< The 2015 All-Europe Research Team
Jason Fairclough & team
Bank of America
Merrill Lynch
First-Place Appearances: 5
Total Appearances: 21
Team Debut: 1992
For the fifth time since 2010, and for a third year running, Bank of America Merrill Lynch earns first-place honors. Forty-three-year-old Jason Fairclough directs his London-based team of four analysts in covering 42 European metals and mining names. “They provide timely information on everything relevant,” one portfolio manager marvels. Even so, adds another admirer, the researchers are known for “paying particular attention to the impacts of macroeconomic trends, such as changing financial exchange rates.” Currency concerns have played a significant role in their recent reporting on the U.K.’s Kaz Minerals, an open-pit copper miner that operates primarily in Kazhakhstan and was known as Kazakhmys until the October completion of a significant restructuring. Last February a tide of capital outflows from emerging markets and the weakening of the currency of one of Kazakhstan’s main trading partners — Russia — prompted the National Bank of Kazakhstan to devalue the Kazakh tenge by 19 percent against the dollar. Kaz Minerals’ revenues are priced in dollars, while more than 50 percent of its operating costs are denominated in tenge, so Fairclough and his colleagues upgraded the stock from underperform to buy, anticipating a boost to earnings and downward pressure on capital expenditures. The stock took off, rocketing 83.1 percent by July, to 324p, and besting the sector by 81 percentage points. BofA Merrill’s analysts then lowered Kaz Minerals to neutral, primarily on valuation. In mid-January, however, they raised their rating to buy again, anticipating further devaluation of the tenge, which had again strengthened significantly against the ruble. The shares had tumbled 39.8 percent since their downgrade, to 195p, worse even than the sector’s 19.6 percent drop. They closed the month at 200.80p. Looking ahead, Fairclough and his crew project strong performance from Germany’s Aurubis. They elevated the copper smelting and refining provider from neutral to buy in October, foreseeing earnings growth from increasing treatment and refining charges. Sure enough, by the end of January, the stock had leaped 29.6 percent, to €48.17, outperforming its regional peers by 38.4 percentage points.