The Best Analysts of the Year 2006

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Chemicals/Commodity
Donald Carson
Merrill Lynch
Second Team: Sergey Vasnetsov Lehman
Third Team: P.J. Juvekar Citigroup
Runners-up: Robert Koort Goldman Sachs; Kevin McCarthy BofA; William Young Credit Suisse

Keeping a good thing going, Donald Carson, 52, appears on the first team for a fourth year in a row as investors continue to praise his long support of Monsanto Co. The Merrill analyst upgraded the St. Louis-based seed and herbicide giant to buy in August 2003, at a split-adjusted price of $10.90, on the basis of its rich agricultural-biotechnology pipeline. By year-end 2005, Monsanto shares had jumped to $38.49 (split-adjusted), outstripping the MSCI chemicals index last year by 43.7 percentage points. Carson kept raising his price targets, most recently in August, primarily owing to Monsanto's forthcoming drought-tolerant corn and other potential blockbusters. Shares rose to $44.24 through mid-September. "He has the courage of his convictions and helps us make money," explains one client. A bearish outlook cements a third consecutive second-place finish for Lehman's Sergey Vasnetsov. Last December he declared 2005 the peak year in the ethylene cycle and downgraded to market weight Midland, Michigan-based Dow Chemical Co., the diversified goliath, at $43.84, and Olin Corp., a Clayton, Missouri-based chemicals and metal-products producer, at $19.21, among others. Through mid-September the shares had fallen 12.0 and 18.2 percent, respectively. "He was the first to reduce Dow, which is a barometer for the entire sector, and it was a wise decision," observes one investor. Advancing from Runner-up: to third place, which he has occupied twice in the past five years (2002 and 2004), P.J. Juvekar of Citigroup impresses clients with his "vast knowledge" and "deep thinking." Sponsors fondly recall a May report about ethanol, the corn-based alternative fuel, which "explained the science in the context of specific stocks," as one grateful customer puts it. Partly because of Monsanto's involvement in corn production, Juvekar, who also ranks third in Chemicals/Specialty, upgraded the stock to buy in August 2005, at a split-adjusted $33.11. Through mid-September the shares were up 33.6 percent.

Chemicals/Specialty
Robert Koort
Goldman Sachs
Second Team: David Begleiter Deutsche
Third Team: P.J. Juvekar Citigroup
Runners-up: Donald Carson Merrill Lynch; Jeffrey Cianci UBS; Kevin McCarthy BofA; John McNulty Credit Suisse; Sergey Vasnetsov Lehman; Jeffrey Zekauskas J.P. Morgan

In his fourth consecutive appearance on the first team, Robert Koort earns high marks for "keeping a sharp eye on valuations," says one portfolio manager. Clients were especially grateful to the Goldman analyst for steering them to Ecolab, a St. Paul, Minnesota-based supplier of institutional cleaning products. In October 2005, Koort, 38, upgraded the stock to outperform, as a bargain at $31.49; by mid-September the shares had risen to $41.98, an increase of 33.3 percent, compared with a 12.0 percent gain for the sector. Providing unrivaled access to senior managements is one way that repeat second-teamer David Begleiter of Deutsche endears himself to clients. "Dave brings corporates around to meet us, rather than having us go on field trips, which is a nice time-saver," asserts one money manager. Another highlights his "unique perspective," especially on Cytec Industries, a West Paterson, New Jersey, midcap manufacturer of adhesives and other specialized engineering materials. Begleiter upgraded Cytec to buy back in March 2004, at $32.29. In the 12 months ended mid-September 2006, the stock rose 26.7 percent, to $54.63. P.J. Juvekar of Citigroup, who also ranks third in Chemicals/Commodity, debuts on the Third Team:. Dubbed "a storehouse of knowledge" by one client, Juvekar made a November counterconsensus upgrade to buy on Engelhard Corp., at $27.43, on the assumption that new diesel emissions standards for trucks would drive demand for the Iselin, New Jersey-based company's catalytic converters. The stock shot up to $38.00 in January after German chemicals giant BASF made a tender offer, and Juvekar downgraded it to hold, on valuation; when the deal closed in June, Engelhard shares had settled at $38.98. "P.J. helps us make money," explains one happy buy-sider.

Metals & Mining
Peter Ward
Lehman
Second Team: Anthony Rizzuto Jr. Bear Stearns
Third Team: Michael Gambardella J.P. Morgan
Runner-up: John Hill Citigroup

Repeating on the first-place team, Peter Ward impresses clients with his dedication and perseverance. The Lehman analyst has been bullish on copper since mid-2004, reasoning that because there have been few significant new discoveries of copper mines, supplies will remain tight and prices will rise. During the 12 months ended mid-September, prices almost doubled, from $16.78 per pound to $33.17, helped by strong demand from China. Ward, 39, stuck with a June 2004 overweight on Phelps Dodge Corp., pegged at a split-adjusted price of $34.50, and added it to Lehman's short list of "Uncommon Values" in June 2005, at $45.46, and June 2006, at $77.58. Through mid-September the Phoenix-based copper producer had risen to $83.73, advancing 62.5 percent in the preceding 12 months and surpassing the sector average by 41.1 percentage points. Anthony Rizzuto Jr. finishes in second place for a fifth year running. The Bear Stearns analyst is hailed for "stock-picking dexterity," in the words of one investor, especially a May 2005 upgrade of Allegheny Technologies to outperform. Rizzuto believed that the Pittsburgh company, having just been freed from fixed-price contracts signed in 2001, was undervalued at $21.00. The specialty-metals and alloys producer soared to $72.98 in April, at which point Rizzuto downgraded it, on valuation. By mid-September the shares had fallen to $62.99. A bullish view of steel helps Michael Gambardella repeat in third. Since mid-2005 the J.P. Morgan analyst has stressed ever-rising steel prices. Clients applaud his March 2005 upgrades of Nucor Corp., a Charlotte, North Carolina-based steel-mill operator, at a split-adjusted $30.88, and scrap-steel supplier Steel Dynamics of Fort Wayne, Indiana, at $35.93. By mid-September the stocks had risen to $46.76 and $50.93, respectively. "No one knows more than Mike about the minutiae of steel," affirms one supporter.

Paper & Forest Products
Chip Dillon
Citigroup
Second Team: Mark Connelly Credit Suisse
Third Team: Peter Ruschmeier Lehman
Runners-up: Richard Schneider UBS; George Staphos BofA; Mark Wilde Deutsche

For the seventh time in ten years, Chip Dillon, 48, appears on the first team. The Citigroup analyst "makes paper interesting," says one investor. Dillon also makes it profitable. He upgraded Georgia-Pacific Corp. in January 2002, at $25.66, and remained bullish on the stock even when its price slipped in the first half of last year, from $37.04 in January to $31.80 in June. In November shares soared to $47.28, after privately held Koch Industries announced it would acquire the Atlanta-based wood producer for $13.2 billion. Dillon also wins praise for not being afraid to issue sell ratings. Case in point: Louisiana-Pacific Corp. In March, Dillon downgraded the Nashville-based lumber supplier to sell, at $27.83, on pricing pressure. By July the stock had fallen to $20.39, cheap enough that he upgraded to hold. In mid-September it was still hovering at about $20. Clients highly regard repeat second-teamer Mark Connelly for his knowledge and perspective. "No one has a deeper or broader view of the sector," says one money manager. The Credit Suisse analyst earns points for his April 2005 upgrade of Rock-Tenn Co., a Norcross, Georgia-based paperboard manufacturer, judged a bargain at $9.85. As of mid-September 2006 the stock had more than doubled, to $20.18, advancing 33.9 percent in the preceding 12 months, while the sector was up 21.1 percent in the same period. Peter Ruschmeier, who moves up a notch to third, "keeps his finger on the pulse of the industry," says one buy-sider. Investors praise the Lehman analyst's ongoing bearish stand on Smurfit-Stone Container Corp. He downgraded the Chicago-based containerboard producer to underweight in August 2002, deeming it overpriced at $13.27; Smurfit's shares fell to $10.27 in July, and Ruschmeier upgraded them to equal weight, on valuation. By mid-September they had edged up to $11.02.

Aerospace & Defense Electronics
Steven Binder
Bear Stearns
Second Team: Robert Stallard BofA
Third Team: George Shapiro Citigroup
Runners-up: Joseph Campbell Jr. Lehman; Douglas Harned Sanford C. Bernstein; David Strauss UBS; Heidi Wood Morgan Stanley

"It's amazing how well he understands the dynamics of these industries," asserts an enthusiast of Bear Stearns' Steven Binder, who outshines the competition for his eighth consecutive first-place finish. Investors point to the analyst's long-standing endorsement of Lockheed Martin Corp. Binder, 48, has recommended the Bethesda, Maryland-based defense contractor since July 1998 as undervalued at a split-adjusted $45.55. Through mid-September 2006 the shares reached $83.00, gaining a stunning 35.3 percent in the preceding 12 months, when the sector as a whole rose 19.0 percent. Clients also mention an early June alert about possible delays in Airbus Industrie's new A380 superjumbo plane, which came just days before the company announced a six-month delay. "He's got information sources like no one else," sums up one money manager. Newcomer Robert Stallard of BofA wows investors with the breadth of his coverage. "He picks up some of the smaller names that are otherwise off our radar screens," says one client. The second-teamer has favored Precision Castparts Corp., a Portland, Oregon-based midcap supplier to the aerospace industry, since August 2004, at a split-adjusted $27.13, because of its exposure to the improving aerospace sector. Through mid-September 2006 the stock had flown to $57.41. In third after four years at No. 2 is Citigroup's George Shapiro, who is "that rare analyst you can easily chat with and always learn something new," relates one buy-sider. Shapiro, who has placed on the All-America Research Team for 23 straight years, continues to win praise for his July 2004 buy recommendation of United Technologies Corp., at a split-adjusted $44.39, on its changing, diverse business mix. Through mid-September 2006 the Hartford, Connecticut-based aircraft-engine maker had skyrocketed to $64.61, up 29.6 percent over the previous 12 months.

Airfreight & Surface Transportation
Edward Wolfe
Bear Stearns
Second Team: Kenneth Hoexter Merrill Lynch
Third Team: Thomas Wadewitz J.P. Morgan
Runners-up: John Larkin Stifel Nicolaus; Rick Paterson UBS

It's four in a row for Edward Wolfe, who wins the top spot in a landslide. Investors praise what one deems the Bear Stearns analyst's "broad purview" and single out an August 2005 upgrade to outperform on small-cap freight railroad Genesee & Wyoming, at a split-adjusted $19.20, partly on its booming business in Australia. In February the "independent thinker," as one supporter describes Wolfe, 40, downgraded the Greenwich, Connecticut-based G&W to peer perform, at $28.77, after the company announced a $941 million gain from selling some routes in southern Australia, which prompted an abrupt hike in the share price. As of mid-September the stock had corrected to $23.55. Kenneth Hoexter leapfrogs two spots to the Second Team:. The Merrill analyst endears himself to clients with frequent, brief telephone conversations. Says one grateful buy-sider, "Ken doesn't send out reams of paper or leave long, impersonal voice mails, as so many other analysts do. He actually talks -- and answers questions off-the-cuff -- which is rare." Advocates also applaud his recent emphasis on select railroad companies such as CSX Corp. Hoexter upgraded the Jacksonville, Florida-based company to buy in September 2004, at $16.27 (split-adjusted), on its plans to implement a new scheduling system. By mid-September 2006, CSX had charged to $31.61, advancing 43.9 percent in the preceding 12 months. Newcomer Thomas Wadewitz joined J.P. Morgan from Bear Stearns in June 2005 and hit the ground running. In July 2005 the third-teamer launched coverage of CSX with an overweight rating, at a split-adjusted $21.74, enabling clients to capture an eye-popping 45.4 percent gain through mid-September 2006. "Tom does rigorous modeling and consequently has the best earnings estimates of anyone covering the space," declares one money manager.

Business & Professional Services
Andrew Steinerman
Bear Stearns
Second Team: Kelly Flynn UBS
Third Team: Gregory Cappelli Credit Suisse
Runner-up: Christopher Gutek Morgan Stanley

Returning first-teamer Andrew Steinerman of Bear Stearns earns praise for an ongoing series of staffing reports. Steinerman, 38, has been stressing revenue growth and margin expansion at select companies with international exposure. "He pointed out that in some countries, industries were being deregulated and there was high demand for skilled staffing services," recalls one investor. Last October, Steinerman highlighted Manpower as undervalued, at $43.87; by mid-September shares of the Milwaukee-based international outsourcer had climbed to $60.90. Other investors single out Steinerman's long-standing cautious stance on Spherion Corp., a temp agency headquartered in Fort Lauderdale, Florida, because of its lack of international exposure. Year-to-date through mid-September, Spherion fell from $10.01 to $7.11, and the sector as a whole was flat. Moving up one rung to second is Kelly Flynn of UBS, who "really gets inside her companies," declares one investor. Flynn was especially astute in her coverage of Career Education Corp., a Hoffman Estates, Illinois-based provider of postsecondary courses. Flynn issued a sell recommendation in September 2004, at $30.50, largely because of federal investigations into allegations that the company submitted false claims to the Department of Education about costs and job placement of its students. The stock seesawed until April 2006, when a Securities and Exchange Commission investigation ended with no enforcement action, and the price shot up to $41.70. Flynn stood her ground, insisting the company's accreditation, and consequently its revenue, were still in danger from other, ongoing investigations. She was right. The company missed its second-quarter earnings, and shares had plunged to $20.52 by mid-September. Though he slips one notch to third, Gregory Cappelli of Credit Suisse is "able to juggle a lot of balls at once and never lose sight of what's important," says one investor. In September 2005, Capelli upgraded SkillSoft, at $3.85, believing the Dublin, Ireland-based developer of electronic-learning programs would benefit from the economic stability buoying its potential market. A year later the shares were up 72.7 percent, to $6.65.

Electrical Equipment & Multi-Industry
Jeffrey Sprague
Citigroup
Second Team: Robert Cornell Lehman
Third Team: John Inch Merrill Lynch
Runner-up: Scott Davis Morgan Stanley

Jeffrey Sprague, 45, wins the top spot for a seventh year in a row, impressing clients with what one calls his "Midas touch." Investors cite the Citigroup analyst's April 2005 buy recommendation on Washington-based toolmaker Danaher Corp., as a bargain at $49.82. Though a tad early -- the stock didn't gain lasting momentum until November -- the recommendation proved wise when Danaher rocketed to $66.70 in mid-September. "He was ahead of the curve and stuck to his guns," observes one money manager. Clients continue to be pleased with Sprague's July 2004 buy on Textron, at $56.29, partly based on a big order for the Providence, Rhode Island, company's Cessna business jets. By mid-September 2006 the shares had soared to $83.83, an increase of 20.8 percent over the preceding 12 months, while electrical equipment shares were up 15.9 percent during the same period. Returning to the Second Team: for a seventh consecutive year, Robert Cornell of Lehman is an analyst who one supporter says "never ceases to amaze"; recommendations from years past, such as Emerson Electric Co., continue to bear fruit. Cornell upgraded Emerson to buy in September 2002, at $39.35, based on the St. Louis company's impending transformation from a components builder to a diversified technology-based solutions provider; in the 12 months ended mid-September 2006, Emerson surged 27.1 percent, to $82.68. "No one has more knowledge or better instincts," declares a satisfied client. No. 3 for a fourth year running, Merrill's John Inch earns praise for having "an agile mind," as one portfolio manager puts it. Last October, Inch issued a sell recommendation on ITT Corp., a White Plains, New York-based supplier of electronic components, believing it was overpriced at a split-adjusted $55.08. A month later, when it had fallen to $49.27, he upgraded it to neutral, again on valuation; then in July, believing ITT was reasonably priced at $49.50, he upgraded it to buy. The shares were trading at $49.18 in September.

