggests that in addition to being correct more often, they are also earlier.
Details on previous years winners can be found online at timgroup.com.