Broker bullishness on energy near 10-year high, says Marshall Wace

Stock analysts are more positive on energy stocks than almost any time since 2001 as political tension keeps oil above $110 per barrel, according to a hedge fund surveying their recommendations.

Marshall Wace revealed the extent of the bullishness after examining its TOPS system, an automated analytical programme that sifts through analyst notes before selecting the best to trade on.

Alan Hofmeyr, Marshall Wace’s head of quantitative research, said analysts it follows had a “higher appetite to take risk in energy stocks” for only 14% of the time since 2001.

He revealed this fact to the Royal Bank of Scotland’s investment funds team, for a regular report it publishes on listed hedge funds.

TOPS currently has over 1.6 million entries, making it one of the largest databases of investment ideas.

Hofmeyr said a number of contributors in it cited the potential for “a dramatic rise in the price of crude”.

Brent crude already jumped by $23, or 25%, to $114 per barrel since mid-December, when a Tunisian student committed suicide in protest against unemployment.

In contrast to their optimism about energy shares, Hofmeyr said brokers are cool on financials, having held stronger views on the sector for 90% of the time since 2001.

European notes feeding into TOPS are most positive on Germany, “guarded” on Iberia and Greece and “buoyed” by the UK’s improving picture.

Meanwhile, global recommendations positioned Marshall Wace’s market neutral TOPS Global Alpha ETF most positively towards Germany, and most negatively towards the US.

Hofmeyr said brokers foresee an improving climate for stockpicking this year on the back of a potential rotation out of fixed income into equities.


David Walker

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