Earning one position on the All-America Research Team is a career-defining feat. Earning two positions is a coup for your firm. And earning three positions — well, that puts you on the fast track to the Hall of Fame (just ask Evercore ISI’s Umer Raffat).
This year, we’re featuring analysts who are among the leading point scorers at their own firms, whether it’s by ranking in multiple sectors or simply by ranking the highest among their colleagues. This is not a comprehensive list. More multisector stars can be found among this year’s New Stars and Hall of Famers.
Meet some of 2021’s Most Valuable Players.
Jimmy Bhullar, JPMorgan Chase
Financial Institutions — Insurance/Life (No. 1)
Financial Institutions — Insurance/Nonlife (Runner-up)
What’s the best call you’ve ever made?
Initiating on The Phoenix Companies with an underweight rating. I was a junior analyst at the time, and this was the first company that I was the lead on. The stock’s valuation was depressed, and the company was highly sensitive to the equity market. So it had been outperforming the sector that year on the back of the equity market recovery. However, long-term business fundamentals were poor given structural issues related to business mix, distribution, and tail risk, which were being masked by the strong market. Our view was that the stock would pull back once investors better recognized flaws in the company’s business. We launched coverage in November 2003 and were the only firm with an underweight rating on the stock. PNX was one of the worst-performing life insurance stocks over the next several years, declining from a split-adjusted $193 when we initiated to around $37 after it agreed to be acquired by Nassau Reinsurance in 2016. The S&P 500 Index and the life sector doubled over the same period.
What’s the worst call you’ve ever made?
The calls I regret the most are ones when I’ve had the right view on a stock and downgraded it too early after it outperformed. Globe Life (previously called Torchmark) is the one I remember the most. We upgraded the stock to overweight in early 2010, when it pulled back due to concerns about the credit environment. The stock rose over 20 percent in the next year and a half as balance-sheet concerns abated, and we downgraded it as it got to our target even though I was positive on business trends. The stock doubled in the next three years, outperforming the market and the life sector by a wide margin. I had a similar experience with Aflac a few years ago.
What’s your favorite part of your job?
Interacting with buy-side clients, which has become more difficult during the pandemic as most clients have been working from home. Speaking with buy-siders, especially when they have a different view on a stock than my own, helps me test my own hypothesis and gives a different perspective on a company or issue. Plus, it’s fun and doesn’t feel like a typical job.
What’s the hardest part of your job?
In general, keeping up with news flow. I cover both the life insurance and the property and casualty insurance sectors, both of which have multiple subgroups within them. The amount of news flow on every topic and every company has continued to increase over the years, and even though the vast majority of it is not meaningful, keeping up with it absorbs a lot of time.
More recently, the hardest part of the job has been trying to stay in front of clients, as most have been working from home since early 2020. While we can still interact with clients over email, it’s not the same as a phone call or an in-person meeting.
What one thing should clients know about your area of coverage?
In the life insurance sector, it would be that these are not just interest rate plays. Over time, many investors have begun to view life insurance stocks as a proxy for rates and the market. Even though the sector is highly sensitive to rates and the equity market, there are other company-specific factors that drive these stocks.
Another thing I’d like to point out is that even though the life insurance sector is not that well positioned from a long-term fundamental standpoint, these stocks tend to perform very well in short intervals, either when the macro backdrop is improving or when sentiment is overly negative and we are in the midst of a macro downturn. The liabilities of life insurance companies are very sticky, so they rarely face liquidity issues and are rarely forced sellers of investments at distressed prices. So when investors start questioning the ability of life insurance companies to survive, those stocks tend to be great ones.
Philip Cusick, JPMorgan Chase
Technology, Media, & Telecommunications — Cable, Satellite, & Telecom Services (No. 1)
Technology, Media, & Telecommunications — Communications Infrastructure (Runner-up)
What’s the best call you’ve ever made?
We did very well recommending Charter over the past ten years, for the most part sticking with the cable broadband and levered-growth theme. Charter has been a great compounding grower over that period, riding the wave of increasing broadband demand.
What’s the worst call you’ve ever made?
