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The backcloth for investors is challenging to say the least: the FTSE All-Share is down 37% since the start of the year while the FTSE Aim All-Share and FTSE Small-Cap indices are off 62% and 48% respectively. Finding profit-making opportunities in such conditions is no easy task but there are analysts with stock-picking abilities up to the challenge. This week Shares identifies the individuals that have made the best calls over the past six months.

Having recorded broker recommendation changes day in day out since 27 May we are in a unique position to tell you exactly whose advice is worth following. The analysts who have made it to our Top 50 calls table (see page 45) have all generated a profit of at least 61%, despite a 33% decline in the FTSE All-Share over the period of our survey.

Having identified the best performers Shares has quizzed the top ten analysts to find out the reasoning behind their calls and unearth their winning methodologies. We have also gone one step further and pooled the individual data for each brokerage to discover which firms consistently provide winning recommendations.

Many of the analysts in Shares’ Top 50 calls table had the conviction to stick by their recommendations. Ross Curran (position four) of UBS and JP Morgan’s Ignacio Cerezo (fifth) may have temporarily doubted their ‘sell’ and ‘underweight’ circulars on Anglo Irish Bank (ANGL) as the shares rallied in late September following the Irish government’s depositor guarantee. But they stood by their calls, delivering returns of 84% and 82% respectively.

Joanna Craig of Oriel Securities, showed impeccable timing with her ‘buy’ on oil services company Bateman Litwin (BWLN:AIM). Craig correctly anticipated all the bad news was in the shares after the company revealed a $63 million full-year loss in October. Her reward was a 123% gain, catapulting her to first place in our Top 50 table.

Women in the lead

While Craig may have made the stand-out call in the past six months our research also finds women as a whole tend to outperform their male counterparts. In our study period the men delivered a mean loss of 3.8% compared with women who on average would have lost you 2.9% – outperformance of 24%. Our Top ten female brokers list (see table) reveals Carla Antunes de Silva of JP Morgan as the highest performing woman analyst, with her calls delivering an average performance of 59% over six months.

Top firms

Whether or not you believe there is more worth in following male or female analysts, the strong message to come out of Shares’ research is analysts overall add value. An investor who acted immediately and followed every broker ‘buy’ recommendation and gone short every ‘sell’ circular over the past six months will have lost only 3.7%, during which time the FTSE All-Share has fallen 33.1%.

All the 37 brokers surveyed delivered market-beating performances when the gains and losses from all their analysts’ ‘buy’ and ‘sell’ recommendations were averaged out. Nine companies actually delivered positive returns, with JP Morgan leading the pack with an average 8.7% return. (see Top ten brokers table)

All the top six performing brokerages have in the past six months produced more ‘sell’ recommendations than ‘buys’ suggesting the analysts’ research was truly independent and immune from the influence of corporate clients. Only two brokers in the top ten last time Shares carried out the survey at the three-month stage (21 August) where in this time; those being UBS, which slipped from first to ninth position, and Charles Stanley which went from sixth to eighth.

Both UBS and Charles Stanley have a higher proportion of ‘buy’ notes at both the three and six-month stages. At the three-month review 65% of UBS’s recommendations were ‘buys’, while this time that proportion was 81%. Meanwhile 86% of Charles Stanley’s recommendations were ‘buys’ at the three-month stage compared with 77% this time. The high proportion of ‘buys’ suggests these brokers are successfully employing contrarian techniques as markets fall.

HDo not forget Shares’ ‘Top 50 calls’ table is updated every week and printed in the Honest Broker section of the magazine.

The top ten calls

The top ten calls generated profits of between 79% and 122%, ranging from a ‘sell’ on Johnston Press (JPR) by Deutsche Bank’s Mark Braley to the ‘buy’ recommendation on Bateman Litwin (BWLN:AIM) from Oriel Securities’ Joanna Craig.

