The firm has 110 professionals in its cash equities business, with half of that number in the equity research team, making it the largest in the country. Sector-lead analysts have around 13 years of sell-side equity research experience, with average tenures at the firm of around eight years.
In terms of the broader platform, while the team size has remained stable, the firm has invested in electronic execution and a block-trade distribution platform to keep up with client demands. It has also expanded its geographical reach.
Paul Checchin, Macquarie Securities
“We are one of the few brokers to maintain Australian sales people in New York, London, Hong Kong and Singapore,” says Paul Checchin, head of research for Australia and New Zealand at Macquarie Securities.
Checchin says the firm's high conviction and counter-consensus calls have distinguished its research in the past year.
“Our building materials team have had high conviction in Reliance Worldwide (RWC), taking a view that the impact from the transition in the company’s US channel strategy would be accretive to revenue and profit in the long term,” he says. “This view was backed by proprietary analysis including surveys. The share price has delivered a total return of about 35% in the last 12 months.”
Another call was on electricity provider AGL, whose share price stood at about A$17 ($12.90) late last year. The stock has since rallied by roughly 50% to A$25. The real estate team also called the decline and bottoming of retail real estate investment trusts (Reits) such as VCX, SCG and WFD.
“The calls were made on the back of substantial work done assessing the structural and cyclical factors impacting retailers and retail landlords and being able to overlay the implications for equity values and share prices,” says Checchin.
The banking sector was another successful call for the team's analysts, correctly forecasting that the larger banks in the country would not require the type of substantial equity fund-raising that was widely anticipated.
“They did the detailed modelling work on capital generation, married it up to comments made by the regulator and made the call early,” says Checchin.