Environmental Services
Leone Young
Citigroup
Second Team: Amanda Tepper J.P. Morgan
Third Team: Lorraine Maikis Merrill Lynch

Claiming victory for a sixth consecutive year, Citigroup's Leone Young is "always ahead of the curve," says one money manager. Clients especially appreciate her ongoing coverage of Waste Management. Young, 45, upgraded the Houston-based, national sanitation giant back in August 2002, at $23.72, partly on management's cost-cutting discipline. In August 2005, at $27.65, she believed it had new pricing power; in January she dubbed it one of her top picks for 2006. By mid-September it had risen to $35.37, up 18.8 percent year-to-date, while industrial conglomerates were down 1.7 percent during the same period. Amanda Tepper, in second place for a fourth year running, garners accolades for the November 2005 installment of her biannual survey of waste haulers, which indicated that companies could sustain sufficiently high price increases to offset rising energy costs. Tepper, who's also No. 3 in Packaging, favored Republic Services, first endorsed in November 2004, at $30.65, partly on its stock-repurchase program. Shares of the Fort Lauderdale, Florida-based nonhazardous-solid-waste remover jumped to $43.86 in April 2006 before slipping to $37.89 in mid-September. "She said it would be a good year for waste companies, and so far it looks to be true," comments one investor. (Tepper left J.P. Morgan to join BofA in September as associate director of equity research.) Merrill's Lorraine Maikis moves up a notch to third place. Backers single out her "in-depth approach to corporate accounting," as one puts it, citing an April 2005 report, "Comparing Apples to Oranges," which examined how industry accounting practices affect earnings. It explained, for instance, that a decline in Waste Management's free cash flow was the result of land purchases essential to expanding capacity. She has backed the company since August 2003, at $22.14, on its strong pricing momentum.

Machinery
David Raso
Citigroup
Second Team: Joel Tiss Lehman
Third Team: Ann Duignan Bear Stearns
Runner-up: David Bleustein UBS

Citigroup's David Raso stands victorious again with his sixth consecutive appearance on the first team, and wins praise for his coverage of Caterpillar. Raso, 36, downgraded the Peoria, Illinois-based engine builder to hold in September 2005, at $57.92, on pricing pressure from hurricane-induced interruptions in its supply chain. One month later, after Caterpillar announced disappointing third-quarter results and lowered expectations for the fourth quarter, the stock plunged 12.2 percent in three days. Raso upgraded it to buy in January, at $62.24, after his construction-equipment dealers survey indicated higher demand for Cat products. By mid-September, Cat shares had climbed to $65.43. "He's got channels of information that make him seem prescient," confides one advocate. Lehman's Joel Tiss jumps to the Second Team: from Runner-up:, earning accolades for having what one money manager calls the "broadest coverage universe on the Street." Especially noteworthy was an October 2005 overweight on Manitowoc Co., a small-cap crane provider based in Manitowoc, Wisconsin, in part on its booming business from rebuilding hurricane-ravaged areas, at a split-adjusted $23.96. By mid-September the shares had risen a whopping 86.7 percent, to $44.74, well outpacing the sector's 15.7 percent rise. "He's terrific at uncovering moneymaking ideas," cheers one grateful client. Repeat third-teamer Ann Duignan -- known as "Ethyl Ann" for frequent TV appearances in which she discusses the prospects for ethanol -- shows it is possible to do well by doing good. Customers applaud the Bear Stearns analyst's monthly "Green Machine Renewable Energy Update" as "concise" and "comprehensive." Backers especially praise Duignan's July 2005 upgrade of Deere & Co., the agricultural-equipment goliath headquartered in Moline, Illinois, at $64.76, on rising demand because of higher corn prices. By mid-September 2006, Deere had jumped to $80.87.

Packaging
George Staphos
BofA
Second Team: Ghansham Panjabi Wachovia
Third Team: Amanda Tepper J.P. Morgan

George Staphos easily takes first for a third straight year (and the seventh time in eight years). The BofA analyst impressed clients last fall with reports about hurricane-related interruptions in the supply of resins used by flexible packagers such as Sealed Air Corp. of Elmwood Park, New Jersey, and Pactiv Corp. of Lake Forest, Illinois. Staphos, 41, downgraded Sealed Air to neutral in September 2005, at $49.41, on rising resin prices; one year later it had edged up only to $52.95. He stuck with his longstanding buy on Pactiv, though it had dropped 25.3 percent from the start of 2005, to $18.90. Largely betting on improving margins in the company's Hefty-brand household-bags business, Staphos reiterated his endorsement; by mid-September 2006 the stock had rallied to $27.83, a gain of 47.2 percent; the sector was up just 2.6 percent. "Why would I need to go to anyone else?" asks a satisfied buy-sider. Ghansham Panjabi, who returns to second place after a year in third, helps clients comprehend "true underlying value, which can be hard to calculate given recent volatility in component costs," says one investor. Case in point: Crown Holdings. In August 2005, shortly after joining Wachovia, Panjabi backed the Philadelphia-based container maker as undervalued at $16.30, a position he reiterated strongly in May, when the stock slipped to $15.64. He stressed Crown's true worth and resilience, given its wide penetration of the food and beverage industries. By mid-September the stock had climbed to $18.47. Trading places with Panjabi is No. 3 Amanda Tepper (who also ranks in Environmental Services). Though she ceased coverage for J.P. Morgan in June to prepare for her September move to BofA, followers prize her nod last November to Sonoco Products Co., a Hartsville, South Carolina, supplier of paperboard cans and tubes, for its recent cost-cutting efforts. Sonoco rose from $27.48 at the time of the call to $33.90 in mid-September.

Airlines
David Strine
Bear Stearns
Second Team: Michael Linenberg Merrill Lynch
Third Team: Jamie Baker J.P. Morgan
Runner-up: Garrett Chase Lehman

David Strine of Bear Stearns jets into the top spot among airlines analysts, up from No. 2 last year. Strine, 37, is a 1990 University of Vermont graduate and former corporate lawyer who says a fascination with business and an early internship in finance lured him back to Wall Street, where his bullish calls have helped clients make money over the past year -- at least those who paid attention. Most airlines analysts turned bearish on USAirways Group after it merged with America West Airlines, but Strine saw value and rated the stock an outperform in September 2005, at $20.21, reasoning that competitors' route cutbacks in East Coast markets and Southwest Airlines' fare raises would help the carrier. He was right. By mid-September 2006, USAirways' stock had soared 128.7 percent, to $46.23, while the sector was up 13.7 percent over that period. "He's a good stock picker," says one buy-sider. Adds another: "He doesn't get rattled by day-to-day events." Though he drops from the first team to the second, Michael Linenberg continues to impress investors with the timeliness of his calls. In July the Merrill analyst downgraded USAirways, AMR Corp. (parent of American Airlines) and Continental Airlines, to neutral, believing they were "getting ahead of themselves," he says. By mid-September the stocks had slipped 13.5, 12.9 and 6.3 percent, respectively, since the time of Linenberg's downgrade. "There's Michael, and there's everybody else," says one portfolio manager. "He is as good as it gets." Repeating on the Third Team:, Jamie Baker earns praise for being "very early in seeing through the effects of high oil prices and hurricanes," says one client. The J.P. Morgan analyst was bullish on not only USAirways but also American and Continental. Last October, Baker recommended overweighting the latter two. By mid-September, American's shares had jumped 86.5 percent, and Continental had skyrocketed 145.9 percent, since Baker's recommendation.

Apparel, Footwear & Textiles
Robert Ohmes
BofA
Second Team: Robert Drbul Lehman
Third Team: Jeffrey Edelman UBS
Runners-up: Lizabeth Dunn Prudential; Virginia Genereux Merrill Lynch;
Margaret Mager Goldman Sachs

Robert Ohmes, 37, of BofA steps up from Second Team: last year to this year's top spot with what one pleased buy-sider calls "great perspective in a space where it's easy to struggle." A micro approach -- using channel checks and detailed financial models -- helps Ohmes determine which companies can gain market share and provide earnings surprises. Clients especially appreciated Ohmes's buy rating on activewear maker Under Armour of Baltimore, inaugurated in mid-March at $27.42. "Others focused on the stock's high multiple," observes one investor. "He saw how the company was taking market share and how it would translate into higher earnings." As of mid-September, Under Armour had risen to $39.60. Ohmes, who holds a B.A. from Vanderbilt University and an MBA from the University of Maryland University College, worked previously as a Retailing/Softlines analyst for Morgan Stanley. Losing his four-year foothold in first place, Robert Drbul slips to No. 2, but backers say he is still "a reliable gut-check when the Street is overly positive or negative." The Lehman researcher, who ranks third in Retailing/Broadlines & Department Stores, issued an overweight rating on a beat-up Phillips-Van Heusen Corp. of New York in October 2005, at $27.73, because he believed that, with the Calvin Klein brand on track, the company had some of the best growth prospects in apparels. The stock had risen to $41.83 by mid-September. Holding steady in third place, Jeffrey Edelman has what one investor calls the "exceedingly rare qualities of experience and judgment." That judgment led the UBS analyst to downgrade Kellwood Co. of St. Louis and Columbia Sportswear of Portland, Oregon. He placed a reduce rating on Kellwood in June at $30.88 and a neutral rating on Columbia in April at $55.01. The stocks were trading at $28.29 and $53.80, respectively, in mid-September.

Autos & Auto Parts
Ronald Tadross
BofA
Second Team: Rod Lache Deutsche
Third Team: Himanshu Patel J.P. Morgan
Runners-up: Darren Kimball Lehman; Jon Rogers Citigroup

"An all-around solid analyst who's not afraid to get down in the muck" is how one money manager describes Ronald Tadross, who zooms from Runner-up: to the first team. The BofA analyst says he has been enamored of Wall Street ever since he commuted to Prudential Securities in New York, where he worked part-time while earning a degree in finance at Connecticut's Fairfield University in 1993. Tadross, 35, is one of the few U.S. analysts to follow Toyota Motor Corp. He pinned a buy on the stock in October 2005, at $91.87, largely on the strength of the new-product pipeline at its North American operations, and downgraded to neutral in May, at $116.67, after the stock gained 27.0 percent and overtook Tadross' target price of $104. By mid-September the shares had slipped back to $106.16. Rod Lache, who repeats on the Second Team:, wins accolades as much for his "good work on the fundamentals" as for his "phenomenal list of industry contacts," says one portfolio manager. Investors praise the Deutsche analyst for his series of calls on Johnson Controls, beginning with a buy recommendation last November. At the time the Milwaukee parts manufacturer's shares were trading at $68.94; in June, when the share price hit $89.35, Lache downgraded to hold. By mid-September the stock had slipped to $71.86. Advancing from Runner-up: to third is J.P. Morgan's Himanshu Patel, who is "an independent thinker in an industry where there's a herd mentality," says one client. Patel believed that fears of a General Motors Corp. bankruptcy were overblown and recommended overweighting the stock in January, at $18.36, after the company launched its T900 platform for SUVs. In August he downgraded to neutral, at $30.99. Investors who listened locked in gains of 68.8 percent.

Beverages
William Pecoriello
Morgan Stanley
Second Team: John Faucher J.P. Morgan
Third Team: Robert van Brugge Sanford C. Bernstein
Runners-up: Michael Branca Lehman; Carlos Laboy Bear Stearns; Bryan Spillane BofA

"He has some of the best industry data, is incredibly accessible and is extremely valuable in giving you a sense of what the consensus is thinking," says one money manager of William Pecoriello, 41, who finishes on the first team for a fourth consecutive year. The Morgan Stanley analyst upgraded Atlanta-based Coca-Cola Enterprises in June, at $19.16, owing to several factors, among them new CEO John Brock's willingness to leverage Coke's assets (including distributing non-Coke products, if necessary) and the introduction of several new tea beverages. By mid-September the shares had risen 8.2 percent, to $20.74, versus gains of 6.6 percent for the sector and 6.4 percent for the Standard & Poor's 500 index. John Faucher, who repeats in the No. 2 spot, is "a great sounding-board and voice of reason," according to one money manager. The J.P. Morgan analyst was bullish on PepsiCo, urging investors to overweight it in September 2005, at $54.42, largely on stronger-than-expected sales of Gatorade. "They enabled PepsiCo to significantly exceed expectations and outperform the market, the beverage group and consumer staples," says Faucher. By mid-September 2006, Pepsi's share price had risen 19.5 percent, to $65.03, since Faucher's call, while beverages were up 9.0 percent over that period. Another satisfied client notes that Faucher "gives straightforward, honest assessments of businesses and management teams, irrespective of his ratings. I also like his somewhat holistic approach in understanding the whole consumer staples universe." A willingness to take a contrarian stand helps Robert van Brugge rise from Runner-up: to third. The Sanford C. Bernstein analyst initiated coverage of Fairport, New York-based Constellation Brands in April 2005, at a split-adjusted $29.10, breaking from consensus to put an underperform rating on the shares. That October, when the shares had fallen to $22.25, van Brugge upgraded to market perform. Through mid-September the shares had risen 25.0 percent, to $27.81, since his upgrade.

Cosmetics, Household & Personal Care Products
Wendy Nicholson
Citigroup
Second Team: Lauren Lieberman Lehman
Third Team: Amy Low Chasen Goldman Sachs
Runners-up: John Faucher J.P. Morgan; William Pecoriello Morgan Stanley; William Schmitz Deutsche

Capturing first place for the first time, Wendy Nicholson "knows the short term, but she doesn't lose sight of the big picture," says one supporter. The Citigroup analyst, ranked third for the past two years, is a 1990 University of Pennsylvania graduate who worked in Citi's investment banking department for eight years before transferring to research in 1998. Nicholson, 38, wins accolades for her call on Avon Products of New York, which she upgraded in October 2005, at $24.12, on the company's restructuring and cost-cutting initiatives. By mid-September the shares had risen 22.5 percent, to $29.54. "I was particularly impressed by her willingness to go against the grain when Avon sold off last year," explains one investor. "It was a gutsy move on her part." Another consensus-breaker, Lauren Lieberman, debuts on the Second Team:. The Lehman analyst was not as enthusiastic as her peers about Procter & Gamble Co.'s $57 billion acquisition of the Gillette Co. last year, believing that investors were already paying for all of the promised cost synergies and step-up in long-term revenue growth from the acquisition. After peaking in March at $61.56, P&G shares sank to $52.94 by early June. Two weeks later, Lieberman upgraded the stock to market perform. By mid-September the shares were up 11.6 percent since Lieberman's upgrade; the personal products subsector was flat over that period. Amy Low Chasen, who slips one notch to third after five straight years at No. 2, continues to win praise for her coverage of longtime favorite Colgate-Palmolive Co. of New York. The Goldman analyst first upgraded the stock in December 2004, at $48.21, on the belief that company restructuring would eventually pay off for investors -- and she has maintained that stance despite disappointing results. The past year proved her right: For the 12-month period ended mid-September, Colgate's stock rose 19.8 percent.

Food
Andrew Lazar
Lehman
Second Team: Terry Bivens Bear Stearns
Third Team: David Nelson Credit Suisse
Runner-up: Eric Katzman Deutsche

On the first team for a fourth year in a row, Andrew Lazar “is one of the few sell-side analysts who can differentiate between management teams that are taking the correct actions to build longer-term franchise value versus those that are just out to make short-term profits,” says one money manager. The Lehman analyst did just that with his coverage of Kellogg Co., which he upgraded in September 2005, at $43.01, on expectations of more-aggressive share repurchases going forward and the sustainability of earnings-per-share growth. By mid-September 2006 shares of the Battle Creek, Michigan–based breakfast cereal manufacturer had risen 15.6 percent, to $49.71, compared with 12.4 percent for the sector and 8.6 percent for the S&P 500. Lazar, 40, understood Kellogg’s “dedication to sustaining superior topline growth while reinvesting in the business,” says one buy-sider. Terry Bivens catapults from Runner-up: to second place on the strength of calls “that continue to be money-making for his constituents,” according to one investor. Case in point: H.J. Heinz Co. The Bear Stearns analyst highlighted his outperform call last December, at $33.28, citing the Pittsburgh-based company’s strong cash position and appealing price-earnings ratio. As of mid-September the shares were up 23.1 percent, to $40.98. “Bivens couples his business acumen with great communication skills to deliver a unique research product,” says one longtime client. David Nelson, who slips to third place after two years at No. 2, “has a very deep understanding and knowledge of all the players,” says one investor. These qualities prompted the Credit Suisse analyst to upgrade Tyson Foods in April, at $12.85, on the belief that fears of avian flu were overstated. By mid-September shares of the Springdale, Arkansas–based poultry processor had risen 24.1 percent, to $15.95.