Seven of the top ten calls were ‘sells’ whereby the analyst spotted the signals early. Like Braley, Citigroup’s Marc Sugarman (position six) spotted the warning signs of a slump in fourth-quarter advertising revenues at Johnston. Ross Curran (fourth) of UBS and Ignacio Cerezo (fifth) from JP Morgan saw their ‘sell’ and ‘underweight’ recommendations on Anglo Irish Bank (ANGL) pay off after a nerve-wracking rally in September, while Paul Rossington (position seven) of HSBC was correct to persist with his ‘underweight’ on the now bust Woolworths (WLW) rightly anticipating it was beyond recovery. David Stoddart (eighth) from Altium Securities was shrewd to remove his ‘sell’ on troubled retailer JJB Sports (JJB) in October as interest in parts of the business has fuelled a recovery in recent weeks, while the ‘underperform’ on Enterprise Inns (ETI) by Tim Barrett (ninth) of Cazenove continues to pay dividends as balance sheet concerns linger. Like Craig’s ‘buy’ on Bateman, the ‘buy’ on Paragon (PAG) by Numis Securities’ James Hamilton (second position) was a well-timed, albeit temporary recovery play (correctly rescinded ahead of the collapse of Lehman Brothers and the seizing up again of wholesale credit markets) while the ‘buy’ on Asterand (ATD) by Vadim Alexandre (third) of house broker Daniel Stewart was a good bit of old-fashioned stock-picking demonstrating small caps can still yield spectacular returns in tough markets.

Top ten firms

JP Morgan has well and truly cornered the list of best brokers. Its own analysts delivered an average 8.7% return over the past six months, while those at Cazenove, JP’s 50%-owned joint venture, gave back 6.6% to take second position. These returns compare with an average negative 3.7% performance across the 37 brokers surveyed and a 33.1% fall in the FTSE All-Share.

The top six performing brokerages all had more ‘sell’ than ‘buy’ recommendations (59% of JP Morgan’s recommendations were sells while the proportion was 61% for Cazenove). This is quite an about-turn from what was seen in our three-month review (Shares 21 August), when all but one of the top ten brokerages had a majority of ‘buys’. Only two of the top ten brokerages at the three-month stage are still in the list today, those being UBS (position one after three months, now ninth) and Charles Stanley (position six after three months, now eighth).

Top ten female brokers

Analyst Broker Sector Average

performance (%)

1 Carla Antunes da Silva JP Morgan Banks 59.0

2 Abigail West Credit Suisse Banks 38.1

3 Joanna Parsons RBS Non-life insurance 20.5

4 Isabel Green UBS Mixed 16.9

5 Lucy Baldwin Goldman Sachs General retail 16.5

6 Catherine Heath Altium Finance 10.1

7 Louise Richardson Arden General retail 8.3

8 Joanna Craig Oriel Oil services 7.5

9 Dymphna d’Costa Panmure Gordon Leisure 5.9

10 Carolyn Dorrett UBS Finance 1.1

FTSE All-Share -33.1

Buy/Sell recommendations (or equivalent) since 27 May 2008. Minimum of three recommendations for inclusion in table. Based on prices at close 24.11.08

Top ten brokers

Firm Recommendation Buys (%) Sells (%)

performance (%)

1 JP Morgan 8.7 41 59

2 Cazenove 6.6 39 61

3 Fox-Pitt 5.7 44 56

4 Exane BNP Paribas 5.5 28 72

5 SG Securities 4.2 25 75

6 Credit Suisse 4.0 48 52

7 Seymour Pierce 3.6 50 50

8 Charles Stanley 1.5 77 23

9 UBS 1.4 81 19

10 Altium -0.1 55 45

Average* -3.7 -

FTSE All-Share -33.1 -

Buy/Sell recommendations (or equivalent) since 27

May 2008. Minimum of six recommendations for

inclusion in table. Based on prices at close 24.11.08. *Average of all broker recommendations

Women versus men

Is there a gender bias when it comes to analysts’ share picks? Analysis of the past six months’ ‘buy’ and ‘sell’ calls tracked by Shares shows women analysts performed better than men, although the women were more cautious. Shares identified a total of 121 women listed as the lead analysts on UK or Irish-listed stocks by research organisation StarMine, using a sample of 44 broking firms. On average, each woman analyst covered 4.7 companies. This compares with a total of 862 male analysts from the same firms, averaging 5.8 stocks each. Overall, women accounted for 12.3% of the analyst sample.

