Jeffrey Sprague picked a bad time to join the sell side: It was just after the October 1987 crash definitely not a good time to be an analyst, especially right out of college, he says.
Sprague graduated from the University of Akron with a bachelors degree in finance. I had to take an investment class as a requirement for the degree, and thats where I found my true calling, he explains. Ive been hooked on investing ever since.
And investors have been hooked on him. Sprague got a job with Paine Webber and debuted on the All-America Research Team in 1994 as a runner-up in Appliances. He fell out of the ranking for a few years but returned in 1997, this time in third place in Electrical Equipment representing Cowen and Co. He was ranked every subsequent year until 2010, for a total of 18 appearances, including 11 first-place positions. In 2002 (by which time he worked for Citigroup/Salomon Smith Barney) he was No. 1 in two sectors, Electrical Equipment and Multi-Industry; the following year the two were merged.
Sprague, 50, has made a number of winning calls over the course of his career, but two in particular stand out. In 2002, on the day that scandal-ridden and financially shaky Tyco International tapped Edward Breen to be its new CEO, the analyst upgraded the stock to buy. Our work on the balance sheet and economics of its ADT Security Services division highlighted the underlying value, and the stock quadrupled over the next two years, he says.
More recently, in April 2007, Sprague published a report explaining why he thought General Electric Co. should divest itself of noncore operations such as consumer finance and real estate. Evidence is mounting that GE is too big and complex to manage effectively, he wrote. His advice fell on deaf ears. They didnt do it and experienced a severe earnings decline and liquidity crisis in the 200809 downturn as a result, he says.
Sprague left Citi last year to help start a boutique. Growing frustrated with the poor management and conflicts at the big firms, but still having a passion for research, he launched Vertical Research Partners with Nicole Parent, a former global industrial sector head at Credit Suisse. The Stamford, Connecticutbased firm employs 18 analysts covering six sectors.
Sprague attributes his success to self-discipline and a passion for the job. Analysts can easily get lost in the weeds, he says. The way to prevent that is to dig deep and get the details, but then step back and see what larger picture those details create. Otherwise, youre just chasing after something, and theres no telling where that will lead.
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