Gaming & Lodging
Joseph Greff
Bear Stearns
Second Team: David Anders Merrill Lynch
Third Team: Harry Curtis J.P. Morgan

Money managers say they hit the jackpot with Joseph Greff, who leaps from Runner-up: to first team for delivering “very thorough work and timely research calls” in an industry prone to gambling fever. The Bear Stearns analyst, who earned an MBA from New York University’s Stern School of Business in 1999, impressed clients with his coverage of Shuffle Master. Greff, 36, upgraded the Las Vegas–based game manufacturer to outperform in March, at $26.23, then downgraded six weeks later, at $39.59, asserting that the stock had reached its peak. By mid-September, Shuffle shares had fallen to $26.79, a 32.3 percent drop from the time of Greff’s downgrade. “That was a gutsy call,” says one buy-sider, noting that many of Greff’s peers were betting for more upside. “Joe is an independent thinker who’s willing to break from the pack.” David Anders of Merrill, who repeats in second place, wins praise for being “logical — he doesn’t just come out with an opinion and try to justify it,” says one satisfied client. The San Francisco–based analyst has been urging investors to shun gaming stocks and stick with hotels because demand is outstripping supply. Shares of Beverly Hills, California–based Hilton Hotels Corp., Washington-based Marriott International and White Plains, New York–based Starwood Hotels & Resorts Worldwide were up 16.9, 16.1 and 16.0 percent, respectively, year-to-date through mid-September. Returning to third place after two years as Runner-up:, Harry Curtis “puts on the best gaming conference in the industry,” says one European investor, who treks to Las Vegas every March to attend. Among the J.P. Morgan analyst’s favorite stocks is Wynn Resorts, which Curtis has rated overweight since 2003. Shares of the Las Vegas–based casino operator were up 50.5 percent for the year ended mid-September.

Homebuilders & Building Products
Ivy Zelman
Credit Suisse
Second Team: Margaret Whelan UBS
Third Team: Stephen Kim Citigroup

Ivy Zelman is back on top. Investors especially praise the Credit Suisse analyst, who scored six straight first-team finishes before slipping to third last year, for her July 2005 report warning that “excessive speculation” and gimmicky mortgage instruments such as interest-only loans were creating artificially inflated housing prices, resulting in “alarming” risk in the sector. Zelman, 40, urged investors to sell. Among her most prescient downgrades: M.D.C. Holdings of Denver, down 42.0 percent since Zelman’s call; KB Home of Los Angeles, down 37.9 percent; and Beazer Homes USA of Atlanta, down 31.3 percent. “While others were trying to justify why earnings could go down slowly,” says one portfolio manager, “Ivy said they would plummet.” Margaret Whelan, who slips a notch to second place, is “knowledgeable and good at identifying trends,” says one client. The UBS analyst acknowledges she was blindsided by the size and starkness of the housing slump. “Everybody was anticipating the downturn,” she says. “I just thought it would be softer.” Despite staying bullish too long on some stocks, Whelan gets credit for her timely call on Furniture Brands International, a St. Louis–based manufacturer she downgraded in July 2005, at $21.25, because of stiff competition from low-cost Asian rivals. Share prices started to slip the following month, and by mid-September were down 10.2 percent, to $19.09. Though he drops from second place to third, Stephen Kim of Citigroup still earns clients’ praise for his “detailed work” on the land inventory held by bigger builders. Kim noted that property acquired in 2002 is more valuable and less costly to have on the books than land acquired in 2005. “It’s very important because companies that have the oldest land are the safest,” says one investor.

Leisure
Robin Farley
UBS
Second Team: David Anders Merrill Lynch
Third Team: Felicia Kantor Hendrix Lehman
Runners-up: Scott Barry Credit Suisse; Timothy Conder A.G. Edwards; Dean Gianoukos J.P. Morgan

It’s five in a row for Robin Farley, who is “the first person I go to for knowledge,” as one money manager puts it. The UBS analyst keeps her eye not only on stocks but also on the weather: In March she downgraded Royal Caribbean Cruises and lowered earnings estimates for Carnival Corp., both of Miami, on the belief that fear of hurricanes would prevent travelers from booking. Through mid-September, Royal Caribbean’s shares were down 15.5 percent since Farley’s call. Although she maintained a buy on Carnival, “her earnings estimates were lower than everybody’s before the stock fell,” explains one client. Carnival’s stock was down 14.9 percent over the same period. In August she impressed investors with her assessment of the impact of Alaska’s new, $50-per-person tax on cruise ship passengers. Farley, 36, reasoned that costs would not be passed along to consumers and would hit earnings by only several pennies a share. Advancing from Runner-up: to second place, David Anders wins praise for his April report, “Jumping Ship to Neutral Territory,” in which he too downgraded Royal Caribbean and Carnival, at $41.07 and $47.03, respectively. The Merrill analyst, who is also on the Second Team: in Gaming & Lodging, upgraded both in June, at $37.83 and $39.84, believing that the lower prices accurately reflected fears of a weather-related downturn in business. As of mid-September, Royal Caribbean stock was holding steady, but Carnival’s had climbed back to $43.81. It was “a damn good call,” says one investor. Dropping to No. 3 after four years in second, Felicia Kantor Hendrix is “thorough and balanced,” says one buy-sider. Customers especially appreciated the Lehman analyst’s bullishness on Vail Resorts of Avon, Colorado, which she upgraded to buy in January. Year-to-date through mid-September, the stock was up 21.5 percent. “That was a stellar recommendation,” says one supporter.

Restaurants
Joseph Buckley
Bear Stearns
Second Team: John Glass CIBC
Third Team: Andrew Barish BofA
Runners-up: John Ivankoe J.P. Morgan; David Palmer UBS

On the first team for a sixth year in a row — and in a landslide — Joseph Buckley, 52, is “easy to work with and has a good nose for the stocks,” says one investor. In September 2005 the Bear Stearns analyst sniffed out opportunities sectorwide, urging clients to overweight because “restaurant stocks had overreacted to concerns about Hurricane Katrina and the related run-up in gasoline prices,” Buckley explains, adding that he thought the earnings performance of the industry would be better than what the market seemed to be expecting at that time. Buckley called on McDonald’s Corp. to outperform, and it did, rising 15.1 percent for the 12 months ended mid-September, compared with 7.5 percent for the S&P 500. Vaulting from Runner-up: to second place, John Glass “is one of the few analysts who does actual research rather than taking what the companies say and inserting the data into his models,” observes one buy-sider. “He’s also not afraid to make negative calls.” The CIBC researcher made a negative call on casual-dining restaurants last December, concluding that in 2006 supply growth would outpace demand for the first time in a decade. “We arrived at this conclusion by doing a thorough, bottom-up analysis of public and private chains within casual dining,” says Glass. Year-to-date through mid-September, the median casual-dining restaurant was down 18.0 percent. Andrew Barish, who falls from second place to third, “has a lot of perspective on the industry,” says one money manager. In May that perspective prompted the San Francisco–based BofA analyst to urge clients not to increase their exposure to casual-dining restaurants, which were losing business to quick-service establishments. “We steered people away from turnaround situations like Applebee’s [International] and OSI Restaurant Partners, which are still trying to turn around,” explains Barish.

Retailing/Broadlines & Department Stores
Deborah Weinswig
Citigroup
Second Team: Christine Augustine Bear Stearns
Third Team: Robert Drbul Lehman
Runners-up: Dana Cohen BofA; Michael Exstein Credit Suisse

Deborah Weinswig claims the top spot for a third consecutive year on the basis of her “wide-ranging perspective on companies,” according to one money manager, and her “overarching view of the sector,” according to another. The Citigroup analyst’s insightful reporting earns raves from clients at a time when her coverage universe has been down; it lost 6.6 percent year-to-date through mid-September, compared with the S&P 500’s 5.7 percent gain. Weinswig, 36, issued a report in April stating that, with department store consolidations thinning the “overcrowded middle,” Kohl’s Corp. of Menomonee Falls, Wisconsin, and J. C. Penney Corp. of Plano, Texas, could not only survive but thrive; she recommended buying both. From the time of her report through mid-September, the stocks had risen 26.1 and 1.8 percent, respectively. Investors also value Weinswig’s conference calls, which “provide access to informative industry contacts,” in the words of one buy-sider. Advancing one place to second, Christine Augustine gets high marks from customers for “excellent model work” and “great stock picking.” Case in point: Dollar General Corp., which the Bear Stearns researcher downgraded from outperform to underperform in January, at $17.82, as rising gas and home-heating prices were putting pressure on low-income consumers. In August she upgraded to peer perform, at $13.39, after a change in top management at the Goodlettsville, Tennessee–

based retailer. By mid-September the share price had inched up to $14.42. Robert Drbul, who debuts in third place, wins praise for keeping “a long-term focus,” says one backer. In February the Lehman analyst, who’s on the Second Team: in Apparel, Footwear & Textiles, highlighted his buy call on Kohl’s, first recommended in November 2002. In mid-September the stock was up 42.8 percent, to $66.85, since Drbul’s most recent recommendation. “He made me nice money,” says one client who heeded Drbul’s advice.

Retailing/Food & Drug Chains
Meredith Adler
Lehman
Second Team: Stephen Chick J.P. Morgan
Third Team: John Heinbockel Goldman Sachs
Runner-up: Neil Currie UBS

Finishing on the first team for a fifth straight time — and by a wide margin, at that — Meredith Adler “is clearly confident in her knowledge and brings gravitas to the job,” observes one money manager. The Lehman analyst earns particular praise for her work on quantifying the impact of drug-industry changes such as the mass movement of seniors to the Medicare Part D plan and the $11 billion to $23 billion worth of prescription brands facing generic competition in 2006 alone. With company forecasts that look out ten years — estimating future demands for and costs of capital, and taking into account off-balance-sheet financing of such items as leases, real estate and tax credits — Adler, 52, makes “solid investment cases” and offers a “uniquely thorough understanding of how companies can create value,” says one supporter. Adler’s overweight recommendation on longtime favorite CVS Corp. of Woonsocket, Rhode Island, “continues to work well for our portfolios,” says another. The stock was up 32.0 percent year-to-date as of the middle of September, compared with a 5.7 percent rise in the S&P 500. Stephen Chick, in second place for a third year in a row, “is not afraid to tell you he’s negative about a company or to avoid a stock.” The J.P. Morgan analyst did just that in January, reiterating his underweight ratings on Whole Foods Market of Austin, Texas, and Supervalu of Eden Prairie, Minnesota; the shares fell by 29.2 and 16.5 percent, respectively, through mid-August, at which point Chick upgraded both to neutral. Clients say returning third-teamer John Heinbockel offers a “good veteran perspective of the industry” and a “good sense of current market sentiment.” In January the Goldman analyst was bullish on Walgreen Co. of Deerfield, Illinois, among others, on the belief that the sharp increase in generics sales would be a growth catalyst. He was right. Year-to-date through the middle of September, Walgreen’s stock had risen 13.4 percent.

Retailing/Hardlines
Alan Rifkin
Lehman
Second Team: Colin McGranahan Sanford C. Bernstein
Third Team: Gary Balter Credit Suisse
Runner-up: Matthew Fassler Goldman Sachs

Alan Rifkin, who takes top honors for the first time, is “by far the most thoughtful analyst in retail,” according to one money manager. Rifkin, 42, second last year, earned an MBA from Syracuse University in 1987 and worked at Thomas Weisel Partners before joining Lehman in 2000. Clients say he makes “excellent sell calls,” such as the ones he made on RadioShack Corp. in June 2005, at $24.84, and Pier 1 Imports in July 2005, at $13.60. By mid-September shares of the Fort Worth, Texas–based retailers had fallen 22.3 and 49.9 percent, respectively. Investors also appreciate his buy calls, such as an early January overweight recommendation on top pick Best Buy Co. Year-to-date through mid-September, shares of the Minneapolis-based electronics retailer had risen 24.2 percent. Though he slips to second, Colin McGranahan thrilled customers with his call on Office Depot. “We made a lot of money because of Colin,” says one buy-sider, and the sentiment is echoed by many others. The Sanford C. Bernstein analyst issued an outperform rating on the Delray Beach, Florida–based retailer in early February, at $32.83, on his belief that cost reductions and gains in efficiency would boost margins. By mid-September the shares had risen 20.9 percent, to $39.70. McGranahan “has done a phenomenal job of navigating a treacherous sector and avoiding value traps,” says one portfolio manager. Advancing from Runner-up: to third, Gary Balter is “in a league of his own,” says one client, for his ability to spot turnaround opportunities. Case in point: OfficeMax, which the Credit Suisse analyst upgraded to outperform in August 2005, at $26.92, when he believed that the Itasca, Illinois–based retailer would be rife for margin improvement under new management. By mid-September the stock had risen 49.0 percent, to $40.11.

Retailing/Specialty Stores
Brian Tunick
J.P. Morgan
Second Team: Stacy Pak Prudential
Third Team: Dana Cohen BofA
Runner-up: Kimberly Greenberger Citigroup

It’s a first-time first-team finish for Brian Tunick, last year’s No. 2. The J.P. Morgan analyst is a “breath of fresh air,” says one portfolio manager. Tunick, 32, is a 1995 graduate of American University with a degree in finance who covered the sector for Bear Stearns before moving to J.P. Morgan in 2002. Clients praise him for continuing to find value in Men’s Wearhouse; shares of the Houston-based retailer were up 24.0 percent year-to-date through mid-September. Tunick also wins praise for standing firm on Abercrombie & Fitch Co. “A lot of analysts wavered when the stock became volatile, but he didn’t,” says one investor. The New Albany, Ohio–based retailer’s stock began the year at $66.00 and went as low as $50.80 in July before rebounding to $68.00 in mid-September. Stacy Pak returns to the Second Team: after a year as Runner-up:, with clients lauding the analyst’s “great insights into the fashion business,” her “eye for spotting trends pretty early” and her “conviction in a space where most competitors’ calls are filled with caveats.” Investors were especially impressed with the Prudential analyst’s coverage of Pacific Sunwear of California, which Pak downgraded in May. She suspected something was amiss when the Anaheim, California–based company switched its guidance from earnings per share to net income growth. Pacific Sun’s shares have since plummeted 34.0 percent, through mid-September. Holding steady in third, Dana Cohen leverages her “incredible Rolodex of contacts” to get the broadest possible perspective, says one investor. In August 2005 the BofA researcher upgraded women’s apparel maker AnnTaylor Stores Corp. to buy, at $25.60, on the belief that new management would have a positive effect. One year later, when shares of the New York–based retailer were up 61.8 percent, Cohen downgraded to neutral.

Tobacco
David Adelman
Morgan Stanley
Second Team: Bonnie Herzog Citigroup
Third Team: Robert Campagnino Prudential
Runner-up: Judy Hong Goldman Sachs

David Adelman, 39, earns his fourth consecutive No. 1 finish for being “the best analyst in the group, hands down,” says one enthusiast. The Morgan Stanley researcher has been bullish on the sector throughout 2006, and tobacco stocks were up 11.3 percent year-to-date through mid-September, compared with 5.7 percent for the S&P 500. Adelman’s top picks have been Carolina Group of New York, which was up 54.0 percent for the 12-month period ended mid-September, and Altria Group, also of New York, which was up 20.1 percent during the same period. “He recommended Carolina Group before the others, and his conviction on the bullish call for the group never wavered, which has helped investors,” says one grateful client. Bonnie Herzog, who takes second place for a third consecutive year, impressed investors with what one buy-sider calls her “strong and timely call” on Reynolds American. The Citigroup researcher upgraded the Winston-Salem, North Carolina, cigarette manufacturer in January, at a split-adjusted price of $48.56, in the belief that the company’s then-pending $3.5 billion acquisition of smokeless tobacco producer Conwood would spur stronger earnings growth. It did. (The Conwood acquisition was completed in May.) By mid-September, Reynolds’ share price had risen 35.1 percent, to $65.60. Holding steady in third place, Robert Campagnino also wins praise for his coverage of Carolina Group. In January the Prudential researcher upgraded the stock to overweight, in anticipation of a benefit to earnings from the settlement of a class-action lawsuit in Florida. By the middle of September, Carolina’s shares were up 34.0 percent.