The sectors that accounted for the bulk of stock coverage by female analysts were: General Retailers, accounting for 11 (9.1%) of the female analysts; Real Estate, with nine (7.4%), and Oil & Gas Producers with eight (6.6%). They were followed by General Financial, Food Producers and Media, each with seven analysts (5.8%). The figure for Oil & Gas Producers is distorted by the presence of specialists in Russian stocks. On average, ‘buy’ and ‘sell’ recommendations by the women performed better than those by the men, although both genders lost money overall. The men delivered a mean loss of 3.8% on their calls over the six months from 27 May, compared with a 2.9% loss by the women. This may partly reflect the tendency for women to be more cautious when it came to making stronger calls. Of the recommendations tracked by Shares, 11.3% of the ‘buys’ and ‘sells’ were by women, whereas female analysts accounted for 12.3% of the total sample.

How the data is compiled

Former Shares editor Jeremy Lacey has compiled the broker data over the past six months. Since May, Shares has been tracking the changes in recommendation made by broking firms and publishing them in a weekly table as part of our Honest Broker section.

For this survey, we are looking only at new ‘buy’ or ‘sell’ recommendations and their equivalent (such as ‘overweight’ and ‘underweight’, ‘outperform’ and ‘underperform’), made since 27 May. Shares tracks many more analyst recommendations in our weekly table – ‘hold’ or ‘neutral’, ‘add’ or ‘reduce’ – but these are of less interest to the private investor where to buy or sell is the critical decision.

For each new recommendation, we take the starting price (at the date when Shares first tracked the recommendation) and the finish price, that is the price when the recommendation was changed again or, if it is still current, the closing price at 24 November, when our calculations were made.

For ‘buy’ recommendations, the analyst is credited with the performance of the share price over that period so, if the price rises, the performance of the recommendation is positive. For ‘sell’ recommendations, the opposite happens – that is, a fall in the share price generates positive performance and a rise gives negative performance. The best 50 individual performance figures are listed in Shares’ Top 50 Calls table (see page 45). Our Top ten brokers table (see table) takes an average of each firm’s ‘buy’ and ‘sell’ performance figures over the six months.

Top 10 analyst calls

1. Joanna Craig, Oriel Securities

Firm: Bateman Litwin (BNLN:AIM)

Start date: 5 November

Closing date: Current

Starting share price: 14.3p

Closing share price: 31.8p

Performance: 122.8%

Top performer Oriel Securities’ Joanna Craig turned buyer of Bateman Litwin last month after full-year results revealed a loss of $63 million based on impairment charges. The losses left Bateman in technical breach of its banking covenants and the write-downs followed the new management team’s review of the business, including the underperforming biofuel Delta-T operation, where Bateman is suing the former owners. Craig’s call proved particularly well-timed as the stock was languishing close to all-time lows at 14.3p. A subsequent rise to 31.8p offered a return of more than 120%. She explains her upgrade on ‘valuation grounds’ and says: ‘It remains difficult to focus on the performance of the core businesses with the ongoing litigation at Delta-T and the exceptional charges. However, we are confident that the new management team will improve the financial and operational performance of the business.’ (TS)

2. James Hamilton, Numis Securities

Firm: Paragon (PAG)

Start date: 7 July

Closing date: 26 August

Starting share price: 53.8p

Closing share price: 111.0p

Performance: 106.5%

Hamilton’s ‘buy’ on Paragon was perfectly timed, riding the stock up from 53.8p on 7 July to 111p on 26 August, a gain of 106.5%. That Paragon received a bid approach subsequent to the publication of his note clearly helped but the decision to move to ‘hold’ in August was also a good call, indicating more judgement than luck. Subsequent to the move to hold, the bid approach was rebuffed and the impact of rising mortgage costs, following the Lehman Brothers’ collapse in September, and what they might mean for the mortgage payments of Paragon’s customers, has seen the shares slump 64% to 40p. That Hamilton has now moved back to an ‘add’ should be noted by those considering buying Paragon as a value opportunity. (SK)

3. Vadim Alexandre,

Daniel Stewart

Securities

Firm: Asterand (ATD)

Start date: 30 May

Closing date: Current

Starting share price: 7.0p

Closing share price: 13.8p

Performance: 96.4%

Picking a small cap winner in today’s markets is doubly difficult but choosing one that returns 96% in under six months is rare indeed. But that is what Alexandre achieved with his end-of-May ‘buy’ on £13 million cap Asterand, a house stock. Initiating coverage at 7p, Alexandre spotted the potential of the human tissue market which, acting as a bridge between animal and human testing, is seen by many as a future part of pre-clinical testing regimes. Asterand is a leader in this field with around a 3% market share. There are very few providers of this material to pharmaceutical companies and there is plenty of room for consolidation according to Alexandre, who recently upped his price target from 18p to 22p. Asterand reported first profits at the earnings before interest, tax, depreciation and amortisation (EBITDA) level in August. (IM)

4. Ross Curran, UBS

Firm: Anglo Irish Bank (ANGL)

Start date: 18 August

Closing date: Current

Starting share price: ?6.03

Closing share price: ?0.97

Performance: 83.9%

UBS financials analyst Ross Curran has been cautious on Irish banks since the New Year on the basis the Irish commercial property market was significantly over priced. He explains what prompted the downgrade on Anglo Irish (from ‘neutral’ to ‘sell’) in August: ‘It is the most exposed bank to this market. It fell sharply in the middle of the year but then rebounded equally sharply in a two or three-week period, which we felt was completely overdone.’ The shares, having hit a low of ?4.08 on 15 July, had shot up nearly 50% to ?6.03 by the time Curran produced his ‘sell’ note on 18 August. This proved something of a dead cat bounce and the stock has since fallen to ?0.97, giving Curran an 83% return. He agrees the market’s focus has now moved from concerns over property to a potential capital raising driven by concerns over asset quality. (TS)

5. Ignacio Cerezo, JP Morgan

Firm: Anglo Irish Bank (ANGL)

Start date: 10 September

Closing date: Current

Starting share price: e5.39

Closing share price: e0.97

Performance: 82.1%

At number five on our list Ignacio Cerezo of JP Morgan initiated with an ‘underweight’ recommendation on all the Irish banks, including Anglo Irish Bank, in September. Since this point Anglo has fallen more than 80% to ?0.97. Cerezo’s concern regarding all the Irish banks was their highly leveraged balance sheets and (like fellow top ten analyst Ross Curran) their exposure to the overheated UK and Irish commercial property markets – of which Anglo’s is the most acute. Valuations of the Irish banks will continue to come under pressure for four reasons, says Cerezo: higher impairments as the credit cycle turns and property prices deflate, lower earnings, rising pressure on capital, and refinancing challenges due to reliance on wholesale funding markets, although government guarantees have improved this situation. (TS)

6. Marc Sugarman, Citigroup

Firm: Johnston Press (JPR)

Start date: 2 July 08

Closing date: Current

Starting share price: 40p

Closing share price: 7.6p

Performance: 81.0%

As Johnston Press has kept falling the obvious question being asked was why had it not attracted bid interest. Sugarman correctly identified the long-term structural problems facing the group, which mean even when advertising revenues do recover it may not be able to capitalise. The analyst, who placed his ‘sell’ on the stock at 40p on 2 July, cited Johnston as ‘the most vulnerable’ to the changing classified business model. Classified ads – property, automobiles and recruitment – are the key source of advertising revenues for regional newspaper publishers like Johnston but this market is being attacked by online rivals. Estimating that the classified ads market is currently split 66% print and 34% online, Sugarman predicts this will be 50/50 by 2012 by which time Johnston’s operating margins will be 16.7% against 29.3% last year. The consequence of this long-term view meant the analyst was ahead of the pack cutting earnings per share forecasts by 10-20% across 2008 to 2010. (SK)

7. Paul Rossington, HSBC

Woolworths(WLW)

Start date: 19 August .