Not necessarily the worst but the latest has been sticking with Altice through 2021. As the company’s underinvestment has become clear, the growth has fallen off — and the shares with it. It’s down about 50 percent this year. We are still recommending it on asset value because private multiples for assets like this are much higher and the chairman has a history of taking his companies private — but the public market is going to struggle with this story in 2022.
What’s your favorite part of your job?
As an analyst, I get to speak to an amazing mix of smart investors and executives. Bouncing ideas off investors, formulating a thesis, and coming back with well-organized arguments are a big part of our franchise. It’s fun when companies are clearly listening as well.
What’s the hardest part of your job?
Finding the correct balance in allocating time. There is demand from clients, as well as an unlimited number of things to work on. Finding the right things to do that will be impactful to our clients and business is hugely important. We try to write two to three thematic reports each year that we can leverage and that will have a long shelf life, and balance those with a series of data points that are interesting to shorter-term traders.
What one thing should clients know about your area of coverage?
Consumers want great broadband wherever they are, including on the go (mobile) and at home (cable or fiber broadband). With federal support now clear, we see a path to greater than 95 percent of households having service, versus about 82 percent today. That demand will keep my companies going even as penetration and competition increase.
Dubravko Lakos-Bujas, JPMorgan Chase
Macro — Quantitative Research (No. 1)
Macro — Portfolio Strategy (No. 2)
What’s the best call you’ve ever made?
Calling the market bottom in late March 2020 during Covid-19 and arguing that investors should position for a V-shaped market recovery, with QQQs [the largest nonfinancial companies listed on the Nasdaq] and tech leading initially, followed by cyclicals later that year.
What’s the worst call you’ve ever made?
Being long cyclicals into the Trump trade war. Escalation of U.S.–China tariffs had a disproportionately higher negative impact on the margins of cyclical stocks [such as] industrials and energy stocks.
What’s your favorite part of your job?
Interacting with the smartest minds in the investment industry on a day-to-day basis.
What’s the hardest part of your job?
Holding and defending a high-conviction, nonconsensus view. For instance, we entered 2021 with a high-conviction bullish call on energy that has received a lot of continuous pushback from clients and investors.
What one thing should clients know about your area of coverage?
Equity investing has dramatically evolved over the years and has become increasingly more complex — requiring understanding not only of fundamentals and macro, but also of the evolving market structure and role of newer investor classes [such as] systematic and retail. In other words, the role of a strategist remains that of a generalist, but with a growing emphasis on deeper specialized knowledge.
Andrew Lazar, Barclays
Consumer — Food Producers (No. 1)
What’s the best call you’ve ever made?
Aside from the ratings we have on the stocks we cover, a crucial part of our role as sell-side analysts is to assess structural shifts in the industries we follow and uncover inflection points in trends that can lead to accelerated sales and earnings growth. In this vein, back in the fall of 2010, we published a report on Kraft Foods entitled “Divide and Conquer?,” in which we detailed the potential financial and strategic viability of splitting the company into two separate entities — a Growth Co. and a Yield Co. At the time, this sort of action was not generally being given much weight in the investment community.
Less than a year later, Kraft Foods announced its intention to split into two separate public companies (which today are known as Mondelez International and Kraft Heinz): the first a faster-growing, global snacks business (featuring Cadbury, Nabisco, etc.) and the second a high-margin, high-cash flow North American grocery business. It is always most gratifying to me to help investors think through what strategic actions may be in the offing for the companies we cover in order for them to stay relevant with consumers and investors.
What’s the worst call you’ve ever made?
The worst call I ever made was the call I did not make. I should have been more positive on McCormick over the years. While the shares historically trade at a healthy premium to the peer group, the reality is that during the 26 years I’ve followed the company, it has been one of the best-performing packaged food stocks by a wide margin. A good reminder that certain structural advantages often pay off handsomely over a longer-term time horizon.
What’s your favorite part of your job?
Without question, my favorite part of the job is the interaction I’m fortunate enough to have with both investors and company management teams. I’m grateful for the opportunity to work closely with incredibly smart and passionate industry leaders and investors, from whom I learn so much every day. Despite following the packaged food group for 26 years, I continue to learn new aspects about the food industry, and many of my best ideas have their genesis from the investors I talk with.