Electric Utilities
Steven Fleishman
Merrill Lynch
Second Team: Daniel Ford Lehman
Third Team: Gregory Gordon Citigroup

Talk about going out on top: Steven Fleishman, who announced last month that he was retiring as a utilities analyst for Merrill to pursue other interests, finishes in first place for a tenth consecutive year. Fleishman, 37, “works harder than any other analyst I know,” says one money manager. Fleishman maintained his bullish stance this year, focusing on power generators such as TXU Corp. of Dallas. When TXU shares fell to $45.79 in April, down 19.3 percent from their presplit high in October 2005, Fleishman declared them cheap under any scenario. Clients listened, and the shares rebounded to $61.45 in mid-September. Buy-siders also praise Fleishman’s in-depth yet concise written work, such as a July report on tightening power markets and their impact on generators. “Not only does he know the ‘trees,’ but he still can step back and see the ‘forest,’” says one portfolio manager. Hailed as “the smartest guy out there” by one client, Lehman’s Daniel Ford is No. 2 for a sixth straight year. “He really gets the big-picture stuff and has done good work on the cap-ex cycles in the industry and the impact on power market supply,” says one investor. Negative on the sector overall, which was flat in the 12 months ended mid-September, Ford favors companies with exposure to nuclear powers, such as Entergy Corp. of New Orleans, which he recommended at $70.11 in September 2005, after the market overreacted to financial damage from last year’s hurricanes; the shares were trading a year later at $73.38. Citigroup’s Gregory Gordon, repeating in third place, “approaches stocks from a unique angle and does not hesitate to be nonconsensus in his views,” according to one client. Gordon focuses on companies with pricing power, such as Allegheny Energy of Greensburg, Pennsylvania, which he recommended in December 2005 at $29.90; by mid-September the shares had risen 32.0 percent, to $39.47.

Integrated Oil
Neil McMahon
Sanford C. Bernstein
Second Team: Douglas Terreson Morgan Stanley
Third Team: Arjun Narayana Murti Goldman Sachs
Runners-up: Paul Cheng Lehman; Mark Flannery Credit Suisse; Doug Leggate Citigroup; Paul Sankey Deutsche

In a very close finish, Sanford C. Bernstein analyst Neil McMahon, 37, rises one notch to first team. Praised for his “original thinking,” McMahon evaluates oil prices by focusing on unique demand metrics, such as consumer spending as measured by restaurant traffic, rather than relying only on oil-supply inventory data. Last fall the London-based analyst, who earned a Ph.D. in geology and geophysics from the University of Edinburgh in 1996 and was a management consultant at McKinsey & Co. before joining Bernstein in 2002, urged clients to shift into integrated oils rather than pure plays in refining and marketing or exploration and production. McMahon’s top picks include Irving, Texas–based Exxon Mobil Corp., whose shares rose from $54.50 at his late-October 2005 nod to $64.65 in mid-September; and San Ramon, California–based Chevron Corp., whose shares rose from $57.65 at his May recommendation to $61.79 in mid-September. McMahon, says one investor, “has bold calls but backs them up with plenty of insightful analysis and supporting statistics.” Morgan Stanley’s Douglas Terreson, who slips from first team to second, still “has distinguished himself by developing a long-term thesis and sticking to it,” says one money manager. The analyst’s ongoing “Golden Age of Refining” call — beginning in 2002, Terreson predicted that refining margins in 2004–’06 would be the strongest in a generation — has been “deadly accurate and exceptionally well timed,” says another. In February, Terreson projected a rebound in North American refining margins; in the next two months margins rose from $2.39 per barrel to $22.53; shares of independent refining-and-marketing stocks, such as San Antonio–based Valero Energy Corp. rose 65.0 percent for the 12 months ended mid-September. Praised as a good stock-picker and independent thinker, Goldman’s Arjun Narayana Murti takes third for a fourth straight year. Murti’s extreme bullishness — even as others called for moderation — proved right; the sector continued to outperform in 2006, gaining 17.0 percent versus the S&P 500’s 5.7 percent gain.

Natural Gas
Scott Soler
Morgan Stanley
Second Team: Ronald Barone UBS
Third Team: Richard Gross Lehman
Runner-up: Faisel Khan Citigroup

For a third — and perhaps final — consecutive time, Scott Soler takes the top spot in the Natural Gas sector. The 37-year-old analyst left Morgan Stanley in August to join Quantum Energy Partners, a Houston-based private equity group that focuses on exploration and production. Soler, a former auditor, wins high praise for his grasp of the financials of companies and for what one investor call his “highly lucrative recommendations of Williams Cos. and Questar Corp.” Soler put a buy on Tulsa-based Williams in August 2003, at $6.01, and maintained that stance on this “continually undervalued” company until his departure. Through mid-September the shares had skyrocketed to $23.04. Questar, based in Salt Lake City, went on Soler’s buy list in March 2005, at $53.16; shares were trading at $78.96 in mid-September. “He understood the upstream part of the business better than his pipeline-focused peers,” explains one buy-sider. In second for a third consecutive year is UBS’s Ronald Barone, “a true veteran in the business who has been around so long that he knows everything about all the companies,” says one investor. Bullish on much of his group, Barone is widely praised for his timely upgrade of El Paso Corp. in May 2005, at $10.00, on the turnaround efforts of new management; shares of the Houston-based company advanced 34.6 percent, to $13.46, by the middle of September. Richard Gross, who advances one position to No. 3, “has less of a herd mentality” than his peers, says one customer. The Lehman researcher, who has been following the energy business for 30 years, is particularly skilled at culling the non-company-specific issues that affect his sector. Clients also value his trading calls in stocks such as Williams and Questar, which were up 0.6 and 5.2 percent, respectively, year-to-date through mid-September.

Oil & Gas Exploration & Production
Robert Morris
BofA
Second Team: Thomas Driscoll Lehman
Third Team: Benjamin Dell Sanford C. Bernstein
Runners-up: F. Lloyd Byrne Morgan Stanley; William Featherston UBS; Ellen Hannan Bear Stearns

Robert Morris of BofA lands in first place — and by a wide margin — for a fifth year in a row. Morris, 44, is lauded for his frequent and highly detailed company reports; a rare analyst who takes a very long-term view on companies, he often forecasts financials such as production growth and expected returns by oil field to project forward five years. Still bullish on the sector overall, Morris has a bias toward oil-sensitive names such as Occidental Petroleum Corp. of Los Angeles, which he recommended at a split-adjusted $41.81 in December 2005; the shares were up 5.4 percent, to $44.05, in mid-September. “His monthly survey has all the information I’m looking for,” says one portfolio manager. Advancing from Runner-up: to Second Team:, Lehman’s Thomas Driscoll wins praise for having “an excellent understanding” of the markets, says one investor, as well as discipline in his valuations: “He doesn’t bend metrics for the equity,” says another. Driscoll made an early cautious call in February 2006, downgrading the sector to neutral just as the group turned negative; natural-gas spot prices fell nearly 50 percent in the first quarter. Clients also cite Driscoll’s ability to look at valuation in new ways, such as through a debt-adjusted-per-share growth metric he championed in a March report, “What Drives E&P Share Prices?” New to the team this year is Benjamin Dell of Sanford C. Bernstein, who claims third place. He has wowed clients with what one terms “impressive and original analytical work,” including an early downgrade of the group to neutral last October, when the average composite spot price for gas was $15.00 per million BTU; as of mid-September the price had fallen to $4.60. Dell earned his wings under Bernstein’s Neil McMahon, first-teamer in Integrated Oil, and has industry experience as an exploration geologist with BP.

Oil Services & Equipment
James Crandell
Lehman
Second Team: James Stone UBS
Third Team: James Wicklund BofA
Runners-up: Michael LaMotte J.P. Morgan; Ole Slorer Morgan Stanley

In a very close finish, Lehman’s James Crandell rises one notch to first. Crandell, 53, “is thorough, objective and very accessible,” says one money manager.” He has, adds another, “been through enough cycles to be able to put information into context.” Crandell was one of the first, in August 2004, to foresee an extended drilling cycle and highlight the attractiveness of Houston-based Weatherford International — which provides drilling equipment and services — based on accelerating revenue and earnings growth from international expansion. The shares rose 10.6 percent in the 12 months ended mid-September, while the sector was up 8.4 percent over that period. The analyst also reiterated his bullish stance on equipment producer National Oilwell Varco of Houston, first recommended in February 2004 at $28.99. By mid-September 2006, the price had more than doubled, to $59.16. Though he slips one rung to second, James Stone of UBS “does a great job of describing how fundamentals within and outside his industry impact his companies,” according to one investor. Stone has been bullish on the sector since June 2004, and last year focused investors’ attention on top picks Cameron International Corp., a Houston-based company whose shares rose 24.2 percent, from $35.92 to $44.60, over the 12 months ended mid-September. James Wicklund of BofA returns to the Third Team:, the position he held in 2004 before finishing unranked last year. “Jim is a walking encyclopedia of oil-services knowledge, with the added benefit of a colorful personality,” says one satisfied buy-sider. “He knows the technology and the businesses, but he also knows a great deal about the people running the companies.” Wicklund recommended Schlumberger, a New York–headquartered oilfield services company, in October 2005, at a split-adjusted $39.40, calling it “the poster child for the future,” with strong international growth and the best drilling technology in the business; as of mid-September, the shares had jumped to $56.28.

Banks/Large-Cap
Lori Appelbaum
Goldman Sachs
Second Team: Jason Goldberg Lehman
Third Team: John McDonald BofA
Runner-up: Michael Mayo Prudential

Buy big banks. That’s what Lori Appelbaum told clients as interest rates rose and the real estate market cooled in 2006, and that advice helped the Goldman analyst take first-team honors for an eighth year in a row. Drilling into bank records and talking to managers, Appelbaum concluded that most big banks would avoid major writeoffs, thanks to good loan quality and reserves. “She has very useful company and industry financial data, especially regarding loan quality,” says one investor. Year-to-date through mid-September, diversified bank stocks were up 8.5 percent, while the S&P 500 rose 5.7 percent. Several clients lauded her timely pick of Charlotte, North Carolina–based Bank of America Corp., which Appelbaum named a hot buy in July, at $48.61, anticipating strong results from its expanding investment banking business. The stock had climbed 6.1 percent, to $51.58, in five weeks through mid-August, when she downgraded to neutral. “Great call on Bank of America,” says one client. Moving up one notch to the Second Team:, Lehman’s Jason Goldberg earns high marks as an analyst with a knack for spotting the catalysts that move bank stocks. (He also tops the Banks/Midcap category.) “His detailed reports are valuable resources for anyone looking at these stocks,” says one investor. In February, Goldberg named New York’s JPMorgan Chase & Co. one of his top picks for 2006 on the expectation of above-average earnings growth; as of mid-September the shares had risen 14.5 percent from the date of his call. A Runner-up: last year, John McDonald of BofA rises to third place for his cautious approach to the sector. McDonald downgraded New York–based Citigroup from buy to neutral in early January, reasoning that it would underperform other banks as it made the transition from an acquisition strategy to one of internal growth. Citigroup dropped 5.9 percent the following month from its $46.90 price.

Banks/Midcap
Jason Goldberg
Lehman
Second Team: Kenneth Usdin BofA
Third Team: Heather Wolf Merrill Lynch
Runners-up: Lori Appelbaum Goldman Sachs; Keith Horowitz Citigroup; Kevin St. Pierre Sanford C. Bernstein

Jason Goldberg, 33, who takes top honors for a fifth straight year, has a knack for sniffing out takeover talk. In January the Lehman analyst (who ranks second in Banks/Large-Cap) accurately predicted a lackluster year for midcaps but offered a smart money play, identifying North Fork Bancorp. of Melville, New York, and Compass Bancshares of Birmingham, Alabama, as potential takeover targets. Capital One Financial Corp. of McLean, Virginia, agreed to snatch up North Fork in March for $31.18 a share, 18.0 percent above its January price. Compass remains independent, but persistent merger rumors helped move the stock up 22.7 percent from Goldberg’s call through mid-September. “Jason is great at providing a lot of detail and perspective on issues affecting the banks in his coverage,” says one satisfied buy-sider. Debuting on the Second Team: after only his second year covering midcap banks, Kenneth Usdin of BofA impresses clients with his signature report, a concise quarterly review that offers a one-paragraph take on each of the eight banks he covers. “Ken brings it together to help you make decisions quicker,” notes one portfolio manager. Usdin picked Marshall & Ilsley Corp. as a top performer in early January, foreseeing a bump in income from the Milwaukee-based bank’s data processing subsidiary. The stock rose from $42.85 to $48.30 by mid-September, up 12.7 percent, while the S&P 500 gained just 4.0 percent. Merrill’s Heather Wolf advances from Runner-up: to No. 3 for what one client calls her “take-no-prisoners march” through the midcap banks sector. Wolf downgraded stocks over the past year until six of the 14 she covers were sells. Though some of her sells have yet to pan out, one was a direct hit: UnionBanCal Corp., the San Francisco–

based holding company for Union Bank of California, which she downgraded in June at $65.83, had dropped 7.1 percent, to $61.47, by mid-September.

Brokers & Asset Managers
Guy Moszkowski
Merrill Lynch
Second Team: Glenn Schorr UBS
Third Team: Charles (Brad) Hintz Sanford C. Bernstein

Guy Moszkowski, 48, takes first-team honors for a third straight year, displaying a depth of knowledge that clients say is hard is beat. “Guy is the dean of the brokerage industry,” says one investor. “He has the best knowledge and the best perspective.” In May 2005, when Goldman Sachs Group and Lehman Brothers Holdings slipped, the Merrill analyst resisted downgrading and instead reiterated his buy rating, which he has maintained. The sector in general and those two stocks in particular were strong enough to rebound quickly, he reasoned. Since hitting bottom at $94.48 in late May 2005, Goldman was up 72.2 percent through mid-September; Lehman gained 65.3 percent from its split-adjusted low point of $43.32 in mid-May 2005. Glenn Schorr, who captures the second-team spot for a third consecutive year, “does a very good job of leveraging people at his firm, and it shows with him having a deeper understanding of industry issues,” says one buy-sider. The UBS analyst’s October 2005 country-by-country report on Asia assessed population, incomes and regulatory issues and concluded that adept U.S. brokerages could double their business in the region, with Goldman, which outperforms its peers in generating revenue from equity underwriting, the most likely ultimate winner. Schorr upgraded Goldman to buy in mid-May at $147.85; the stock was up 10.1 percent as of mid-September. In third place for a fourth year running, Charles (Brad) Hintz of Sanford C. Bernstein continues to enjoy support from clients despite being fined $200,000 in February by NASD in a case that revolved around trades he made in companies he covered as well as stock options he carried over from a previous job at one of the companies he now covers. Hintz admitted no wrongdoing in the settlement. One of his top picks this year has been Merrill Lynch & Co., up 15.1 percent year-to-date through mid-September.

Insurance/Life
Andrew Kligerman
UBS
Second Team: Colin Devine Citigroup
Third Team: Eric Berg Lehman
Runners-up: Jamminder (Jimmy) Bhullar J.P. Morgan; Nigel Dally Morgan Stanley; Thomas G. Gallagher Credit Suisse; Edward Spehar Merrill Lynch

After four years on the Second Team:, Andrew Kligerman captures first place, garnering praise for his “extremely detailed approach — not only in company-specific research, but also industry research as a whole,” says one portfolio manager. The UBS analyst, who earned an MBA from Columbia Business School in 1998, was an insurance analyst for Bear Stearns before joining UBS in 2003. He impressed clients with his coverage of Ameriprise Financial. In October 2005, after the Minneapolis-based insurance and asset management firm was spun off from American Express Co., Kligerman broke with consensus and issued a buy rating, at $34.34, though he warned investors that share prices would probably drop in the first few weeks. Shares hit bottom in mid-October, at $32.06, before steadily climbing higher; as of mid-September, Ameriprise shares had risen 36.3 percent, to $46.80. Kligerman, 43, says the former American Express Financial Advisors remains undervalued. Though he slips to second place after six years in first, Colin Devine “has a unique combination of street smarts and industry contacts, mixed with a deep understanding of the arcane industry of life insurance,” observes one client. “This leads to trustworthy and powerful calls in the space.” One such call was Principal Financial Group. Devine upgraded the Des Moines, Iowa–based asset management firm in January, at $47.29, because “it has the strongest growth rate of any company we cover,” Devine says. Year-to-date through mid-September, the stock was up 13.2 percent, to $53.52. Eric Berg repeats in third place. Customers say they like the Lehman analyst’s in-depth thinking and his habit of looking ahead to spot industry issues before others notice. Case in point: MetLife. Taking advantage of new regulations requiring the disclosure of assets held in insurance companies’ equity portfolios, Berg concluded that the New York–based insurer’s guidance “was way too conservative.” He upgraded the stock in May, at $53.19; by mid-September the shares had risen to $56.00.

