2015 All-America Research Team: Quantitative Research, No. 1: Yin Luo

Yin Luo

Deutsche Bank Securities

First-Place Appearances: 5

Total Appearances: 5

Analyst Debut: 2011

Yin Luoof Deutsche Bank Securities is one of only two analysts to appear in three sectors this year. While extending his winning streak on this roster to a fifth year, he also secures debut showings on the Accounting & Tax Policy and Portfolio Strategy lineups, at No. 2 and runner-up, respectively. (Evercore ISI’s Mark Schoenebaum sweeps three Health Care categories.) Regarding Luo’s work in this space, one money manager remarks that “he makes a complicated subject very accessible to the generalist.” Another backer agrees, marveling that the strategist “demonstrates a special talent in translating quantitative ideas and processes into usable information for quants and nonquants alike.” One subject that Luo has been covering in great detail is event-driven investing. His research in this area includes an in-depth consideration of whether investor activism adds shareholder value. Published in February, and replete with color-coded charts and voluminous data drawn from myriad studies and sources, the piece finds, in part, that investors initially react positively to activism announcements. In particular, target companies that typically post poor earnings growth and are less profitable than peers before an activist involvement demonstrate clear gains in both areas during the 12 months following that event. Moreover, relevant stocks tend to appreciate even before advocates announce their positions, most likely as they themselves trade in the stock before making their objectives public, “both as a way to assert control and to profit on the value creation from intervention,” reports Luo, 40. Dividend-payout ratios also increase “significantly after activist intervention,” he concludes, while a company’s financial leverage, as measured by its level of debt to equity “rises sharply.” Finally, activist investors often target operations that earn lower-than-average corporate governance scores, he adds, and “governance improves prominently” after advocates intervene.