What’s the hardest part of your job?
Interestingly, I find the hardest part of the job is ensuring I continue to effectively develop my team members into the next generation of industry analysts and investors. I have been incredibly fortunate to have had incredibly talented team members over the years, and I take seriously my responsibility to ensure they continue to grow and develop. Of course, I don’t always get it right, but I’m gratified that so many of my former team members have gone on to impressive roles and success in all aspects of the investment management and investor relations arenas. It is their hard work and talent that have led to their success, to be sure, but at least I didn’t screw them up too much!
What one thing should clients know about your area of coverage?
Packaged food companies often get a bad rap from investors due to more-modest growth, shifts in the balance of power between manufacturers and retail customers, and a less aggressive response during the past several years to rapidly changing consumer needs. That said, the past two years have represented the most significant new-household trial opportunity for the industry in history, given the shift to at-home eating due to the pandemic. If packaged food companies can capitalize on this and retain even a small portion of these new consumers, then longer-term, even as the world more fully reopens, it could represent a new era of improved growth trends.
Dara Mohsenian, Morgan Stanley
Consumer — Beverage, Household, & Personal Care Products (No. 1)
Consumer — Food Producers (Runner-up)
What’s the best call you’ve ever made?
Our best calls through the years have been ones with long-term secular growth drivers and/or changes in the business model that the market was not fully appreciating. Estée Lauder was one of our best calls that fits both these criteria. We were able to correctly identify ahead of time that Estée Lauder was poised to transform away from its unfavorable U.S. department store focus to a much higher-growth and higher-margin company with a strong competitive position in areas poised for significant expansion — including skin care from a product category perspective, China from a geographic standpoint, and e-commerce and travel retail from a channel perspective. The stock is up 14-fold since the beginning of the last decade, during which time we have consistently recommended it as an overweight.
What’s the worst call you’ve ever made?
We have had a couple of periods when we were underweight Weight Watchers, when the stock shot up significantly on celebrity partners or new diet programs, which we frankly missed, although ultimately our long-standing underweight call did work eventually.
What’s your favorite part of your job?
My favorite part of the job is trying to figure out the different pieces of the puzzle on individual companies and what the market is missing, which is always fascinating given the intricacies of each company and the dynamic nature of the markets. Collaborating with my excellent colleagues at Morgan Stanley — which is a key linchpin of our research strategy — and sharing ideas and pushbacks and vetting stock ideas with our clients, as well as interacting with the companies we cover, are also rewarding.
What’s the hardest part of your job?
A research analyst is pulled in many different directions. Having the time to do all the value-added analysis we would like and the foresight to understand what should take priority, particularly in a dynamic market, can be challenging.
What one thing should clients know about your area of coverage?
From an industry standpoint, with the worst inflationary environment we have seen in our more than two decades of experience, we have been laser-focused on those companies and sectors with pricing power to pass on costs, given that we believe we are entering a multiyear period where higher pricing will be necessary. We see the beverage and beauty sectors as best positioned here. From a company standpoint, we are also focused on companies with improving execution, with Procter & Gamble and Pepsi serving as two good examples of very successful multiyear calls we have had where management has driven positive organizational change with sustained longer-term benefits.
Brian Nowak, Morgan Stanley
Technology, Media, & Telecommunications — Internet/Large-Cap (No. 1)
Technology, Media, & Telecommunications — Internet/Small- and Midcap (No. 1)
What’s the best call you’ve ever made?
There have been multiple times over the course of my career where we’ve done in-depth work looking at the intricacies of Amazon’s operational model as well as the way they were expanding into new markets — and the way that all impacts valuation. The Amazon deep-dive work is something that I have the most pride in.
What’s the worst call you’ve ever made?
In the last few years, we underestimated Snap’s turnaround. We were underweight the stock while the company was making a lot of changes on the advertising side — and we were wrong. We underestimated the impact of low-hanging fruit and even larger changes that we were seeing.
What’s your favorite part of your job?
The daily analytical rigor to analyze the evolving sector. There is so much news and so many events that happen in the space, which require us to constantly be doing math to figure out how news either does or does not impact the space or our stock. I like how it forces you to stay sharp, stay on top of the news, and constantly be asking why.
