Institutional Investor All American Research Team

ESTING 58/research & rankings THE FUTURIST THE CHARTIST CONTENTS INSIDE II OP M INSIDE R&R Many firms have adapted to the postcrisis reality of limited resources by asking veteran analysts to pick up coverage of a second sector — at least until a junior analyst or new hire proves ready to take the reins. This strategy is not without its risks, of course: Analysts could become stretched so thin that the quality of their work suffers. That doesn’t appear to be a problem for members of the All-America Research Team, though. Thirteen of this year’s 65 top analysts also rank in a second sector. Barclays’s Andrew Kaplowitz, for instance, not only captures a fourth straight first-place finish in Engineering & Construction but also is a runner-up in Machinery — a sector he began covering in April. ISI Group’s Omar Saad boasts similar victories in Apparel, Footwear & Textiles and Retailing/Specialty Stores; he picked up coverage of the latter sector when he moved from Credit Suisse last year. — Thomas W. Johnson Managing Editor Thomas W. Johnson Senior Editors Tucker Ewing Jane B. Kenney Associate Editors Denise Hoguet Brian Murphy Cover photo by Justin Borucki The Best Analysts of the Year BASIC MATERIALS 15.2 percent. Zekauskas, who follows 36 stocks, is recommending Mosaic Co., partly on the Plymouth, Minnesota– based fertilizer provider’s share-repurchase program. “Jeff thinks like his clients,” observes one buy-sider. “He wants to be right with minimal risk.” — Ben  attlin M PAPER & PACKAGING CHEMICALS Jeffrey Zekauskas J.P. Morgan The buy side says: “His perspective on chemicals is superior — Jeff has seen it all.” I nvestors credit J.P. Morgan’s Jeffrey Zekauskas, who leads the lineup for a second consecutive year, with providing “grounded, unemotional assessments” and asking “insightful questions of management.”The 58-year-old analyst upgraded Monsanto Co., a St. Louis–based seed and pesticide supplier, from neutral to overweight in October 2011, at $65.49, largely on high seed demand and its new pest-control products.The stock soared 33 percent, to $87.11, and beat the sector by 6.3 percentage points, through August. In November he raised Ashland, a specialty-chemicals producer headquartered in Covington, Kentucky, from neutral to overweight, dubbing the shares a bargain after disappointing quarterly earnings drove the price down to $49.41. By late August the stock had jumped 49 percent, to $73.63. During the same period the sector rose 28.4 percent, to $11.51, and trailed the sector by 35.1 percentage points. Gambardella’s advice going forward: Stay away from this one. He is “the dean of metals stocks,” declares one ally, while another praises the analyst for being “an independent thinker.” — B.M. METALS & MINING Michael Gambardella J.P. Morgan The buy side says: “Mike is rational and thoughtful with his recommendations in this historically cyclical sector.” I t’s five straight years at No. 1 for Michael Gambardella.The J.P. Morgan analyst, who publishes research on 25 companies, “is not afraid to take a stand,” observes one money manager. Case in point: In September 2011, Gambardella, 55, broke with the consensus and issued a valuation-based downgrade on Molycorp from overweight to neutral, at $53.01, because widespread speculation about new export restrictions in China had pushed the stock price artificially high. In early August, after the stock had plummeted 69.7 percent, to $16.07, he reduced it to underweight, on management’s announcement that the Greenwood Village, Colorado–based producer of rare earth minerals was short of funds to finance new projects. By the end that month, the shares had tumbled George Staphos Bank of America Merrill Lynch The buy side says: “Great insight on industry trends and individual companies.” A ll-America Research Team Hall of Famer George Staphos is on top for a ninth straight year (including this sector’s predecessors) and has finished in first place 13 times since 1999. “Being on the other side of his stock calls is an uncomfortable proposition I try to avoid,” asserts one client. Others praise the Bank of America Merrill Lynch researcher’s long-standing support of Packaging Corp. of America. Staphos, 47, launched coverage in February 2009 with a valuation-based buy rating, at $11.69, and has stood by the call ever since. Through August 2012 the Lake Forest, Illinois–based corrugatedbox maker’s stock soared 173.9 percent, to $32.02 — gaining 30.6 percent in the past year alone. In June the analyst, who covers 23 companies, reiterated his buy rating on Norcross, Georgia’s Rock-Tenn Co., when disap- O C T O B E R 2 012 • I N S T I T U T I O N A L I N V E S T O R . C O M