Asaninvestor, if your thing is resource stocks, 2010 was a pretty goodyear.Even better if you also favour smaller-cap junior names.
Butcombine those positive traits with superior research, as Bonnie Hughesdid often last year, and the results are award-winning.
Ms.Hughes,an institutional sales analyst at MGI Securities based inToronto, wontop honours in First Coverage’s annual performance rankingsin Canada,unveiled by the Financial Post on Tuesday. Recognized as thetop salesrepresentative of 2010, her recommendations stood abovethousands oftrade ideas from the country’s best institutionalsalespeople.
TD Securities, meanwhile, was the top ranked firm last year.
“The commodity market has been on a tear, so obviously that helped,” Ms. Hughes says.
Herwinningpicks ran the resource gamut, from gold and silver to copperand oil& gas and included names like Medusa Mining Ltd., AurcanaCorp.,Compass Petroleum Ltd. and Antares Minerals Inc., a copper playthat wastaken out by First Quantum Minerals Ltd.
Inadditionto rising prices for commodities, the key to Ms. Hughes’success wasrecognizing which stocks under coverage were undervalued.
Shespentconsiderable time figuring out net present values based on futurecashflows, particularly for companies near or in production.
Beyondthenumbers, Ms. Hughes adds that she is attracted to companies withstrongmanagement teams and also admits, after 20 years in the business,sheoften relies on instincts to decide recommendations.
“Itcomesfrom experience,” she says. “When you see so many companies, youcansay, ‘oh, I’ve seen that before,’ and can tell if that somethingwill dowell or not so well.”
TimWiggan,a managing director and co-business head of institutional salesat TDSecurities, says his firm’s winning performance in 2010 wasthankslargely to a very good macro call.
“Thebetwas that we weren’t going into a double dip recession,” he says.“Lastyear, especially in July and August, that was a prevalent fear inthemarket place and it offered an opportunity if you were a bitmoreoptimistic about where the
economy stood.”
Theopportunity,he adds, was to buy blue-chip Canadian companies thatwerehighly-capitalized and offered great relative yields atattractiveprices.
“Itwasreally a case of us being willing to take on equity exposureinstead ofdebt. At the time, that was a bit of a contrarian view.”
Hecreditsstrategist John Aitkens for TD’s bang-on economic take, butalso paidrespect to the firm’s analysts and sales & trading groupthat haveworked together for a very long time.
“Wehave specialists in every area of the Canadian market who are veryconfident and very diligent. It makes the
job that much easier,” hesays.
FirstCoverage’s Web-based
platformtracks all the recommendations thatresearch analysts and sales desksare pitching to portfolio managers. Itallows institutional sales teamsto highlight their best ideas for thebuy side.
Therankingsare derived from more than 100,000 actionable sell-side tradeideascommunicated by thousands of sales people at more than 350 globalfirmsthat participated on the system in 2010.