TD’s Mendonca named ‘TopGun’ analyst of the year

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A year ago, TD Securities Inc. went out and grabbed insurance and banking analyst Mario Mendonca from Canaccord Genuity Corp. The results of the annual survey of investors by Brendan Wood International show why TD did it as Mr. Mendonca was named analyst of the year for Canada.

BWI surveys investors about how they allocate commissions to pay for research, which is at the heart of why securities firms are in the business of analyzing stocks. They want to provide clients with good ideas, and get paid for them. And it helps if solid coverage of companies leads those companies to show up with investment banking mandates that pay large fees, like merger advisory and underwriting work.

According to BWI's analysis, the analysts it labels as "TopGun" account for "less then ten per cent of the analyst population, [but] generally earn in the vicinity of half the allocated commission dollars." BWI also looks at research quality and talks to issuers about the analysts that cover their companies.

Analysts who are able to bring in that kind of revenue are highly sought after – and highly protected by their employers. But in the past few years there has been movement.

There was an opening to get Mr. Mendonca as smaller firms were struggling, and banks could pay up to get the analysts they wanted. Before Mr. Mendonca's move, Scotia Capital Inc. similarly grabbed top-ranked pipeline analyst Matthew Akman from Macquarie Capital Markets Canada Ltd. Mr. Akman shows up as a TopGun in two categories.

There are plenty of perennially highly ranked names who once again show up on this year's roster. Along with Mr. Mendonca, other names on the list (which follows at the bottom) include Mr. Akman, named top in alternative energy and utilities; Perry Caicco of Canadian Imperial Bank of Commerce for retail; Canaccord Genuity Corp.'s Dvai Ghose for telecommunications and wireless; and Royal Bank of Canada's Neil Downey for real estate.

BWI also singled out some strategies as worthy of note, including National Bank Financial Inc.'s revamping of its research department to try to focus more on companies that actually generate investment banking business.

That strategy, which started in late 2010, meant scaling back coverage of companies that were not using NBF for investment banking services. Some big name analysts departed, including this year's TopGun precious metals analyst, Tanya Jakusconek, who is now at Scotia Capital. She covers companies like Barrick Gold Corp., which just weren't big clients of NBF and were unlikely to be so any time soon.

Four years later, according to BWI, the shift is working.

"While maintaining its position in research commissions this year, the firm has created an industry leading corporate research franchise," BWI said. Companies that do a lot of transactions rate NBF highly: "NBF now matches the industry leader, RBC, in the number of transactionally active corporations ranking its research in first place." That should lead to revenue.

The BWI survey also noted the strategies at Bank of America Merrill Lynch, which has kept its focus on Canada even in a tough market, and has gained commissions for two years, and Peters & Co., the Calgary boutique that is benefiting from a "flight to quality" focus in the energy sector that is bringing increasing market shares.

Here is the full list of TopGuns from the BWI release:

Agriculture, Chemicals, Fertilizers – Jacob Bout – CIBC World Markets

Alternative Energy – Matthew Akman – Scotia Capital

Banks – Mario Mendonca – TD Securities

Base Metals & Minerals – Greg Barnes – TD Securities

Biotechnology & Pharmaceuticals, Healthcare – Doug Miehm – RBC Capital Markets

Consumer Products & Merchandising – Perry Caicco – CIBC World Markets

Diversified Financials – Geoff Kwan – RBC Capital Markets

High Tech – Richard Tse – Cormark Securities

Industrial Products – Ben Cherniavsky – Raymond James

Insurance – Mario Mendonca – TD Securities

Media – Drew McReynolds – RBC Capital Markets

Oil & Gas Equipment & Services – Jeff Fetterly – Peters & Co.

Oil & Gas – High Payout – Patrick Bryden – Scotia Capital

Oil & Gas – Large Cap – Randy Ollenberger – BMO Capital Markets

Oil & Gas – Small/Mid Cap – Jeff Martin – Peters & Co.

Precious Metals & Diamonds – Large Cap – Tanya Jakusconek – Scotia Capital

Precious Metals & Diamonds – Small/Mid Cap – Andrew Kaip – BMO Capital Markets

Pulp, Paper & Forest Products – Daryl Swetlishoff – Raymond James

Real Estate, REITS & Hospitalities – Neil Downey – RBC Capital Markets

Telecommunications & Wireless – Dvai Ghose – Canaccord Genuity

Transportation – Walter Spracklin – RBC Capital Markets

Utilities – Matthew Akman – Scotia Capital

Economics – John Aitkens – TD Securities

Index Analysis – Peter Haynes – TD Securities

Portfolio Strategy – John Aitkens – TD Securities

Quantitative Analysis – Mark Deriet – Cormark Securities

SmCap/SpSits – Sarah Hughes – Cormark Securities

Technical Analysis – Mark Deriet – Cormark Securities