Every year, thousands of investment professionals vote to determine the top equity research analysts — and firms — on Wall Street. For the fourth year in a row, that top firm is JPMorgan Chase & Co.

JPMorgan leads the 2019 All-America Research Team, Institutional Investor’s 48th annual ranking of U.S. stock analysts and research providers. The bank continues its reign at the top of the leaderboard despite changes to the ranking’s methodology, which for the first time ever gives more weight to the sell-side’s biggest clients.

As budgets for sell-side research shrink — a trend reflecting regulatory changes, fee pressure, and the decline of active management — the new methodology better reflects the opinions of those voters who pay more in equity research commissions. It also recognizes the value of research teams, with voters asked to choose the best overall firm in each sector, in addition to the best individual analysts.

Still, regardless of how the results are added up, JPMorgan comes out victorious, topping all four leaderboards compiled this year. Nick Rosato, the bank’s head of North America equity research, attributes the franchise’s continued success to its “seasoned team” of equity analysts. “For the better part of the last ten years, we have been fully built out in the U.S. with 49 senior analysts covering every sector we want to cover,” he says.

The strength of the team is exemplified by this year’s three new entrants to the All-America Research Team Hall of Fame. All of them are from JPMorgan. Health care analyst Lisa Gill — only the seventh woman ever to join the Hall of Fame — earned her first No. 1 ranking in the healthcare technology and distribution sector in 2010, the same year that JPMorgan first ranked as the top firm overall.

JPMorgan life insurance analyst Jamminder (Jimmy) Bhullar and his colleague Philip Cusick, who covers cable, satellite, and telecom services, also nabbed their tenth first-team positions this year. Cusick made his first-team debut at Bear Stearns in 2005, while Bhullar first rose to the top of his sector in 2010.

“Our analysts are talented bottom-up stock pickers who have developed deep relationships with companies and investors,” Rosato says. “We have been fortunate to have below-average turnover.”

Despite the bank’s obvious success, JPMorgan has faced many of the same challenges as the rest of the sell-side industry. The biggest challenge is the asset management industry’s shift from active management to passive index funds, according to Rosato. “Our job is to help clients achieve outsized investment returns, and many of them are doing that — but if they can’t garner assets, that’s going to be a drag on the whole business model,” he says. 

It’s a sentiment echoed by new Hall-of-Famers Gill, Bhullar, and Cusick, who below discuss career highs and lows, the challenges facing the industries they cover, and the ways the sell-side research industry has changed. The obvious changes: regulatory shifts and advancements in technology. At JPMorgan, Rosato says there has been a lot of investment in data-driven research and automation to free up analyst time for “value-adding” tasks like talking to company executives.

“The business is not getting any less competitive,” Rosato says. “We have to continue to innovate and be nimble and make sure we’re well-positioned.”

Jamminder (Jimmy) Bhullar

Financial Institutions: Insurance/Life

I would say the very first company I ever initiated on, Phoenix — PNX was the ticker. I was a junior analyst at the time, and I spent a lot of time on it. It was November 2003 and I initiated with an underweight rating. The company barely survived, the stock did extremely poorly, and it eventually got bought out by private equity. 

The ones that I consider the worst calls are not ones that necessarily go wrong but where you focus too much on the valuation or try to lock in gains and end up missing the rest of the upside. There’s a company that changed names — it used to be Torchmark but now it’s called Globe Life. It had taken a huge beating: the stock went below $20. So we upgraded it in February 2010 and a year from then it had gone to $30. Because it had done so well, I went neutral on it, even though I was still pretty positive on the company, because I figured the valuation was getting stretched. Now the stock is sitting at $93. We actually upgraded in January of this year.

I think the biggest challenge is that many of our clients are struggling. Their research budgets are squeezed, which means our revenues are squeezed. Most analysts are covering more companies and are not able to specialize as much as they used to. There are analysts who are covering more companies than buy-siders cover — how do you give advice to somebody when your coverage is broader than theirs is? That’s the main issue; otherwise, not much in the industry has changed.

The biggest one is low interest rates, which pose risk to earnings and balance sheets. Another risk is that many companies have significant exposure to underpriced legacy policies. It’s an industry with companies selling products that will be on their balance sheets for 10, 20 years, and they’re just sitting there. There’s just an inability to expand demand and expand the target market. There’s a significant unmet need for products, but companies have a hard time reaching customers.

I don’t think it’s changed that much. The best thing about a sell-side position is it gives you a lot of autonomy around how you run your franchise. You can decide what you focus on and where you want to spend more time. I think obviously people are stretched a little bit in terms of resources, but the job is very similar to how it was 10 or 20 years ago. 