What’s the hardest part of your job?
Earnings season: having multiple earnings on the same day, being able to ensure that we spend enough time analyzing the earnings, updating the models, determining the key learnings from those earnings, and being able to maximize the value we add for clients.
What one thing should clients know about your area of coverage?
It’s important to focus on consumer behavior that will and won’t change and how companies in the space are both driving and benefiting from those changes and developing tools that can monetize around them. Oftentimes there are too many assumptions around behaviors changing.
Umer Raffat, Evercore ISI
Health Care — Pharmaceuticals/Major (No. 1)
Health Care — Pharmaceuticals/Specialty (No. 1)
Health Care — Biotechnology/Large-Cap (No. 1)
What’s the best call you’ve ever made?
By far the best call I ever made was my decision to join equity research covering the very innovative biotech and pharma space under the great Mark Schoenebaum.
What’s the worst call you’ve ever made?
Valeant has to be the worst call I ever made. It also has to be the one stock where I learned the most. What was most unusual was that a majority of allegations weren’t accurate. However, once the noise level amplified to the levels it did, things changed very fast, ranging from managed care’s decision to completely change the P&L to valuation metrics completely switching.
What’s your favorite part of your job?
I love learning and solving problems. The pace of clinical development in biotech provides a perfect storm for learning about innovation as well as attempting to solve for the winning solutions amidst a myriad of therapies in development.
What’s the hardest part of your job?
The unprecedented pace of company formation in biotech has certainly created new challenges in managing resources to be able to track and ramp up on the emerging technologies.
What one thing should clients know about your area of coverage?
Innovation will remain the fundamental driver of this sector. Markets and financing windows may inevitably go through cycles, but innovation is here to stay.
Keith Weiss, Morgan Stanley
Technology, Media, & Telecommunications — Software/Large-Cap (No. 1)
Technology, Media, & Telecommunications — Software/Small- and Midcap (Runner-up)
What’s the best call you’ve ever made?
In April 2013, upgrading a $28 Microsoft stock to overweight with my assumption of coverage. While it was my first big call as the lead software analyst at Morgan Stanley, it had all the elements of a solid investment thesis: Sentiment was washed out on the stock after two competitor downgrades, giving us a great entry point at a 20 percent discount to large-cap comparables; the Windows 8 upgrade cycle was a bust, so investor expectations were low for fundamental performance, making the call very out of consensus; and most importantly, our proprietary survey work on Microsoft’s new cloud solutions showed an adoption trend quicker than investors had forecasted, giving us a clear catalyst path ahead. Undervalued cloud growth has been core to our positive investor thesis ever since, giving the call amazing shelf life.
What’s the worst call you’ve ever made?
In September 2013, we downgraded Microsoft to equal weight on the Nokia acquisition. It was a knee-jerk emotional reaction to an acquisition I thought was a very bad idea. While correct on the acquisition being a bad idea, it was the wrong call on the stock — the shares had already corrected by far more than the $7 billion price for the deal, and the upside potential from Microsoft’s emerging cloud businesses well outweighed the ongoing execution risks from Nokia (from which investors expected little). It took us almost two years to get back to an overweight rating on Microsoft, and we missed the move from $32 to $58, but we’ve been onboard ever since.
What’s your favorite part of your job?
The constant learning. In researching the software industry, the team and I constantly explore technology innovations, evolving business models, and the changing dynamics of the industries these solutions are sold into. Keeping up with the fast pace of change in software means there is always a lot to learn.
What’s the hardest part of your job?
Prioritization. There is so much happening in the software industry right now: new companies, emerging business models, evolving technology architectures. The hardest part of the job is figuring out what to prioritize and how to allocate the team’s time. More often than not, we find ourselves with many more ideas than time to execute them.
What one thing should clients know about your area of coverage?
Software is sticky, particularly enterprise software. Once deployed in an enterprise environment, given the software’s role in orchestrating key business processes and an inherent ability to consistently innovate, the revenue (and cash flow) driven by strategic software solutions can be remarkably durable.
Read more:
The 50th All-America Research Team
The Hall of Famers
The New Stars
Remembering Tobias Levkovich
