Panmure Gordon & Co., Altium Securities and ABG Sundal Collier topped First Coverage’s ranking of best European brokerages for equity trading ideas in 2010, as boutique firms beat their larger rivals.
In a separate ranking of individual analysts, Hamish Dickson, head of equities for Altium in London, was the best performer after recommending shares including Oxford Instruments Plc and Spectris Plc. Brad Meikle, who analyzes the solar industry at Renewable Analytics LLC in San Francisco, and Peter Schofield, who trades European equities from New York for ABG, were respectively ranked second and third, according to a statement from the Toronto-based firm.
First Coverage allows sell-side traders to post trade ideas on its website for clients in the asset management industry. Smaller stocks tend to lead returns in up years but can post the biggest losses in years when markets sell off. The MSCI World Index of 24 developed markets rose 9.6 percent in 2010.
“We often see a high concentration of boutique and regional research firms rise to the top of our performance rankings,” said Boston-based David Allen, First Coverage’s vice president for sales and marketing, in an interview. “For most of these firms the research product is a key revenue driver,” he said, adding that a focus on smaller-capitalization stocks, which tend to be more volatile, helps their outperformance.
First Coverage received about 50,000 recommendations worldwide from about 1,500 equity sales people from 350 firms, Allen said. As many as 80 participating brokerages have a focus on European stocks, he added.
The Stoxx Europe 600 Index rose 8.6 percent last year as central banks around the world nurtured an economic rebound by leaving interest rates at record lows. The Euro Stoxx 50 for countries in the euro zone fell 5.8 percent on concern countries from Greece to Ireland and Spain would falter in cutting their budget deficits.
Handelsbanken Capital Markets, KBC Groep NV, MF Global Holdings Ltd., Mirabaud Securities, Kempen, SNS Securities and Deutsche Bank AG completed the ranking of best companies by sales ideas.
Bets on the smallest stocks as well as in industrials and basic-resources companies helped the best-performing traders. Oxford Instruments, a maker of tools for scientific research, more than trebled in 2010. Spectris, the U.K.’s biggest maker of production-testing gear, rose 78 percent.
“The most obvious theme to come out from 2010 was the recovery in the industrial sector, where deeply bombed-out ratings recovered,” said Altium’s Dickson. “A lot of that recovery is complete,” he added, “but a lot of the underlying fundamentals are still very bullish.” He recommends Spectris again for 2011 and IQE Plc, a Cardiff, Wales-based maker of wafers for the electronics markets.
Schofield at ABG Sundal said Norske Skogindustrier ASA, the world’s fourth-largest maker of publication paper, and Norsk Hydro ASA, Europe’s third-largest aluminum producer, were among his best picks last year. For 2011, Schofield recommends Novo Nordisk A/S and Yara International ASA.
Gareth Jones at Edison Investment Research, which came in fourth place, succeeded with recommendations on energy companies Nautical Petroleum Plc and Xcite Energy Ltd. He is advising investors buy Howden Joinery Group Plc and IFG Group Plc this year, he said in an interview.
Oil and gas was the industry with the most “buy” recommendations in 2010, while consumer-goods producers received the most “sells,” Allen said.
Sebastien Fuki at KBC, Lauri Suoninen at Handelsbanken, Roger Lee at Deutsche Bank, Bas Van Zelm at Kempen, Josh Wilson at Collins Stewart Plc and David Izzard at MF Global were the other top-ten ranked individuals for 2010.