The first is to spend as much time as you can learning the companies and the industry, because as you advance, there are more demands on your time and you’re not able to spend as much doing just the research. The other thing — and this is pretty simple stuff — be responsive. Calling someone back is the easiest thing to do, but people don’t do it.

Phil Cusick

Technology, Media & Telecommunications: Cable, Satellite & Telecom Services

Believing in demand for broadband and wireless services. That led to a series of good calls and it’s been a consistent performer for us. Charter had an 800 percent return over an 8-year period — all of that driven by broadband.

I tend to get sucked in by secularly declining businesses with a lot of cash flow, and getting out of those on time is a lesson I keep having to learn. CenturyLink was a good example of a bad call in that theme over the last year.

With fee compression at most of my clients, it’s just headed to a barbell between really big banks that can afford a scale of high-quality, broad research and really tight boutiques who are excellent at one particular thing. The undifferentiated analysts or undifferentiated banks in the middle are going to disappear over time.

Right now the internet just continues to eat other businesses. Things like wireless line phones, which used to be something people would pay for, have disappeared. More and more niche services are going over generic broadband lines. The video ecosystem also seems to be accelerating out of control. More and more people are getting video over the internet. The old bundle gets more expensive every year, and quality tends to deteriorate.

When I started, most of my colleagues and I had very specific niches. So I started in wireless telecom services a couple of big companies that mattered and a bunch of smaller start-ups. There’s since been a massive consolidation of analysts. Today we cover a half-dozen huge, almost conglomerates , and dozens of mid-sized companies, but the number of start-up or small-caps is very small. It’s really been about doing more sub-sectors on our own with one team with less time and energy to put against the individual small businesses.

I think to do this job well, especially starting out, you need to pick one or two particular subjects and do them phenomenally well. It almost doesn’t matter what they are as long as they are important to your companies. You need to have one or two things where you just know it better than anybody, because then clients and companies will need to talk to you about it. A lot of people are afraid to say they’re not good about a particular thing — I’m not shy about that as long as I am really good at something else. I take pride in being very good at particular subjects and making sure I really own them.

Lisa Gill

Health Care: Health Care Technology & Distribution

As I think about my career and think about things that were critical, it would be the industry I covered more than any particular stock. Back in the day, we recommended the PBM [pharmacy benefit manager] industry and saw opportunities. One of the best calls I ever made was when Express Scripts signed a deal with WellPoint, which is now Anthem. Everyone on the Street didn’t really like Express Scripts, but we were positive on it. It was a great performer in 2010 — and that was the first year I was ranked No. 1 [on the All-America Research Team].

One of the things I’ve learned is that when one shoe drops, there’s probably another one to follow. There’s a smaller company I follow called Diplomat — we upgraded the stock based on its new management team that I knew well and liked. But the business was deteriorating, and they weren’t able to turn it around. This is a stock that’s down 62 percent this year. We thought this was going to be a great small-cap company.

I think it’s regulation. It’s the changes from MiFID that have come about. It’s a very competitive business that we’re in on the sell-side, and I think the challenge, especially if you are not well known in the industry, is really getting your name out there and building the relationships with the institutional investors. I think the sell side has changed a lot over the years and I think we go through waves of how important people view the sell side to be in their decision-making process. I think it’s important as a sell-side analyst to not only be a great analyst, but also to participate in things such as industry conferences and really know what you’re talking about so people want to talk to you. 

We’re in this time where we’re going to see disruption. Health care needs to change and evolve. Our sector, we’re going to have companies on the cutting edge. We believe the companies that are not on the edge of finding those solutions are going to be left behind. Cost, quality, convenience — those are the pillars we see in the marketplace today. The consumer is more important than ever. We think there are good companies that will come out of this on the other side.

When I started at J.P. Morgan as junior analyst in 1998, it was before Reg FD [Regulation Fair Disclosure]. People would call you and tell you that you need to think about tweaking your numbers. Reg FD kind of leveled the playing field. Before it was always analysts with relationships that got great information. Technology has also gotten better. And quarterly reports, while still important, are not as important as they were 15, 20 years ago.

Follow an industry that you’re passionate about. I love health care. I worked my entire career in health care; I love to hear about new information in the market around health care; I love meeting people who are involved in health care. I’m really passionate about the sector I follow. You really not only need to be passionate about it but also be the person people look up to. Have humility, be honest, and have integrity. That all sounds really simple and you think everybody has that, but that’s not always the case with the sell side. If you can have those characteristics and be passionate, you will succeed.