Insurance/Nonlife
Todd Bault
Sanford C. Bernstein
Second Team: Jay Cohen Merrill Lynch
Third Team: Jay Gelb Lehman
Runners-up: Charles Gates Credit Suisse; Alain Karaoglan Deutsche; Brian Meredith BofA

Todd Bault, 41, nabs a first-team finish for a third consecutive year. Hurricanes were the big news in property/casualty insurance, and two of the Sanford C. Bernstein analyst’s most successful calls were influenced by last year’s destructive weather. In October 2005, as the storm season was winding down, Bault recommended Bermuda-based reinsurer RenaissanceRe Holdings, at $39.88, and Chubb Corp. of Warren, New Jersey, at a split-adjusted $41.89, because of their reduced risk profiles. By August, when he downgraded the stocks to neutral, share prices had risen 19.9 and 14.4 percent, respectively, while the broad market was up 3.1 percent. “They were downgraded as part of my overall cycle call,” Bault explains. “As the market anticipates that property pricing will not be up as much next year, we forecast that the stocks could come under valuation pressure.” Hurricanes also influenced the recommendations of Jay Cohen, who returns in second place. The Merrill analyst, praised by investors for his “responsiveness” and “willingness to help,” issued a buy recommendation on Allstate Corp. of Northbrook, Illinois, in January 2005, at $48.98. He downgraded to neutral in July, at $60.11, as the hurricane season was gathering momentum, then upgraded to buy in October, post-Katrina and Rita, at $53.55. By mid-September, Allstate’s shares had risen 12.3 percent, to $60.12, since Cohen’s upgrade. Advancing from Runner-up: to third place, Jay Gelb is “first and foremost an actual insurance guy,” says one money manager. “He came from the industry and really knows the nuts and bolts of products, pricing and the process.” The Lehman analyst also made a post-Katrina buy call on Allstate, “based on my view that the market was overly concerned about losses from hurricanes.” For the 12-month period ended in mid-September, Allstate’s shares were up 12.9 percent.

Mortgage Finance
Bruce Harting
Lehman
Second Team: Eric Wasserstrom UBS
Third Team: Kenneth Posner Morgan Stanley
Runners-up: Bradley Ball Citigroup; David Hochstim Bear Stearns; Moshe Orenbuch Credit Suisse

Interest rates were up, sales and appreciation were down, but Bruce Harting didn’t move; he finishes on the first team for a second year in a row. (He also captures first place in Specialty Finance and is the only analyst to win two sectors this year.) “He doesn’t let short-term volatility distract him from the right conclusions,” says one investor. Case in point: Radian Group. In October 2005 the Lehman analyst said the Philadelphia-based credit-protection provider’s stock was heading up; it promptly lost 3.7 percent over the next two days. But then the more favorable economics that Harting predicted kicked in, and Radian bounced. By mid-September the stock had risen 21.9 percent. Harting, 48, scored a similar coup with longtime favorite Golden West Financial Corp., which he upgraded to a top pick in January. Shares of the Oakland, California–based company were already on the rise when Wachovia Corp. announced a takeover in May for $25.5 billion. By mid-September the stock was at $75.95, a 15.5 percent increase for the year, while the sector was up 3.6 percent over that period. Eric Wasserstrom vaults from Runner-up: to second place, thanks in part to his client services “Eric is always available and returns calls and e-mails promptly,” says one buy-sider. Though cautious on the sector overall, the UBS analyst issued a buy recommendation in December 2005 on PMI Group, at $40.47; shares of the Walnut Creek, California–based surety and title insurance provider hit $46.67 in April, a 15.3 percent increase, before slipping back to $44.69 by mid-September. “He’s been more cautious on the mortgage space than other analysts, and he’s been right,” says one money manager. For a fourth year in a row, Kenneth Posner of Morgan Stanley captures third place, winning praise for comprehensive company and industry reports. “Ken consistently provides a unique analytical perspective to his coverage, and his industry pieces serve as a very useful reference,” says one investor.

REITs
Jonathan Litt & team
Citigroup
Second Team: Ross Smotrich & team Bear Stearns
Third Team: Ross Nussbaum & team BofA
Runners-up: David Harris & team Lehman; Stephen Sakwa & team Merrill Lynch

Jonathan Litt leads the Citigroup team to a fourth consecutive first-team finish for having “breadth of coverage that is among the best on Wall Street,” says one money manager. Litt, 42, and his ten-member team impressed investors last year with reports in March and April on real estate held by U.S. corporations in the S&P 500 and the Russell 2000 index. Undervalued companies with substantial property holdings are attractive acquisition targets for private equity firms looking for real estate investment but wary of the housing market. Of the 103 companies the Citigroup team cited in 2005, 14 have since been acquired through merger or acquisition. Rising one notch to second place, Ross Smotrich and his team at Bear Stearns win praise from money managers for being both “timely” and “accessible.” In January the five-member crew reiterated its positive outlook on real estate investment trusts, based on increased liquidity and rising demand. In multifamily, Smotrich recommended Camden Property Trust of Houston, up 35.8 percent year-to-date through mid-September, and Archstone-Smith Trust of Englewood, Colorado, up 34.7 percent. Ross Nussbaum and his seven-member BofA team, which debuts in third place, win praise for their timely coverage of Mills Corp. The team urged investors to sell their shares of the Arlington, Virginia–based trust in March, at $36.05, on the belief that the value of the real estate was well below where the stock was trading. In August, when the price had fallen to $12.94, the team upgraded to neutral, arguing that the lower price more accurately reflected the asset’s worth. By mid-September the stock had climbed back to $17.63. “He was one of the first to go negative on Mills, and he was correct in a big way,” says one grateful money manager.

Specialty Finance
Bruce Harting
Lehman
Second Team: Howard Mason Sanford C. Bernstein
Third Team: Moshe Orenbuch Credit Suisse
Runners-up: David Hochstim Bear Stearns; Eric Wasserstrom UBS

After three years on the Second Team:, Bruce Harting moves up to first, thanks in part to the strength of his industry contacts and insight. (He also finishes first in Mortgage Finance.) “He knows managements and their strategic goals better than anyone,” says one portfolio manager. In evaluating CIT Group, which fell 5.6 percent in the first half of 2005, the Lehman analyst saw an opportunity for loan growth and better overall performance after the New York–based consumer finance company unloaded noncore businesses. He rated the stock a buy in July 2005, at $43.39; by the time he downgraded in April, it had risen 27.9 percent, to $55.49, while the S&P 500 rose 7.9 percent during the same period. Harting, 48, also receives high marks for his analysis of the impact of a lawsuit that requires Visa USA and MasterCard International to pay a combined $3.0 billion to settle a fee dispute with merchants. Howard Mason, who slips to the Second Team: after three years in first, retains a loyal following of clients who eagerly await his reports. The Sanford C. Bernstein analyst “highlights interesting issues and analyzes them in intricate and intellectual ways,” says one investor. Although a number of analysts upgraded American Express Co. over the past year, Mason stuck with his January downgrade, in which he reasoned that the spin-off of the company’s financial advising business, Ameriprise, would not be enough to boost the bottom line. Year-to-date through the middle of September, Amex shares gained 5.2 percent. Moshe Orenbuch claims the third-team spot for a fourth consecutive year, thanks in part to some well-timed stock picks. He caught the swing in CIT perfectly, touting the stock through its rise in early 2006, then downgrading it in April at its peak. Since then, CIT’s shares dropped 14.7 percent through the middle of September.

Biotechnology
Mark Schoenebaum
Bear Stearns
Second Team: Geoffrey Porges Sanford C. Bernstein
Third Team: Maykin Ho Goldman Sachs
Runners-up: Eric Ende Merrill Lynch; Steven Harr Morgan Stanley; Craig Parker Lehman; Eric Schmidt Cowen; Elise Wang Citigroup

Mark Schoenebaum repeats on the first team after weathering what he calls “a sort of perfect storm” of earnings disappointments, brewing competition among traditional pharmaceuticals companies and manufacturers of generic rivals, and questions surrounding options accounting. During a difficult time the Bear Stearns analyst “leveled with us and gave us back our sense of perspective,” says one portfolio manager. Schoenebaum, 33, also helped investors turn one of the worst biotechnology blowups of last year into a buying opportunity. In August 2005 he recommended Amylin Pharmaceuticals of San Diego when its exenatide long-acting release diabetes therapy delivered encouraging early results. Amylin’s stock, which spent most of 2005 in decline after earlier diabetes treatments failed to win Food and Drug Administration approval, has been rising. Year-to-date through mid-September, shares were up 11 percent; the sector was down 4.7 percent. Leaping from Runner-up: to second place, Geoffrey Porges brings clients the benefit of his medical training, as well as his professional experience as COO of London-based technology licensing firm BTG. The Sanford C. Bernstein analyst wins praise for “reports that are very thorough and informative,” in the words of one money manager. His most popular call: longtime favorite Vertex Pharmaceuticals. Porges reiterated his earlier outperform call on the Cambridge, Massachusetts, antiviral drug developer in June 2005, at $13.55, on the rising prospects for the company’s VX-950 treatment for hepatitis C; by mid-September 2006 the stock had shot up 143.4 percent, to $32.98. Maykin Ho slips one place to third, but she continues to impress investors as “probably the single most comprehensive analyst on the Street,” as one says. In December the Goldman analyst raised eyebrows for going neutral on the sector as a whole and underscoring the long-term focus of even her outperform recommendations, such as Gilead Sciences. Ho reaffirmed the Foster City, California, AIDS drug maker, at $54.07. By mid-September, Gilead had risen 19.8 percent, to $64.75.

Health Care Facilities
Adam Feinstein
Lehman
Second Team: Kenneth Weakley UBS
Third Team: Gary Taylor BofA

Adam Feinstein, 34, holds on to the top spot for “missing nothing,” one client says, in his efforts to keep investors out of trouble: “comprehensive” and “thorough” come up a lot when money managers describe his work. The Lehman analyst surprised investors last October by downgrading his entire sector to neutral, citing rising debt and disappointing patient-admission levels; members of his 24-stock universe subsequently fell an average of 7.5 percent through mid-September, compared with a 7.6 percent gain for the S&P 500. Feinstein impressed buy-siders with his June prediction that at least one hospital group would soon accept an LBO bid. At the time, Nashville-based HCA, the nation’s biggest hospital operator, was trading at $42.60; four weeks later, Kohlberg Kravis Roberts & Co., a private equity firm, offered $51 a share, or $33 billion, to take the company private. Kenneth Weakley repeats at No. 2, as clients praise what one dubs his “prophetic and admirably cautious” view. The UBS analyst issued a much-appreciated report in May 2005 noting that hospital insiders were selling their shares and that the sector overall was in decline. “He’s been great at keeping us grounded,” says a grateful customer. Weakley did see a glimmer of hope in longtime favorite Community Health Systems, which he first recommended in May 2004, at $25.87. Over the 12 months ended mid-September, shares of the Brentwood, Tennessee–based company were down 2.1 percent, to $37.30, but Weakley believes there is still potential for growth. No. 3 for a third year running, Gary Taylor identifies opportunities for clients by looking beyond his coverage area to companies that either sell equipment to hospitals or compete directly with them. Investors were grateful for the BofA analyst’s “more trading-oriented” focus, such as a buy recommendation on Intuitive Surgical in June 2005, at $48.45. By mid-September 2006 shares of the Sunnyvale, California, manufacturer had more than doubled, to $99.38.

Health Care Technology & Distribution
Lawrence Marsh
Lehman
Second Team: Robert Willoughby BofA
Third Team: Lisa Gill J.P. Morgan
Runners-up: Thomas Gallucci Merrill Lynch; Ricky Goldwasser UBS; Christopher McFadden Goldman Sachs

Lawrence Marsh, in first place for a third year in a row and the sixth time in seven years, is “truly an institution,” says one money manager. “Virtually no one in the sector offers the background and knowledge base that he possesses.” Supporters credit the Lehman analyst with “great calls,” such as his November 2005 buy recommendation on Fisher Scientific International. Marsh, 46, believed the Hampton, New Hampshire–based surgical equipment developer was undervalued at $56.64, and he repeated that view three times over the next six months. In May the company agreed to merge with Thermo Electron Corp., a Waltham, Massachusetts–based developer of analytical instruments, for the equivalent of $78.90 a share, generating a gain of 39.3 percent over the period. On the distribution side, Marsh identified Priority Healthcare Corp. of Lake Mary, Florida, as a potential M&A candidate in November 2004, at $18.65; in July 2005, Express Scripts, a pharmacy management company based in Maryland Heights, Missouri, announced that it would buy the niche dispensary at $28 a share. Robert Willoughby repeats in second place for demonstrating a “deep understanding of the varied motivations for investing in the space,” according to one client. The BofA analyst’s model portfolio of five top picks outperformed the S&P 500 by an average of 7.0 percentage points year-to-date through mid-September. For example, Laboratory Corp. of America, a Burlington, North Carolina–based developer of specialty tests, was up 24.1 percent year-to-date. Lisa Gill advances from Runner-up: to the Third Team:, winning praise from customers because “she has the best understanding of pharmacy benefit managers on the Street,” says one. The J.P. Morgan analyst upgraded MedcoHealth Solutions, a Franklin Lakes, New Jersey, provider of pharmacy benefit programs, in November 2005, at $52.47. By mid-September it had risen 18.1 percent, to $61.96.

Managed Care
John Rex
Bear Stearns
Second Team: Joshua Raskin Lehman
Third Team: Charles Boorady Citigroup

“There are times when we feel that every report he writes is taking us closer to a sort of promised land,” says one money manager of John Rex, first-team finisher for a third year in a row. Bearish on the sector since the start of the year because of anxiety over the latest wave of Medicare privatization, the Bear Stearns analyst advised clients to steer clear of bellwether Cigna Corp., believing it would lead a downward march. Rex, 44, was right. Shares of the Philadelphia-based employee health plan provider started to stumble in April; by mid-June they had sunk to $89.36, 32.9 percent down from their March high of $133.19. Repeating in second place, Joshua Raskin exhibits “extraordinary acumen for balancing the scenarios in Washington” as he scrutinizes Medicare policy, says one client. The Lehman researcher says a push for lower costs will come from the government as private health providers take on a bigger share of Medicare business; in the meantime, Raskin is not afraid to point out shorter-term opportunities when he finds them. He raised his outlook on Magellan Health Services in March 2005, at $34.92, on the Farmington, Connecticut–based company’s efforts to mold its members’ behavior into more-healthy (and thus less expensive) patterns. By mid-September 2006 the shares had risen 20.9 percent, to $41.97. Charles Boorady repeats in third on the strength of what clients call a “very in-depth look at tough issues” and a “correctly bullish outlook.” The Citigroup analyst recommended health insurer Anthem in late 2004 (shortly before its acquisition of WellPoint Health Networks) and advised clients against selling shares in the Indianapolis-based benefits company even as HMOs were losing ground. After touching an April low of $67.50, the stock recovered and was trading at $78.63 in mid-September, up 6.5 percent during the preceding 12 months.

Medical Supplies & Devices
Robert Hopkins
Lehman
Second Team: Michael Weinstein J.P. Morgan
Third Team: Glenn Reicin Morgan Stanley
Runner-up: Frederick Wise Bear Stearns

Robert Hopkins of Lehman makes his first appearance on the first team thanks to a “healthy cynicism” about the growth prospects of orthopedic-product manufacturers. “He’s very open that his sector doesn’t offer a lot of value,” says one money manager. An MBA graduate of Columbia Business School in 1995, Hopkins started his analytic career covering HMO stocks at Donaldson, Lufkin & Jenrette (now part of Credit Suisse) almost a decade ago; he shifted to devices in 1999 and to Lehman in 2002. Hopkins, 39, initiated coverage of CR Bard in April, at $68.76, with an outperform rating on what he saw as one of the few moneymaking opportunities in the sector. Shares of the Murray Hill, New Jersey, broadline medical supplies maker had risen 10.8 percent, to $76.20, by the middle of September. After three years on the first team, Michael Weinstein slips to No. 2. The J.P. Morgan analyst spent a lot of time last year recommending “defensive types of names,” recalls one money manager. In January, Weinstein upgraded Abbott Laboratories and Baxter International. Both the Abbott Park, Illinois, company and the Deerfield, Illinois, business handily outperformed the broad market, up 19.3 and 18.8 percent, respectively, by mid-September. Returning to the Third Team: after a year as Runner-up:, Glenn Reicin says he spent much of the past year working on the collapsing valuations in the sector. In July the Morgan Stanley analyst got widespread attention for pointing out that formerly richly valued orthopedic and cardio companies such as Biomet and Boston Scientific Corp. were still churning out substantial cash and as such might be ripe for leveraged buyouts. “The LBO report got me thinking,” says one client. “There’s still a story to be told here.”

