Business News

Editor's Intro: All-America Research Team

Institutional Investor

All-America Research Team, now in its 39th year, celebrates the nation’s top sell-side equity research analysts, as determined by the world’s leading money managers.

The inaugural ranking was published in 1972, just a few years after brokerage firms began publishing research that assessed the relative strengths and weaknesses of various stocks and

strategies in an effort to assist clients with their investment decisions. In the decades since, many firms have come and gone, new ones have been born, others have merged with or been acquired by former rivals – and Institutional Investor has consistently published the definitive ranking of the U.S. equity researchers that money managers consider to be the best.

Being named to the All-America Research Team can enhance an analyst’s reputation and give his or her paycheck a dynamic premium. Many firms base at least a part of their analysts’ compensation on how he or she fares in the Institutional Investor survey, and the magazine’s proprietary research has shown that the impact can be substantial. For example, in 2006 (the most recent year for which data are available), analysts who had appeared on the prior year’s All-America Research Team reported earning 2.4 times more in total compensation than analysts who had not ranked.

The survey process begins when questionnaires are sent to research directors and chief investment officers of major U.S. money management firms – more than 90 of the country’s 100 largest asset managers participated in the 2010 survey – asking them to identify the best analysts in 58 industry sectors and eight macroeconomic disciplines.

Rankings are determined strictly by using numerical scores based on the number of votes and the place (first, second, third) awarded to each analyst, and the weighting assigned to the voter’s firm (based on its assets under management). In sectors where team-based coverage is the norm (Equity-Linked Strategies, Real Estate Investment Trusts, Washington Research), we combine the votes for all the analysts covering the sector for a given firm, and ask that company’s director of research to designate a team leader.

Voter participation surged by more than 20 percent this year. The 2010 survey is based on responses from more than 3,500 individuals at some 970 firms that collectively manage an estimated $10.2 trillion in U.S. equities. The identities of the voters are kept confidential to ensure their ongoing cooperation.

Several changes were made to this year’s ballot. One sector, Life Science & Diagnostic Tools, was added. Moreover, the former Equity Derivatives category was expanded and its name changed to Equity-Linked Strategies, to reflect the broader, more comprehensive approach that many firms are taking with regard to hybrid debt securities.

This year’s highlights include J.P. Morgan’s first appearance as leader of the All-America Research Team, after having spent the past two years at No. 2, and Morgan Stanley zipping from No. 9 to No. 7 after picking up eight team positions – seven of them for analysts ranked in first place in their respective sectors. The only other top-ten firm to increase its number of first-place analysts is ISI Group, the New York-based firm that was co-founded by Ed Hyman. He is the undisputed champion of the All-America Research Team, having captured first-place honors in Economics for a mind-boggling 31 consecutive years.