2015 All-America Research Team: Airfreight & Surface Transportation, No. 2: Kenneth Hoexter

Kenneth Hoexter

Bank of America Merrill Lynch

First-place appearances: 0

Total appearances: 10

Analyst debut: 2005

Kenneth Hoexterof Bank of America Merrill Lynch holds on to the No. 2 position he captured in this space last year and earns a runner-up spot on the new Shipping lineup. “Ken keeps his thumb on the pulse of the industry and has good contacts with managements and regulators,” one fund manager says. Backers especially value the analyst’s warning on TAL International Group. In July 2014 he reduced his rating on the Purchase, New York–based provider of freight containers from neutral to underperform, citing overcapacity from competition and decreasing lease rates. Sure enough, by mid-September 2015 the stock had plummeted to $15.79, shedding 62.3 percent over a period during which U.S. airfreight and transportation names overall declined 4.2 percent. Investors also hail Hoexter’s coverage of trucking trends. In May his proprietary biweekly Truck Shipper Survey Diversion Index indicated that volumes for less-than-truckload carriers were declining while their costs were rising, prompting him to turn negative on Fort Smith, Arkansas–based ArcBest Corp. and Ann Arbor, Michigan’s Con-way, two leaders in that industry. He cut his rating on both names from neutral to underperform, and each stock subsequently trailed the wider sector. ArcBest had fallen 22.8 percent by mid-September, to $27.93, lagging its peers by 15.7 percentage points. Con-way was down 15.3 percent, at $35.53, in early September — and underperforming the sector by 9.1 percentage points — when management announced that it had entered into an agreement for supply chain specialist XPO Logistics of Greenwich, Connecticut, to buy the company. The stock had leaped to $47.59 by mid-September, just shy of the per-share purchase price. Hoexter, 44, reports on a coverage universe of 36 names.