Pharmaceuticals/Major
Richard Evans
Sanford C. Bernstein
Second Team: David Risinger Merrill Lynch
Third Team: C. Anthony Butler Lehman
Runners-up: Timothy Anderson Prudential; Jami Rubin Morgan Stanley

In a tight finish, Richard Evans leaps from Runner-up: to the first team. “His reports are by far better than any other research I have read,” says one enthusiastic investor. Evans, 44, who earned a master’s degree from the Yale School of Management in 1991, spent seven years as a manager at Swiss giant Roche before going to the Street in 1998. The Sanford C. Bernstein analyst recommended Pfizer in October 2005, telling clients that the New York–based company would be undervalued at $20.72 even if it were to lose the patent on its blockbuster cholesterol-lowering drug, Lipitor. (The patent has been challenged in court by Indian generic drug maker Ranbaxy Laboratories.) In February, after the shares ran up 21.7 percent, to $25.21, he downgraded them to market perform. Moving up a notch to second, David Risinger offers similarly trading-oriented recommendations, such as his March downgrade of Eli Lilly & Co. The Merrill analyst noted that the Indianapolis-based company was struggling to find market share for its antidepressant Cymbalta, so he cut his rating to neutral. By mid-September the share price had fallen 5.5 percent. “He has excellent industry knowledge and takes the long view,” says one money manager. Though he slips from first place to third, C. Anthony Butler wins praise for being “the most unfailingly responsive of all the analysts I deal with,” says one buy-sider. The Lehman analyst remains bullish on Merck & Co. despite ongoing litigation and potential liability associated with the Whitehouse Station, New Jersey–based company’s arthritis drug Vioxx. Merck has posted the best performance of any member of the Big Pharma group, up 49.4 percent for the year ended mid-September, compared with an 8.7 percent gain for the MSCI pharmaceuticals index during the same period.

Pharmaceuticals/Specialty
David Maris
BofA
Second Team: Gregory Gilbert Merrill Lynch
Third Team: Richard Silver Lehman

David Maris, 38, earns his sixth consecutive first-team finish for having the courage to match his convictions. In January, when the rest of the Street was shrugging off a warning from Bausch & Lomb that it would be restating results from a few of its overseas units, the BofA analyst started digging into the company’s potential for further accounting surprises and urged his clients to dump their shares of the Rochester, New York–based contact lens maker. “He had the most negative opinion on Bausch & Lomb,” one client remembers. News flow and Maris’s outlook became more “colorfully blunt” after the company pulled a product from store shelves in April. In May he warned of “sizable” collateral damage to the company’s entire consumer line and, eventually, a cash flow crunch and possible credit squeeze. The stock shed 31.0 percent of its value year-to-date through the middle of September. “I wish other analysts had this level of conviction,” says one grateful client. Gregory Gilbert, who captures second place for a third year in a row, gratifies investors with what one calls his “quietly effective style.” In September 2005 the Merrill analyst recommended Andrx Corp., at $14.97, because the Davie, Florida, generic drugmaker’s manufacturing dispute with the FDA had made it unappealing to investors and he thought the reaction was overblown. The stock quickly regained its footing, rising 60.3 percent to hit a plateau at about $24.00 in mid-March, near Gilbert’s $25.00 target. Holding steady at No. 3 for a third straight year, Richard Silver is a “tireless thinker with an extraordinarily well reasoned take on the industry,” says one money manager. In May 2005 the Lehman analyst recommended Nektar Therapeutics of San Carlos, California, at $15.64, asserting that the share price did not adequately reflect the blockbuster potential of its inhalable insulin, Exubera. Over the next 12 months, the stock rose 47.7 percent, to $23.10, at which point Silver downgraded to neutral because the product’s market debut was delayed.

Cable & Satellite
Craig Moffett
Sanford C. Bernstein
Second Team: Aryeh Bourkoff UBS
Third Team: Douglas Shapiro BofA
Runners-up: Richard Bilotti Morgan Stanley; Vijay Jayant Lehman

Craig Moffett, who advances from second place to take top honors, impresses investors with his “insider’s view of the telecom industry,” as one portfolio manager puts it. Moffett, 44, who earned an MBA from Harvard Business School in 1989, spent 11 years as a telecommunications consultant at Boston Consulting Group before joining Sanford C. Bernstein in 2002. During the past year the analyst broke with consensus, which has been generally bearish on the sector, and started emphasizing the growing demand for high-speed applications. In April he highlighted his call to buy Comcast Corp., at $26.38. By the middle of September, shares of the Philadelphia-based goliath had risen 30.6 percent, to $34.46, while the S&P 500’s gain during the same period was 1.9 percent. “For a long-term investor, Craig’s perspective is invaluable,” says one supporter. Though he drops from first place to second, Aryeh Bourkoff continues to receive high marks for covering a wider range of companies than his competitors, which gives the UBS analyst “a more robust view of the big picture,” explains one buy-sider. Bourkoff is another Comcast convert. He upgraded the stock to buy in October 2005, at $27.30, as the company began to roll out its voice over Internet protocol services; through the middle of September, the shares rose 26.7 percent. Moving from Runner-up: to the Third Team:, Douglas Shapiro has been “one of the go-to analysts this past year,” says one investor. Shapiro thought the competitive dynamic in cable would be more benign than the Street feared, and he was right. The BofA researcher began aggressively recommending DirecTV Group last December, at $13.63, on the belief that management would begin to buy back stock, which it did. By the middle of September, shares of the El Segundo, California–based company’s stock had climbed 37.4 percent, to $18.73.

Entertainment
Michael Nathanson
Sanford C. Bernstein
Second Team: William Drewry Credit Suisse
Third Team: Anthony Noto Goldman Sachs
Runners-up: Richard Bilotti Morgan Stanley; Jessica Reif Cohen Merrill Lynch; Spencer Wang Bear Stearns

Previously unranked Michael Nathanson leaps onto the first team only a year and a half after launching coverage of the Entertainment sector for Sanford C. Bernstein. Nathanson, 43, who earned a master’s degree in public and private management from the Yale School of Management in 1990, worked at Time Warner’s Time division before joining Sanford C. Bernstein in 1998. The analyst, who also ranks third in Radio & TV Broadcasting, “provides a single perspective across a much broader space compared to his peers,” says one investor. Nathanson’s top pick: News Corp. He initiated coverage with an outperform rating in March 2005, at $16.33, owing, he says, to its “unique position of possessing the fastest long-term growth at the lowest earnings multiple.” He remained bullish even when the stock dipped to $15.95 that September over cost concerns stemming from Internet acquisitions. Year-to-date through mid-September, the New York–based giant’s shares had risen 21.9 percent, to $20.14. Moving up a notch to second, William Drewry, with a daunting breadth of coverage, “is a kind of one-stop shop,” as one buy-sider puts it. Customers especially appreciated the Credit Suisse researcher’s bullish stance on Walt Disney Co.’s acquisition of Pixar when other analysts were expressing skepticism. In early October, Drewry recommended the Burbank, California–based studio at $23.84 and Pixar at $44.52. The deal was announced in January and finalized in May, by which time Pixar’s stock had risen to $67.69. In mid-September, Disney’s shares were trading at $30.31. Anthony Noto, a first-team finisher in Internet, captures third place in Entertainment after being unranked in this sector last year. The Goldman analyst wins praise for his “timely updates” and for being “well versed in the key issues,” according to one money manager. Noto has been bullish on Disney, a longtime favorite, since September 2003. In 2006 through mid-September, the stock had risen 26.4 percent.

Publishing & Advertising Agencies
Craig Huber
Lehman
Second Team: Alexia Quadrani Bear Stearns
Third Team: Lauren Rich Fine Merrill Lynch

Craig Huber vaults from Runner-up: to the first team for being a straight shooter. The Lehman analyst “took the most aggressive approach in his negative view of the newspaper space,” explains one portfolio manager. “Unlike most other sell-side analysts, he was unafraid to come out and speak negatively about the fundamentals of newspaper companies, which are quite bad.” Huber, 39, who earned an MBA from the University of California, Davis, Graduate School of Management in 1992, covered the publishing sector at Morgan Stanley for nearly ten years before moving to Lehman in mid-2004. He initiated coverage of newspaper stocks a few months later, in October, with a sell rating on all ten papers he followed. From the time of his downgrade through mid-September 2006, the stocks in Huber’s group declined 28.0 percent, on average, while the S&P 500 rose 17.4 percent. On the Second Team: for a third consecutive year, Alexia Quadrani wins praise for her realism. The Bear Stearns researcher “has great drill-down on inputs that matter in valuing the space,” says one client. In February, Quadrani issued an outperform rating on Omnicom Group, at $81.18, on signs that the European ad market was improving. By the middle of September, the New York–based advertising agency’s shares had risen to $92.07. After three years on the first team, Lauren Rich Fine drops to third. “Her knowledge of the publishing players’ strengths and weaknesses is unparalleled,” asserts one buy-sider. The Merrill analyst also recommended Omnicom in February; customers who followed her advice enjoyed the shares’ gain of 11.7 percent by mid-September. “She is an experienced voice of reason,” says one happy investor.

Radio & TV Broadcasting
Victor Miller IV
Bear Stearns
Second Team: Jonathan Jacoby BofA
Third Team: Michael Nathanson Sanford C. Bernstein
Runners-up: Anthony DiClemente Lehman; Laraine Mancini Merrill Lynch; Mark Wienkes Goldman Sachs

For a fifth year in a row — and by a wide margin — Victor Miller IV finishes on the first team. The Bear Stearns analyst wins praise for having “the best industry contacts and relationships,” according to one money manager. Miller, 42, highlighted Univision Communications in October 2005, at $24.70, suggesting that the Los Angeles–based Spanish-language media company might soon be on the auction block. In February the company announced it was up for sale. A consortium of private equity firms made a $12.3 billion offer that was approved by a majority of shareholders last month; the deal still must win regulatory approval. From Miller’s recommendation through mid-September, Univision shares rose 41.2 percent, to $34.88. Moving up one notch to the Second Team:, Jonathan Jacoby shows “unflinching honesty,” as one customer says, and helps keep investors out of trouble. Case in point: Sirius Satellite Radio of New York, which the BofA researcher downgraded to sell in December 2005, at $7.17, on the bleak outlook for local broadcast revenues. Year-to-date through mid-September, shares had sunk 43.0 percent, to $4.09. Jacoby also has been an advocate of Univision, highlighting the shares in August 2005, at $27.11. Since then through the middle of September, the stock price has risen 28.7 percent. Making his debut appearance on the Third Team:, Michael Nathanson “produces very in-depth and thought-provoking pieces on his industry that help frame future investment decisions,” observes one money manager. The Sanford C. Bernstein analyst, who is on the first team in Entertainment, initiated coverage of Clear Channel Communications in March 2005, at $31.04. Although the stock has lost ground, declining by 5.9 percent through the middle of September 2006, Nathanson continues to recommend the San Antonio–based company for its LBO potential.

Computer Services & IT Consulting
Rod Bourgeois
Sanford C. Bernstein
Second Team: Adam Frisch UBS
Third Team: James Kissane Bear Stearns
Runner-up: Patrick Burton Citigroup

After two years in second place, Rod Bourgeois moves to the first team on the strength of research that is “the deepest in the group and essential reading for those following the sector,” according to one buy-sider. In January 2005 the Sanford C. Bernstein analyst, who earned an MBA from Harvard Business School in 1995 and is a former McKinsey & Co. consultant, published a black book on the offshoring trend in information technology in which he reasoned that the growth of the Indian players was not coming at the expense of such traditional companies as Electronic Data Systems, but instead was creating new markets, as companies were choosing to outsource additional functions. Bourgeois, 37, initiated coverage of Hyderabad, India–based Satyam Computer Services in September 2005, at $27.90, as a bet on the offshore market, starting with an outperform rating. Satyam shares overall rose 50.9 percent, to $42.09, in early March, at which point Bourgeois downgraded them to market perform. By the middle of September, the price had slipped to $38.29; IT services shares overall were up 11.1 percent for the preceding 12-month period. Adam Frisch, who drops to No. 2 after three years on the first team, continues to win praise for having “developed the best network of industry insiders,” in the words of one investor. That network helped the UBS analyst identify an opportunity in BearingPoint. In May 2005, when shares of the McLean, Virginia–based consulting firm sank to $5.74 because of delayed 10-Q and 10-K filings, Frisch began telling clients it was a turnaround story with great management and acquisition potential. By mid-September 2006 the stock had risen 50.9 percent, to $8.66. Returning third-teamer James Kissane of Bear Stearns scores points with customers who like what one dubs his “long-term view on the fundamentals of the companies he covers.” One of Kissane’s top picks was Automatic Data Processing, which he upgraded in mid-May, at $43.54, in anticipation of a new, shareholder-friendly CEO at the Roseland, New Jersey–based company. By the middle of September, the stock was up 8.8 percent, to $47.37.

Electronics Manufacturing Services
Michael Walker
Credit Suisse
Second Team: Scott Craig BofA
Third Team: Steven Fox Merrill Lynch
Runners-up: Louis Miscioscia Cowen; Jim Suva Citigroup

Michael Walker of Credit Suisse rises to the first team after spending the past two years at No. 3. Walker, 34, who earned a degree in economics from the Wharton School of the University of Pennsylvania in 1995, worked at Donaldson, Lufkin & Jenrette, joining Credit Suisse when the two firms merged in 2000. He impresses investors with “the best written reports in the sector,” according to one portfolio manager, and he “digs deeper into the industry and the companies than his peers,” according to another. In September 2005, Walker upgraded Amphenol Corp., a Wallingford, Connecticut, company that is the world’s third-biggest manufacturer in the connector industry, when it was at $38.25; in late December, when it rose to $44.08, he made it his top pick for 2006. By mid-September, Amphenol had risen to $60.75, a 58.8 percent rise since Walker’s upgrade. Scott Craig leaps from Runner-up: to the Second Team: for what one client calls his “no-nonsense analytical opinion.” The BofA analyst urged customers to stick with quality names and avoid restructuring stocks. In January he recommended Molex, at $30.13, after concluding that the Lisle, Illinois–based electromechanical component manufacturer’s growth rate was accelerating faster than investors thought and that the market wasn’t giving it credit for the savings associated with shutting plants. By mid-September shares had risen 25.4 percent, to $37.77. Rising from Runner-up: to the Third Team:, Steven Fox is commended by one satisfied buy-sider for “helping us in making informed decisions.” The Merrill analyst was also bullish on Amphenol, on valuation; he made it one of his top picks for 2006. Year-to-date through mid-September, the stock was up 37.5 percent.

Imaging Technology
Benjamin Reitzes
UBS
Second Team: Caroline Sabbagha Lehman
Third Team: Jay Vleeschhouwer Merrill Lynch
Runners-up: Shannon Cross Cross Research/Soleil; Matthew Troy Citigroup

Benjamin Reitzes earns his fifth consecutive first-team finish — by a landslide — thanks to his “intellectual honesty,” as one investor puts it, and his “stock-picking ability,” according to another. Reitzes, 34, who makes the Second Team: in IT Hardware, has been highlighting Electronics for Imaging, a stock he first recommended in June 2005, at $19.66, because he expects new color and monochrome products from major copier companies to boost business for the Foster City, California, provider of print server technology. The UBS analyst reiterated his call in November, February and April, when share prices hit $29.18. “We identified a new product cycle,” he says. The stock has since pulled back to $23.64, as of mid-September, but Reitzes remains bullish. “He understands both the market fundamentals and market psychology,” says one buy-sider. Caroline Sabbagha’s call on Adobe Systems demonstrates what one client calls “an unparalleled depth of knowledge of the industry and her companies.” The Lehman analyst, who takes second place for a fourth straight year, was more cautious than her peers about the San Jose, California–based software developer because of concerns about the company’s ability to maintain momentum between product cycles. Sabbagha upgraded Adobe in June, at $28.84, after the stock had dropped 25.0 percent in one month in response to disappointing earnings results. By mid-September, Adobe had climbed 28.3 percent, to $37.00. Jay Vleeschhouwer grabs third place for a third year running, garnering praise from one customer for “knowing his companies inside and out, from products to management to financials.” The Merrill analyst downgraded Navteq Corp., a Chicago-based provider of navigation software, in late April, at $53.10. The stock was trading at $26.35 in mid-September, down 50.4 percent. Vleeschhouwer had concerns when the high-multiple company underperformed in its biggest revenue segment, mapping licenses for navigation in the automotive market.

