< The 2015 All-Europe Research Team
Michael Huttner & team
J.P. Morgan Cazenove
First-Place Appearances: 1
Total appearances: 12
Team debut: 1992
In the No. 3 position on this list for a third consecutive year is the six-person J.P. Morgan Cazenove crew under the direction of Michael Huttner & team, whose experience wows investors. “During meetings, Michael uses his historical perspective and is able to recall the many meetings he has had with corporate executives of the companies that he has been following,” recalls one admirer. Four of the team’s analysts are stationed in London, and two work out of Mumbai. Together, they report on 49 names. In a December year-ahead piece, they advised investors to overweight regional insurance companies. The group “offers more dividend growth supported by stronger nonlife earnings in Europe thanks to lower frequency and low inflation, which is part offset, in particular for life insurers with spread business, by the risk of low interest rates’ putting pressure on insurance earnings,” Huttner explains. His squad’s favorite name in this space going forward is German property/casualty insurer Munich Re, which the researchers assign a target price of €185. Catalysts informing their bullish outlook include “its No. 1 market share in the profitable reinsurance market; its very strong capital position, with 267 percent economic solvency, equivalent to Solvency II; and its track record of buybacks every year since 2006, except 2011, the year of the Japan quake,” he says. (The Solvency II Directive is a European Union regulation that will codify unified insurance standards in the region with effect from January 2016.) Moreover, Munich Re also offers “an attractive total cash return of 8.5 percent, consisting of 5 percent from the dividend and 3.5 percent from our forecast €1 billion [$1.1 billion] buyback again in 2015,” notes Huttner. The shares were trading at €178 at the end of January.