Raymond James CIO: How we keep beating the market
Raymond James might not carry the same headline-grabbing cachet of Goldman Sachs or JP Morgan Chase, but the wealth management firm boasts that it produces an annual stock-picking list that almost always beats the market by a good margin.
The list, called Raymond James' Analysts' Best Picks, outperformed the S&P 500 by an average of 8.5 percent over the past 10 years, according to calculations from the company. In 2013, the list posted a 44-percent return, compared with the S&P's 29-percent gain. David Henwood, chief investment officer at Raymond James, which oversees $441 billion of client assets, explained to CNBC on Friday how the investment firm zeros in on stock market winners.
"All of our analysts know what they're talking about," Henwood said on "Squawk Box." "The question is, which are the ones that have the investment acumen to pick a name that will clearly deliver the goods?"
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Henwood said only top performing analysts can submit "strong buys" to the list. The investment firm makes the process voluntary. For example, only 38 of Raymond James' 55 analysts were qualified to submit stock picks this year, but only 13 actually made calls. Henwood said that means the stock picks come from "high confidence and passion."
The company tries to steer investors away from high-risk stocks, Henwood said.
"We have a system of procedures to evaluate the analysts' performance and to evaluate whether the stock has enough liquidity," Henwood told CNBC. "We pick solid names that we think are marketable and should have dependable performance over an extended period of time."
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The following 13 companies made Raymond James' 2014 Analysts' Best Picks list:
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Henwood highlighted Ctrip.com—a popular Chinese travel booking website—as a strong long-term performer. The stock popped more than 140 percent last year, Henwood said, and his analysts believe growth should continue.
"It's a name that probably if you own over the next five years, you're going to make a lot of money," Henwood said.
Disclosure: Comcast is the owner of NBCUniversal, the parent company of CNBC and CNBC.com.
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen.