EMEA Chemicals
Marina Alexeenkova Renaissance
second team Haim Israel & team BofA–Merrill Lynch
third team Ronen Roni Biron & team UBS
runner-up Anna Kochkina & team UniCredit
In a brutally difficult period for stock picking, Marina Alexeenkova of Renaissance Capital repeats in first place. The Moscow-based analyst, who works alone, admits being “not particularly happy with any of my recommendations — the depth of the correction was unexpected.” Alexeenkova, 35, named Russian fertilizer producers Uralkali and Acron her top picks in January 2008; the stocks surged 151.6 and 131.8 percent by June and July, respectively, before the worldwide credit crunch caused demand for fertilizer products to plummet. Through January 2009 the shares were down 80.0 and 81.5 percent, compared with a sector loss of 56.6 percent, since her recommendation. Still, investors were pleased with the results in the first half of the year and with her access to management. “She organizes meetings with companies that are not generally available to investors,” reports one grateful buy-sider.
Unranked last year, the Banc of America Securities–Merrill Lynch trio led by newcomer Haim Israel finishes in second place; the Tel Aviv–based analyst also leads the No. 2 team in Israel. Praised by one client for the way they “blend credit and foreign exchange analysis into their equity work,” the analysts downgraded Israeli insecticide maker Makhteshim-Agan Industries in January 2008 from buy to neutral, on earnings pressure. By the end of January 2009, the stock was trailing the sector by 4.9 percentage points.
Newcomer Ronen Roni Biron guides the UBS duo to third place. The team, which is based in Herzliya, Israel, reinitiated coverage of Israel Chemicals in January 2008 with a buy, at 4,511.84 shekels, largely on rising potash prices. The fertilizer producer’s shares soared to 7,593.61 shekels in June, then falling grain prices took the analysts by surprise. The stock plunged to 2,886.00 shekels through January 2009, but the team remains bullish.
EMEA Financials
David Nangle & team Renaissance
second team Cristina Marzea, Richard Thomas & team BofA–Merrill Lynch
third team Paul Formanko & team J.P. Morgan
runners-up Henry Hall, Simon Nellis & team Citi; Gyorgy Olah & team UniCredit
In first place for a second straight year is the three-strong Renaissance Capital squad guided by David Nangle, 33. “They offer the most comprehensive views of broad sector trends,” says one money manager. Praised for their reporting on the creditworthiness of Russia’s banks, the Moscow-based team downgraded the global depositary receipts of Russia’s VTB Bank from buy to hold in October, at $4.00, as jittery customers closed their accounts. By the end of January, the retail and investment bank’s GDRs had tumbled to $1.19.
Vaulting from runner-up to second place is the ten-analyst Banc of America Securities–Merrill Lynch team co-led by Richard Thomas and newcomer Cristina Marzea, described by one investor as “a good, maturing group with excellent top-down coverage.” The team, headquartered in London, downgraded Dubai Islamic Bank to underperform in November, on concerns about the United Arab Emirates–based bank’s exposure to faltering real estate markets. Through January the stock trailed the sector by 34.8 percentage points.
Paul Formanko pilots the J.P. Morgan Securities foursome from runner-up to third place. The London-based team initiated coverage on Bank Millennium in June with an underweight rating, on concerns about the impact of the global liquidity crisis on the Polish consumer lender. By the end of January, the shares had underperformed the sector by 14.5 percentage points.
EMEA Metals & Mining
Robert Edwards & team Renaissance
second team Dmitry Kolomytsyn & team Morgan Stanley
third team George Buzhenitsa, Marat Gabitov UniCredit
runners-up Deutsche; James Bennett, Alexei Morozov & team UBS
Topping the roster for a third year running is Renaissance Capital’s Robert Edwards and his team of four, praised for their “in-depth coverage of companies that are not widely followed by other analysts,” as one buy-sider puts it. The London-based squad’s stock calls receive mixed reviews, however. A March upgrade from hold to buy on Mechel’s American depositary receipts, largely on rising coal and steel prices, paid off at first, as the ADRs soared from $37.93 to $57.62 in late May. Then steel prices fell and the Russian coal and steel producer was charged with price-fixing; the shares had plummeted to $3.40 by the end of January. “We totally underestimated the extent of the collapse,” concedes Edwards, 42.
Dmitry Kolomytsyn returns in the No. 2 spot, but with a different firm; the Moscow-based analyst left UniCredit Global Research in May for Morgan Stanley and guides the four-member team to a second-place debut. In November, as the Mechel price-fixing scandal was emerging, the team urged clients to sell their holdings. By the end of January, the shares had plunged 39.4 percent, lagging behind the sector by 27.4 percentage points, in local currency terms. “His caution saved us money,” notes one grateful investor.
UniCredit’s George Buzhenitsa and Marat Gabitov pleased portfolio managers by launching coverage of Polyus Gold Co. in July with a sell rating, judging the Russian gold producer overpriced at $57.50. In October, after the stock had plunged 65.2 percent, to $20.00, the Moscow-based newcomers upgraded the shares to buy, as a bargain. Polyus shares had jumped 33.0 percent by the end of January, to $26.60.