Internet
Anthony Noto
Goldman Sachs
Second Team: Imran Khan J.P. Morgan
Third Team: Robert Peck Bear Stearns
Runners-up: Douglas Anmuth Lehman; Mark Mahaney Citigroup; Benjamin Schachter UBS

Landing in the top spot for a fourth year in a row, Anthony Noto “is a great strategic thinker on the Internet sector,” observes one portfolio manager. The Goldman analyst, who ranks third in Entertainment, pleased clients with his independent stance on Baidu.com, China’s most popular search engine. Noto, 38, advised clients to sell, even though Goldman was the lead underwriter on the Beijing-based company’s August 2005 IPO. Noto initiated coverage in mid-September 2005, at $112.25; one year later the stock had fallen 21.8 percent, to $87.75. He remains bearish on Baidu, believing that the fair-market value is between $27.00 and $45.00 a share. One money manager says, “I respect him for coming out with a sell on Baidu when Goldman did the deal.” Repeating on the Second Team:, Imran Khan offers “data-driven analysis” of the sector “without getting caught up in the fads,” as one investor puts it. The J.P. Morgan analyst made a strong call on Seattle-based Amazon.com, issuing a sell rating in January, at $47.87. Khan believed large-cap rivals such as EBay and Google would force Amazon to make increased technology investments, putting pressure on margins. Through mid-September the stock dropped 32.1 percent, to $32.52, and the sector lost 23.4 percent. “Imran really nailed it in 2006 — he told us to stay away from Amazon,” says one grateful buy-sider. Rising from Runner-up: to the Third Team:, Robert Peck is “not afraid of writing challenging commentary,” explains one money manager. The Bear Stearns researcher raised eyebrows when he downgraded Ebay of San Jose, California, in September 2005, at $37.10, despite the online auctioneer’s robust business at the time. Peck made an early call that growth was slowing faster than expected. One year later the stock was down 24.9 percent, to $27.85.

IT Hardware
A.M. (Toni) Sacconaghi
Sanford C. Bernstein
Second Team: Benjamin Reitzes UBS
Third Team: Andrew Neff Bear Stearns
Runners-up: Keith Bachman BofA; Harry Blount Lehman; Laura Conigliaro Goldman Sachs; Richard Gardner Citigroup

A.M. (Toni) Sacconaghi earns his fifth consecutive first-team finish because he is a “thought leader,” says one investor, and is not “afraid to go against consensus,” says another. The Sanford C. Bernstein analyst downgraded Sun Microsystems to sell in early January, at $4.71, reasoning that the Santa Clara, California, company’s quarterly results would be weak and its workforce reductions lower than expected. He was right. In July, when shares had sunk to $3.82, Sacconaghi upgraded to neutral. “The valuation was much more favorable at that point,” he says. Sacconaghi, 41, says he has never had a buy on the stock because he believes Sun faces structural challenges with its core Unix server market, under attack by Intel Corp. In mid-September the shares had risen to $5.28. Benjamin Reitzes, who rises a rung to second place, continues to win praise for his stock picking. “He has helped me make money,” sums up one satisfied client. The UBS analyst, who also makes the first team in Imaging Technology, upgraded Hewlett-Packard Co. in September 2005, at $27.73, believing the Palo Alto, California–based computer manufacturer had the advantage over rival Dell of Round Rock, Texas, which he downgraded the following month, at $31.88. Through mid-September, Hewlett-Packard was up 30.5 percent, to $36.18, while Dell was down 33.0 percent, to $21.35. Investors laud third-teamer Andrew Neff, who advances from Runner-up:, for seeing “that corporate transformations can keep juicing earnings beyond what may seem calculable at first,” according to one buy-sider. The Bear Stearns analyst also upgraded Sun in July, at $4.09, concluding that the new CEO and CFO were serious about cost-cutting and finally turning the company around. By mid-September the stock had risen 29.1 percent since Neff’s upgrade.

Semiconductor Capital Equipment
Timothy Arcuri
Citigroup
Second Team: Jay Deahna J.P. Morgan
Third Team: James Covello Goldman Sachs

Both “impassioned” and “reasonable,” according to investors, Timothy Arcuri leapfrogs from third to the first team. Arcuri, 35, who earned a chemical engineering degree from Villanova University in 1993, joined Citigroup in 2004 after working as an analyst with Deutsche Bank Securities. His best call, say observers, was his February recommendation to sell the sector. Arcuri reasoned that the industry was adding capacity at a rate that would result in a peak in chip capacity use (and thus equipment orders) in the third quarter. From his downgrade through mid-September, the Philadelphia semiconductor index fell 14.7 percent; during that same period the S&P 500 was up 2.9 percent. Arcuri remains bearish: “The trajectory of capacity addition by chip makers continues to be too aggressive.” Jay Deahna advances from Runner-up: to second place. Clients praise the J.P. Morgan analyst and his team for their responsiveness as well as for the annual conference they hold at the Semicon West trade show every summer. “It is a credit to Jay,” says one fan, “that some of those who have worked for him have become lead analysts at other brokerage firms.” In third place after two years on top, James Covello of Goldman highlighted his buy rating on longtime favorite FormFactor, first recommended in February 2004, at $18.59. The Livermore, California, semiconductor tool manufacturer led the group with an 84.5 percent rise year-to-date through mid-September. “Many other analysts can track overall capital spending levels for the industry,” says one money manager, “but Jim’s closer connections to the day-to-day operations of those firms that purchase tools is invaluable.”

Semiconductors
Adam Parker
Sanford C. Bernstein
Second Team: Christopher Danely J.P. Morgan
Third Team: Mark Edelstone Morgan Stanley
Runners-up: Mark Lipacis Prudential; Michael Masdea Credit Suisse; Joseph Osha Merrill Lynch

For a third straight year, Sanford C. Bernstein’s Adam Parker earns a first-team ranking, and his continued success can be traced to calls such as the one he made on Advanced Micro Devices. Parker upgraded the Sunnyvale, California, company in September 2005 because consensus revenue estimates were too low and “AMD’s product superiority would result in server share gain,” he says. He was right. The stock rose from $22.55 when he made the call to $42.10 in February; he downgraded in early March, on valuation, and by mid-September the shares had dropped to $26.53. Parker, 37, went overweight on the group in July, believing that inventory reductions would be positive for ongoing profitability. By the middle of September, the semiconductor sector had gained 12.7 percent. Advancing from Runner-up: to the Second Team:, Christopher Danely “obtains leading-edge data earlier than many others, thinks independently and is not afraid to make a controversial call,” says one money manager. The J.P. Morgan analyst was the first to downgrade Intel Corp. of Santa Clara, in July 2005 at $25.64, convinced that Intel’s margins were peaking and that inventory was building up in the PC components subsector. Year-to-date through athe middle of September, Intel’s shares were down 21.1 percent, to $19.51. Mark Edelstone repeats in third place. The Morgan Stanley analyst turned cautious on the semiconductor group in the first quarter, believing that companies and investors were too bullish about end-market demand. But he remained upbeat on longtime favorite Nvidia Corp. because he thought the Santa Clara–based programmable graphics creator would continue to profit from notebook PCs and Sony Corp.’s PlayStation 3 video game. Nvidia has consistently exceeded earnings expectations, and its shares were up a stunning 80.0 percent for the year ended mid-September.

Software
Heather Bellini
UBS
Second Team: Richard Sherlund Goldman Sachs
Third Team: Charles DiBona Sanford C. Bernstein
Runner-up: John DiFucci Bear Stearns

Advancing from Second Team: to first, Heather Bellini wins kudos from clients for providing “detailed work on all her companies,” as one portfolio manager says. The UBS analyst, who earned an MBA in finance from Columbia Business School in 1997, has been covering software since 2000, when she was at Salomon Smith Barney; she joined UBS in March 2003. Bellini, 36, broke with consensus in January to make Oracle Corp. one of her top picks for 2006, concluding that the Redwood City, California, company would enjoy more licensing opportunities for its database. Oracle was up 33.7 percent year-to-date through the middle of September, compared with the sector’s 6.1 percent gain. After 17 years in the top spot, Richard Sherlund slips to second place. The Goldman analyst continues to win praise from investors for his insightful coverage of Microsoft Corp. “Rick has by far the most detailed understanding of all of Microsoft’s segments and competitors and the forces affecting change,” says one backer. The Redmond, Washington–based software giant was up 3.8 percent year-to-date through mid-September, outperforming the Nasdaq composite index by 2.4 percentage points, and Sherlund remains bullish. He believes Microsoft’s new Windows Vista operating system and Office 2007, scheduled to be launched in January (after several delays), will have a positive impact, and he added them to his list of best ideas, “Americas Conviction Buy List,” in June. Repeat third-teamer Charles DiBona has a “very deep understanding of the technical trends of the software industry that helps him identify the long-term winners,” says one money manager. Clients were particularly impressed with the Sanford C. Bernstein analyst’s May report on Microsoft, which explained why the company’s controversial $2.3 billion investment in MSNBC.com is critical if it is to compete with Google.

Data Networking & Wireline Equipment
Ehud Gelblum
J.P. Morgan
Second Team: Tal Liani Merrill Lynch
Third Team: Nikos Theodosopoulos UBS
Runners-up: Jeffrey Evenson Sanford C. Bernstein; B. Alexander Henderson Citigroup

Ehud Gelblum, 37, claims first place for the first time, rising from third last year. The J.P. Morgan analyst, who earned a Ph.D. in electrical engineering from Columbia University in 1998, previously covered telecommunications for Merrill and Credit Suisse. Clients praise his “great call on Cisco Systems,” as one investor characterizes it, and his pointing out that its Scientific-Atlanta acquisition would drive higher growth. That Atlanta-based company was a “business that was poised for exploiting,” Gelblum recalls, even as San Jose, California–based Cisco was “in a revenue box,” with little growth in sight. In December 2005, one month after Cisco announced it would acquire Scientific-Atlanta for $6.9 billion, Gelblum upgraded the stock to buy, at $17.50; by the middle of September, the shares had risen 29.8 percent, to $22.72. Tal Liani of Merrill, who jumps from Runner-up: to the Second Team:, wins praise for not confining his research to subsectors but for covering the entire telecommunications space, from wireless and wireline to data networking and even some communications software names. Among his top calls was an early-September 2005 upgrade of Tellabs, a telecoms equipment manufacturer based in Naperville, Illinois. By late December the stock had shot up 27.6 percent, from $8.80 to $11.23, and Liani downgraded it to neutral, on valuation. As of the middle of September, the price had dropped back to $10.51. Nikos Theodosopoulos of UBS, who slips from second place to third, also got Tellabs right: His buy in June 2005 was followed by a downgrade in January, after a 47.0 percent gain. He is still neutral on the stock, wary of pricing pressure on the company’s newer products. Theodosopoulos expressed caution about the telecom equipment sector during a conference call with clients in March, concerned over slowing growth and declining profit margins; the sector peaked three weeks later and in mid-September was down 4.9 percent since that call.

Telecom Equipment/Wireless
Timothy Luke
Lehman
Second Team: Ehud Gelblum J.P. Morgan
Third Team: Timothy Long BofA

For a seventh year in a row, Timothy Luke of Lehman tops the Telecom Equipment/

Wireless group as investors continue to view him as “thorough, flexible, and well-supported analyst with a long-term track record of performance,” as one puts it. That record was bolstered by his success with Finland’s Nokia Corp., which Luke, 39, upgraded from equal weight to overweight in July 2005, attracted by its growth prospects and historically low valuation. Nokia was showing returns of 17.5 percent (trailing 12 months) and 6.7 percent (year-to-date) in mid-September. Schaumburg, Illinois–based Motorola, upgraded to Luke’s top pick in 2005, had risen 10.7 percent year-to-date through the middle of September, compared with 5.7 percent for the S&P 500. “Continued focus on supply-chain management and design is expected to help drive further margin improvement in Motorola’s handset business,” Luke asserts. J.P. Morgan’s Ehud Gelblum, who makes the first team in Data Networking & Wireline Equipment this year, ranks second in Telecom Equipment/Wireless, rising from Runner-up: last year. Gelblum, who offers a “unique perspective,” according to one money manager, is also a fan of Motorola. He first upgraded the stock to overweight in September 2003, at $9.27, and has been bullish ever since, even as the stock has fallen in and out of favor with other analysts. In the 12 months ended mid-September, the stock had risen 5.8 percent, to $24.85. Timothy Long of BofA, who holds the third-team position for a second year in a row, also includes Motorola among his top calls. He downgraded the stock to neutral in July 2005, after it had gained 42.5 percent on a March buy recommendation, then upgraded it to buy in May, on increasing investor interest. Since then shares have risen 17.5 percent.

Telecom Services/Wireless
Philip Cusick
Bear Stearns
Second Team: Thomas Lee J.P. Morgan
Third Team: David Barden BofA
Runners-up: Blake Bath Lehman; Simon Flannery Morgan Stanley; Jeffrey Halpern Sanford C. Bernstein; Richard Prentiss Jr. Raymond James; Michael Rollins Citigroup

Repeating on the first team, Philip Cusick “knows the sector landscape well and drills down on valuation variables to make things clear,” one investor reports. “His models provided us particular insights into trends and allowed us to be better positioned within our sector weightings.” Among the Bear Stearns analyst’s best calls over the past year were buys on regional service providers Alamosa Holdings of Lubbock, Texas, UbiquiTel of Conshohocken, Pennsylvania, and Nextel Partners of Kirkland, Washington, which Cusick, 32, identified as acquisition targets. Sprint Nextel Corp. paid big premiums for all three in late 2005 through 2006. Cusick also initiated an outperform rating on Leap Wireless in June 2005 and kept that rating until January; the stock jumped 44.4 percent during the period, from $26.95 to $38.92. He now rates the San Diego–based carrier as peer perform; as of the middle of September, its shares were trading at $48.18. Thomas Lee of J.P. Morgan, who claims second place for a second consecutive year, “looks at the telecom industry in a way no other analyst does,” says one client. “He tends to focus less on the industry buzzwords and sees his stocks for what they are: investments in real businesses that either can or can’t generate strong cash flows in the future.” Case in point: Dobson Communications Corp. of Oklahoma City, which Lee recommended in July, at $6.95, as significantly undervalued. Through mid-September the price had risen 3.9 percent, to $7.22; Lee continues to recommend the company because its margins are improving and subscriber growth is accelerating. BofA’s David Barden, rising from Runner-up: to the Third Team:, is lauded for his understanding of macro themes, especially those concerning the tower industry, and for his support of American Tower Corp., which has been a strong performer. Barden upgraded the Boston-based company in mid-May 2005, at $17.07. By the middle of September 2006, the shares had more than doubled, to $36.71.

Telecom Services/Wireline
Simon Flannery
Morgan Stanley
Second Team: Jeffrey Halpern Sanford C. Bernstein
Third Team: John Hodulik UBS
Runners-up: David Barden BofA; Michael McCormack Bear Stearns

For a fifth consecutive year, Morgan Stanley’s Simon Flannery is the first-team pick in this category. Flannery, 44, wins praise for his “big-picture thinking,” as one investor puts it, and for looking to the long term. He has stayed overweight on longtime favorite AT&T, citing merger synergies that are likely to lead to substantial cost savings for the San Antonio–based company. In mid-September the stock had climbed to $31.86, up 40.3 percent over the preceding 12 months. He is also bullish on Canadian telecoms because, he says, cell phone penetration and use in Canada are below U.S. levels, so there is more growth potential. North-of-the-border favorites include Rogers Communications and Telus, which have gained 22.7 and 37.0 percent year-to-date, respectively as of the middle of September. Jeffrey Halpern makes the Second Team: this year, up from third last year, and impresses customers with “reports that dig deep and find opportunities that others miss,” according to one buy-sider. In January 2005 the Sanford C. Bernstein analyst was among the first to recommend Qwest Communications International. At a time when many analysts were down on the stock, Halpern concluded that cost-cutting and debt reduction would lead to higher ebitda and free cash flow for the Denver-based provider. The stock had advanced 22.4 percent by the time he downgraded it to market perform one year later, concluding that it no longer offered investors an attractive risk-reward profile. John Hodulik drops from second place to third, but the UBS analyst still pleases clients with “thorough and timely understanding of the issues” affecting his sector, as one money manager explains. Last November, following the acquisition of AT&T by SBC Communications, Hodulik upgraded the stock, at $23.85, on the belief that earnings-per-share estimates were too low. As of mid-September the stock had risen 33.6 percent.

