Best Equity Research?

JP Morgan tops US research rankings

Shanny Basar in New York 29 Jun 2010

JP Morgan is the top bank for US equity research, according to annual rankings that show Wall Street’s biggest banks have successfully captured market share freed up by the collapse of rivals during the crisis.

JP Morgan was ranked first in Greenwich Associates’ US equity research rankings for 2010 and the Connecticut-based consultancy said bulge bracket firms have succeeded in retaining or capturing market share over the past 18 months.

Bank of America Merrill Lynch was in second place with Barclays Capital and Credit Suisse sharing joint third position. The report said: “Only 60 basis points in share separates the jointly fourth ranking firms of (in alphabetical order) Citigroup, Goldman Sachs, Morgan Stanley, Sanford C Bernstein, and UBS.”

The consultancy interviewed 1,007 equity analysts at US buyside institutions between November 2009 and March 2010. Research providers are ranked by their share of the US institutional “research vote,” which Greenwich weights by the amount of US equity trading commissions the fund manager pays out.

Greenwich said in a report yesterday that the loss of Bear Stearns, Lehman Brothers and Merrill Lynch initially boosted smaller research providers but added that the bulge-bracket firms as a whole captured a significant portion of the business freed up by market dislocations during the global crisis.

The report said: “Barclays Capital has been especially effective in securing the vast bulk of the relationships and research share formerly held by Lehman Brothers, the core US assets of which were acquired by Barclays in 2008.”

Greenwich said that as the crisis receded, several US bulge-bracket firms have begun rebuilding depleted research franchises and hiring back top analysts, while overseas firms such as Nomura, CLSA and Macquarie have been building their own research teams in the country.

This month, Nomura said that Glenn Schorr from UBS will join the Japanese bank as head of its US financials equity research team. Greenwich said growth of overseas firms has had the biggest impact on smaller research providers.

Jay Bennett, a Greenwich Associates consultant, said: “To a large extent, some of the top mid-sized brokers and other non-bulge bracket providers are limited in the amount of the vote they can capture because they are only able to compete in US equities. For this reason, several of these firms are trying to build capabilities in Europe and Asia, while foreign firms look to build a bigger presence in US equities.”

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