Closing Date: 26 November

Starting share price: 6.8p

Closing share price: 1.34p

Performance: 80.2%

Last week’s (26 November) suspension of the shares subsequent to the completion of Shares’ survey has made Paul Rossington’s ‘sell’ recommendation even more profitable. Woolworths has been handicapped since the demerger in 2001 by onerous leases and intense competition from supermarkets. Its woes worsened this year as rating agencies no longer provided credit insurance. Some suppliers demanded cash on delivery. With large borrowings of £385 million and a £100 million pension fund deficit the group always appeared vulnerable. Steve Johnson became chief executive in September but by then the group’s fate was already sealed. The downturn in consumer confidence this autumn was the final straw. Institutional investors had long ago given up on Woolies. It was not surprising its myriad of bankers decided to do so too. (JM)

8. David Stoddart, Altium Securities

Firm: JJB Sports (JJB)

Start date: 19 August

Closing date: 14 October

Starting share price: 118.5p

Closing share price: 23.5p

Performance: 80.2%

Altium’s David Stoddart turned bearish on JJB after the group’s AGM in July. It turned out to be a good call as the interims in September underlined how great the company’s problems were and the dividend was passed. The group also confirmed it had taken out a £20 million ‘bridging loan’ from Kaupthing, which has to be repaid by the end of December. On 14 October, JJB announced the possible sale of non-core assets. That persuaded Stoddart to withdraw his ‘sell’ recommendation as ‘fundamentals have gone out of the window’. Both the group’s founder Dave Whelan and rival outlet JD Sports(JD.) are rumoured to be interested in parts of the business. As a forced seller JJB may have to accept a poor price. Mike Ashley’s Sports Direct (SPD) has a stake as does JD, which could prevent anyone taking the business private. (JM)

9. Tim Barrett, Cazenove

Firm: Enterprise Inns (ETI)

Start date: 27 August

Closing date: 24 November

Starting share price: 307.5p

Closing share price: 63.0p

Performance: 79.5%

Top performer Tim Barrett at secretive broker Cazenove said ‘sell’ Enterprise Inns three months ago and it has since crashed 80%. Barrett remains bearish saying the dividend is likely to be cut as part of the pub group’s desperate efforts to reduce debt. A £1 billion bank facility expires in 2011. The banks want to cut lending and increase the margin from today’s 80 basis points above the London Inter-bank Offer Rate (Libor). Enterprise is selling pubs and hopes to sell around 200 this year to generate between £50 million and £100 million, says Barrett. The number of publicans needing financial support is likely to rise after Christmas. ‘Uncertainty surrounding Enterprise’s financial position could persist for several more years unless there is an abrupt change in debt market conditions,’ he says. (TD)

10. Mark Braley, Deutsche Bank

Firm: Johnston Press (JPR)

Start date: 22 September

Closing date: Current

Starting share price: 35.5p

Closing share price: 7.6p

Performance: 78.6%

When some did not believe things could get worse for regional publisher Johnston Press, Braley was busy slashing his earnings forecasts in anticipation of a continued worsening in trading during the fourth quarter as the economic downturn bit into advertising budgets. Deutsche Bank’s analyst slapped his ‘sell’ recommendation on the stock on 22 September when the shares were trading at 35.5p, Johnston has since collapsed to 7.6p following a terrible interim management statement (IMS) on 12 November. That IMS revealed a sharp acceleration in the advertising downturn so that for the year to 1 November ad revenues were down 16% on 2007, much worse than the fall experienced at the half-year point. In the 17 weeks to 1 November the company was hit by a 48.4% year-on-year decline in property advertising revenues, 32.1% retreat in recruitment ad spending, while expenditure on car ads shrunk by 24.3%. (SK)