David Knox & team Cazenove
second team Alexander Hugh, Nicholas Nelson & team UBS
third team José Linares & team J.P. Morgan
Since 2005, David Knox has led the Cazenove team to first place every year in which this sector has produced publishable results. (The category was not published in 2007 or 2009.) Knox, 44, heads up a 65-analyst squad that wins praise for keeping “the focus on fundamentals and on the bigger picture. And their experience and independence allowed them to resist some of the panic calls we’ve seen in market,” as one client puts it. In March the researchers upgraded HSBC Holdings from neutral to outperform, at 380.60p, on signs of growth in the financial services firm’s investment banking division. The stock leapt 86.2 percent, to 708.80p, through December, beating the U.K. broad market by 43.3 percentage points. The team downgraded National Grid to underperform in January, at 634.92p, telling investors that “deteriorating credit ratios” would make it difficult for the electricity-transmission company to secure needed financing. In August, after the stock had tumbled 12 percent, to 558.84p, and trailed the broad market by 19.7 points, the analysts upgraded it to neutral, on valuation. By late December the shares had climbed to 679p. Newcomers Alexander Hugh and Nicholas Nelson shepherd UBS to a second-place finish, the team’s first appearance in the ranking since 2006. Investors praise the group for combining “very good stock picks” with “complex and detailed data analysis.” Recent winning calls include a July upgrade from hold to buy on Dunelm Group, at 210.25p, on the soft-furnishings retailer’s strong balance sheet. The stock shot up 80.7 percent, to 380p, through December. J.P. Morgan debuts in third place. In January 2009 the team highlighted their underweight call on RBS, arguing that the bank was undercapitalized. The stock ended the year down 46.9 percent and lagged the U.K. broad market by 69.3 points. “While others were finding excuses to upgrade U.K. banks, they stayed bearish — and they hit the nail on the head,” cheers one grateful investor. The team was guided by J.P. Morgan’s director of European and Asia-Pacific equity research, José Linares; in November, when the firm announced it would buy out its venture in Cazenove Group, Knox was tapped to oversee the combined U.K. team. The acquisition was completed last month.
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