< The 2016 All-Europe Research Team
Andrew Garthwaite & team
Credit Suisse
First-place appearances: 3
Total appearances: 32
Team debut: 1989
After spending last year in second place, Andrew Garthwaite and his nine-strong Credit Suisse crew slip to No. 3. Garthwaite, 53, earns high marks from one portfolio manager for his “outstanding ability to present in great detail both sides of the argument for his main calls.” The major theme these London- and Mumbai-based strategists have been advocating is to overweight European telecommunications, their favorite group within defensives. The sector has proxy cyclicality, Garthwaite notes, so it outperforms other defensives when growth accelerates, with 1 percent expansion of real gross domestic product adding 1 percent to mobile and fixed-line demand. Regional telecoms’ performance, moreover, has recently been negatively correlated to credit spreads, which the team believes are set to narrow. In addition, he says, “this sector has a dividend yield relative to the market in line with its norm, but its outlook is much better than its norm, since pricing has never been this good and [capital expenditure] to sales is abnormally high.” Several factors — such as net neutrality, average revenue per user, fourth-generation subscriptions and cost-cutting potential — could surprise to the upside, while “the regulatory environment should be much more benign than in the past,” concludes Garthwaite. The team’s favorite stocks are the U.K.’s BT Group, Spain-based Cellnex Telecom, Deutsche Telekom of Germany and Telekom Austria.