EMEA Oil & Gas
Alexander Burgansky & team Renaissance
second team Oleg Maximov & team Troika
third team Robert Réthy & team UniCredit
runner-up Deutsche
Renaissance Capital’s three-analyst team, now led solely by Alexander Burgansky, 36, following Adam Landes’s departure in September, repeats in first place. The Moscow-based researchers, praised for doing “more than just stock analysis,” in the words of one money manager, warned clients that difficulty in obtaining needed credit might impede production at Urals Energy. They downgraded shares of the Cyprus-based oil exploration company to sell in April, at 172.00p. By the end of January, the stock had plunged 98.7 percent, to 2.25p. During the same period the sector tumbled 66.6 percent. The team’s research is “visionary and thought provoking,” says one admirer.
Leaping from runner-up to second place is the Troika Dialog troupe captained by Oleg Maximov. The Moscow-based group of three wins praise for being able to “look at the market from a new angle,” according to one impressed buy-sider. Case in point: In August the team recommended the preferred shares of Surgutneftegaz, saying the Russian oil supplier had sufficient cash on hand after a profitable first half to pay an annual dividend of up to 1.23 rubles, a yield of 13.0 percent. The dividend won’t be announced until late March, but “we estimate about 16 to 18 percent now,” Maximov said in late January.
Rising from runner-up to third place is the UniCredit Global Research quartet now conducted solely by Budapest-based Robert Réthy; former co-leader Steven Dashevsky was promoted to head of equities in July 2007. “They are always one step ahead of their competition,” insists one appreciative investor. The team recommended Poland’s Polskie Górnictwo Naftowe i Gazownictwo in July, at 3.55 złoty, citing the state-run oil and natural gas distributor’s strong balance sheet. The stock had risen 7.0 percent by the end of January, to Zł3.80.
EMEA Telecommunications
Alexander Kazbegi & team Renaissance
second team Stephen Pettyfer & team BofA–Merrill Lynch
third team Dalibor Vavruska & team ING
runners-up Rhys Summerton & team Citi; Alexander Wright & team UBS; Anna Bossong & team UniCredit
In first place for a second straight year is the three-strong Renaissance Capital team helmed by Alexander Kazbegi, who is “not afraid to make tactical trading calls,” according to one satisfied client. Kazbegi, 46, and his colleagues initiated coverage on Celtel Zambia at its initial public offering in June with a buy, at 640.00 Zambian kwacha, on the mobile phone carrier’s market dominance. The stock shot up to 800.00 kwacha by July, and the Moscow-based team downgraded it to hold, on valuation. It slipped back to 640.00 kwacha in September, so they raised it to buy again. That was premature, though, as the price continued dropping; through January it had tumbled to 280.00 kwacha.
The Banc of America Securities–Merrill Lynch pair headed by Stephen Pettyfer holds steady in second place for a third consecutive year. The Dubai-based team “helps clients save money,” asserts one backer, citing a June downgrade to underperform on Egypt’s Orascom Telecom Holding, a cellular network operator, on growing competition. The stock plunged from 78.17 Egyptian pounds to 22.65 pounds through January, a loss of 71.0 percent that underperformed the sector’s drop by 19.3 percentage points.
After spending last year as runner-up, the three-analyst ING Equity Markets team led by Dalibor Vavruska reclaims third place. Hailed for “timely and on-the-money calls,” as one backer puts it, the London-based team downgraded the American depositary receipts of Russia’s Mobile TeleSystems in September 2007, on the mobile-phone services provider’s declining market share. For the 12 months ended January 31, the stock fell 74.3 percent.
EMEA Utilities
Derek Weaving & team Renaissance
second team Dan Karpisek, Dmytro Konovalov & team UniCredit
third team Dmitry Bulgakov & team Deutsche
The Renaissance Capital duo directed by Derek Weaving, in first place for a second straight year, wins praise for “insights into the political, regulatory and market environments,” according to one client. In November the London-based analysts published a report linking electricity demand to economic activity and concluding that the decline in the former anticipated a downturn in the latter. “This was at a time when the Russian government was claiming that the country was isolated from global financial turmoil,” explains Weaving, 57. Two weeks after the RenCap team published the report, the Russian government released figures acknowledging that year-over-year power consumption fell by 8.9 percent in November and industrial output tumbled 12.8 percent.
Debuting in second place is the UniCredit Global Research trio co-led by Dan Karpisek, who is headquartered in Prague, and Moscow-based Dmytro Konovalov. The researchers have been consistently bullish on ˇCEZ, the Czech Republic’s biggest power distributor, citing steadily increasing demand and rising prices. Although ˇCEZ shares plunged along with the rest of the market in the latter half of last year, they still outperformed the sector by 8.5 percentage points for the 12 months ended January 31.
Dmitry Bulgakov steers the Deutsche Bank duo to a third-place debut. In February 2008 the Moscow-based analysts warned investors away from RusHydro, at $0.09, owing to the Russian hydroelectricity company’s high level of capital expenditure commitments. In April, after the stock had slipped to $0.07, the team dubbed it a bargain and told clients to buy. The share price rose to $0.09 by early June before crumbling with the rest of the market, sliding to $0.02 through January, but the analysts stand firm.