Accounting & Tax Policy
Patricia McConnell
Bear Stearns
Second Team: David Zion Credit Suisse
Third Team: Janet Pegg Bear Stearns
Runner-up: Robert Willens Lehman

The big story in accounting is the ongoing federal investigations into employee stock option backdating, and money managers say no one has covered the issue better than Patricia McConnell, who returns on the first team for a 16th consecutive year. The Bear Stearns analyst wowed clients with a revelatory report in May, “Digging up Dinosaur Bones: 20 Frequently Asked Questions on Stock Option Backdating,” that warned of a looming financial crisis at some 900 companies using questionable methods to backdate options. “In some cases companies may have intentionally retroactively set the exercise price of their stock options to correspond with the market price of the stock on dates when the stock price was particularly low and claimed that these dates were the grant dates,” she wrote. In other cases, transaction dates were unintentionally recorded incorrectly. Either way, she says, “the result is an understatement of stock option expense in the financial statements.” McConnell, 57, updated her report in August, estimating that “over $8 billion of stock option expense has vanished from future income statement recognition.” David Zion, on the Second Team: for a fourth year in a row, “was way out in front on the options backdating issue,” says one client. In July the Credit Suisse researcher informed investors that annual employee stock option costs for companies in the S&P 500 had plunged from a peak of $104 billion in 2000 to just $30 billion in 2005. “Stock options has been the most important topic over the past two years, and Dave has been all over it,” observes one client. One of McConnell’s colleagues at Bear Stearns, Janet Pegg, repeats on the Third Team:. “She makes complicated issues easy to understand,” says one money manager. “Her work goes beyond factual changes and discusses their implications at the market, sector and stock level.”

Convertibles
Venu Krishna & team
Lehman
Second Team: Yaw Debrah & team Merrill Lynch
Third Team: Lynn Hambright, Adrian Miller, Stuart Novick Citigroup

In first place for a third straight year, Venu Krishna, 40, and his two Lehman teammates have “great skill in recognizing trends within the convertibles market,” says one portfolio manager. In their monthly “Outlook” report for January, the team predicted that convertibles arbitrage would outperform long-only in the coming year (even though just the opposite had occurred for the previous three years), outflows would abate, and small-cap convertibles would outperform large-caps. They have been right on all three counts. By the end of the second quarter, the Dow Jones convertible-arbitrage index was up 8.24 percent, compared with 6.17 percent for Lehman Brothers’ U.S. convertible composite index (the benchmark for a convertibles long-only strategy). After seven consecutive quarters of outflows, the convertibles market saw a net inflow of $791 million in the second quarter. Small-cap convertibles were up 7.7 percent year-to-date through August 31, while large-caps were up 5.6 percent. Yaw Debrah, who leads his three-member Merrill team to a repeat second-place finish, “has developed one of the most comprehensive databases in the industry,” says one money manager. That database helps the team analyze trends and make predictions, such as their forecast of an upswing in new issuance. Convertibles came off a major sell-off in 2004 and 2005, but in January the Merrill team predicted that the market would reverse course. “After $37 billion in 2005, we called for at least $50 billion in 2006, and we are seeing the numbers come in,” Debrah says. “We had $40 billion in the first eight months, so we could see $60 billion” by the end of the year. In third place is Citigroup’s team of Lynn Hambright, Adrian Miller and Stuart Novick. Unranked last year, the researchers win praise from clients not only for their macro commentary, but also for innovative ways of providing access to management, such as their annual Silicon Valley bus tour and quarterly bring-your-own-idea investment-brainstorming dinners.

Economics
Ed Hyman
ISI Group
Second Team: David Malpass Bear Stearns
Third Team: David Rosenberg Merrill Lynch
Runners-up: Maury Harris UBS; Nancy Lazar ISI Group

Ed Hyman, the reigning champ of the All-America Research Team, finishes on the first team for the 27th year in a row. The ISI Group co-founder wins praise for research that is “timely, prescient and often contrarian,” as one client puts it. Hyman, 61, began alerting clients in September 2005 that the long-awaited slowdown in the housing market would materialize in 2006, and in February he cited statistics from a University of Michigan report, “Good Time to Buy a House?,” in which only 59 percent of respondents said that current conditions were favorable for purchasing a residence, down from 75 percent a year earlier. The weakness in housing will prompt growth of consumer spending to slow to 1.0 percent because of “the unprecedented mortgage equity withdrawal that is likely to unwind,” Hyman predicted. By September, Deloitte Research’s leading index of consumer spending had dipped to 2.82 percent, down from 3.38 percent one year earlier. David Malpass repeats in second place. Clients praise the Bear Stearns chief economist’s March 2005 report that challenged the assumption that U.S. savings rates are low, noting that government statistics often exclude realized gains on equities, houses and mortgage refinancings. When those factors are taken into account, the savings rate is closer to 10 percent than the oft-cited 2 percent, he says. Malpass “is capable of taking a different view from almost everybody else and sticking to it,” says one buy-sider. David Rosenberg holds on to the third position, winning praise for drawing investors’ attention in April to the fact that the National Association of Home Builders index, which leads the S&P 500 by about a year at a correlation close to 80 percent, has been declining; in August it hit its lowest point since 1991. The Merrill economist “has been the most articulate and persistent advocate of the decelerating economic environment that we now find ourselves in,” says one client.

Equity Derivatives
Maria Grant & team
Goldman Sachs
Second Team: Gabriela Baez, Evren Ergin, Ryan Renicker & team Lehman
Third Team: Heiko Ebens & team Merrill Lynch

Maria Grant and her 16-member team at Goldman repeat in the top spot for their willingness to “go the extra mile,” as one money manager puts it. The strategists earn compliments for their weekly reports, which highlight trends in the market and routinely include about ten trading ideas. Grant, 31, notes that “business is booming” since investors have realized how options can be used to hedge risk. Since February, when the Chicago Board of Exchange began trading options on its volatility index, “we have covered them actively with instructions to clients on what the products are and how to use them,” she says. Another area of specialization: mutual funds selling covered calls to enhance yield, a strategy that works well in a time of low volatility. The Goldman team “is always worth listening to because they always have something new to say,” notes one investor. Lehman’s eight-member team, co-led by Gabriela Baez, Evren Ergin and Ryan Renicker, takes second place for a second year in a row. The analysts are “on the forefront of providing unique reports and insights in terms of what is going on within the index world,” says one portfolio manager. One index fund client praises the Lehman team for their advice on using futures to manage some cash positions and trade others in the two weeks preceding Russell Investment Group’s annual reconstitution of its indexes, which the Tacoma, Washington, investment management firm conducts each June. The strategy helped the index fund outperform its benchmark, Baez says. At No. 3 again is Merrill’s three-member team, led by Heiko Ebens. The analysts are highly regarded for their reporting, such as an August 2005 missive quantifying the stock, sector and industry group impact of the transition of the S&P indexes to free-float indexes. The Merrill team is “unique with its research on volatility,” says one investor.

Portfolio Strategy
François Trahan
Bear Stearns
Second Team: Richard Bernstein Merrill Lynch
Third Team: Michael Goldstein Empirical Research
Runners-up: Tobias Levkovich Citigroup; Henry McVey Morgan Stanley; Jason Trennert ISI Group; Vadim Zlotnikov Sanford C. Bernstein

On the first team for a second year in a row, François Trahan is a “rare, must-read information source,” says one money manager. The Bear Stearns strategist doesn’t publish a lot of reports, “so when he has something to say, it’s useful,” says another, citing Trahan’s November 2005 report that forecast an end to Federal Reserve Board tightening but noted that this might not be the buy signal it has been in the recent past. “The 1960s, not the 1980s–’90s, is the better model of what to expect from the upcoming posttightening environment,” wrote Trahan, 37, urging investors to “wait until leading economic indicators begin to reaccelerate before assuming an aggressive position in equities.” One buy-sider says that Trahan “added the most value last year by linking market similarities between the current period and the late ’50s to early ’60s. Numerous other ideas came from that insight.” Advancing from Runner-up: to second, Richard Bernstein “stands out for his independent thinking, analytical discipline and the frequency and relevance of his communications,” observes one portfolio manager. Last November the Merrill strategist identified three industry turnaround possibilities — media, pharmaceuticals and diversified telecoms — on the belief that they were undervalued, and he reiterated his call throughout the year. By mid-September the sectors had gained 7.2, 18.2 and 26.9 percent, respectively, while the S&P 500 was up 4.9 percent. Michael Goldstein slips one notch to third. The Empirical Research strategist, who’s also on the Third Team: in Quantitative Research, “combines the role and approach of a technical strategist with his excellent skills at quant work,” says one client. A strategy Goldstein has developed is a “Distrusted 50” screen featuring stocks that have been overlooked. Year-to-date through mid-September, Goldstein’s selections were up 10.6 percent, compared with 5.7 percent for the S&P 500.

Quantitative Research
Vadim Zlotnikov
Sanford C. Bernstein
Second Team: Keith Miller; Citigroup
Third Team: Michael Goldstein Empirical Research
Runners-up: Richard Bernstein Merrill Lynch; Edward Keon Jr. Prudential; Pankaj Patel Credit Suisse

Holding on to his first-team position, Vadim Zlotnikov “has a very disciplined approach and might have the highest humility-to-talent ratio on Wall Street,” says one admirer of the Ukraine-born analyst. The chief equity strategist at Sanford C. Bernstein alerted investors to opportunities in tech shares in April, noting that cash at top technology companies amounted to 25 percent of assets by year-end 2005, up from 12 percent in 1991, and compared with an average 9 percent for S&P 500 companies (versus 7 percent in 1991). Zlotnikov, 44, also predicted that the Fed’s pause in interest rate hikes would have a limited long-term effect, as economic growth would continue to be muted by high energy prices and slow consumer spending. He says the S&P 500 will gain no more than 5.0 percent by the end of the year; year-to-date through mid-September, it was up 5.7 percent. Leaping to second after two years as Runner-up:, Keith Miller is “very creative and thorough,” says one money manager. Investors especially value the Citigroup analyst’s sector-specific stock-selection models. For example, Miller’s health care stock selection model outperformed the Russell 1000 health care benchmark by 6.2 percentage points in the 12 months ended August 31, and his consumer-staple stock selection model outpaced the Russell 1000 consumer staples benchmark by 5.8 percentage points over the same period. Though he drops a notch to third, Michael Goldstein is “without a doubt, the single most valuable research tool available to me,” says one money manager. The Empirical Research analyst, who’s also on the Third Team: in Portfolio Strategy, wins praise from one money manager for his work demonstrating that, when all the companies in a particular industry group are valued similarly, investors are not rewarded for taking the risk of owning a higher-beta stock. Goldstein is “creative, consistent and thorough,” that investor says.

Small Companies
James Furey
Lehman
Second Team: Steven DeSanctis Prudential
Third Team: Satya Pradhuman Merrill Lynch

James Furey, 46, repeats in the top position for providing research that “fuses fundamental, technical and market insights in a pragmatic and user-friendly manner,” says one portfolio manager. Last October, when the Russell 2000 hit a post-Katrina low of 621.57, the Los Angeles–based Lehman analyst urged investors to buy small-cap stocks, believing the market was overstating the hurricane’s impact. The index began rising and, when it reached 717.18 in February, Furey downgraded to neutral. The index went on to peak at 781.83 in May before dropping back to 671.94 in July; in mid-September it stood at 729.46, up only 1.7 percent since Furey’s downgrade. Repeating second-teamer Steven DeSanctis provides service that “is second to none,” according to one buy-sider. The Prudential strategist wowed clients with his research attributing the extended small-cap rally to hedge funds, which since 2002 have been gobbling up big chunks of IShares Russell 2000 (an exchange-traded fund that tracks the index), and noting that hedge fund investment makes the small-cap sector especially vulnerable to volatility. DeSanctis is “an excellent source of information,” says one money manager. Customers praise Satya Pradhuman, who is No. 3 for a third year in a row, for his research into private equity acquisitions in the small-cap arena. In August the Merrill strategist noted that in the second quarter private equity investment had risen to a six-year high of $47 billion. Investors will continue to eye smaller companies with low returns on equity and stable cash flows, Pradhuman says, with the result being few venture-backed small-cap IPOs in the coming year.

Technical Analysis
Jeffrey deGraaf
Lehman
Second Team: John Mendelson Stanford
Third Team: Ralph Acampora Knight
Runners-up: Mary Ann Bartels Merrill Lynch; John Roque Natexis Bleichroeder; Louise Yamada LY Technical Research

Jeffrey deGraaf earns his second consecutive first-team finish because “he looks at parameters and indicators that are not on anyone’s radar screen and makes his analysis based on the totality of them,” says one portfolio manager. The Lehman strategist impressed investors by accurately predicting, in August 2005, a massive upswing in gold prices in the second half of the year. He has maintained that position, and in the 12 months ended mid-September, gold rose 26.3 percent, to $574.40 per ounce. DeGraaf, 38, also wins praise for his daily e-mail updates. “He sticks his neck out every day, trying to call both short-term and secular moves in the market. He’s a moneymaker!” exclaims one buy-sider. “When it comes to technical analysis, John Mendelson has been right in his calls more than anyone else,” says one money manager of the Stanford analyst who debuts on the Second Team:. In May, Mendelson urged investment in media stocks, particularly News Corp., based on its price pattern and volume. At the time of his call, the shares stood at $18.21; by mid-September they had risen 10.6 percent, to $20.14; the media sector was up 4.1 percent during that period. Mendelson is “willing and almost seems to enjoy making recommendations that run counter to common wisdom,” observes one client. Ralph Acampora, who repeats in third place, “is one of the few tech analysts who makes a strong call and sticks to it — no waffling,” says one investor. One such call: The Knight analyst predicts that large caps that have underperformed for years, including AT&T, Oracle and Baxter International, will lift a back-to-basics market in 2007, which Acampora says will be a very positive year.

Washington Research
Thomas D. Gallagher & team
ISI Group
Second Team: Charles Gabriel Jr. & team Prudential
Third Team: Kim Wallace & team Lehman
Runner-up: Leslie Alperstein & team Washington Analysis

For a fourth year in a row — and by a landslide — Thomas D. Gallagher leads his two-member ISI Group team to a first-place finish in Washington Research. “Tom and his team are very much in the political flow and, consequently, always on top of the political agenda,” notes one money manager. Gallagher, 52, built up his D.C. network during eight years as a federal employee, followed by 13 years at Lehman. In January the ISI team warned investors of increased volatility in financial markets in connection with Benjamin Bernanke’s taking over as chairman of the Fed, and in June they said the cessation of interest rate hikes would not be short-lived, but lasting. “He correctly called the recent pause and believes the Fed is done. We agree with him and have tailored our investment portfolio accordingly,” says one customer. Leading the repeating No. 2 team, Charles Gabriel Jr. “is the consummate Washington insider, with contacts everywhere,” says one buy-sider. Gabriel and his four-member Prudential team in Washington impressed clients with a string of reports assessing the risk of legislation affecting Fannie Mae and Freddie Mac, as well as the political landscape associated with the issue. “I have always found Chuck Gabriel to be the go-to guy for Washington issues,” says one money manager. Lehman’s Kim Wallace and his five-person team in Washington hold on to third place. One investor says Wallace has “a unique ability to encapsulate complex political-government information into relevant bullet points for investors, such as how policy affects a particular company or industry.” In February the team predicted Congress would pass controversial pension reform legislation before its summer recess. Congress approved the bill in August — then went on vacation.