Basic Materials: Paper & Forest Products

Chip Dillon

First Team

Chip Dillon

Citi

Second Team

Mark Connelly,Credit Suisse

Third Team

George Staphos,BofA

Runners-Up

Peter Ruschmeier,Lehman; Richard Schneider,UBS; Claudia Shank,JPMorgan

“Passionate about paper,” in the words of one investor, Citi’s Chip Dillon earns first place for the eighth time in 11 years. Dillon, 49, downgraded Domtar Corp., a Canadian producer of uncoated paper, to sell in March, citing softness in the market. The shares fell 16.4 percent by mid-September. During the same period the sector slid 7.3 percent. “Chip’s chief value is his ability to identify and properly analyze megatrends,” asserts one supporter, praising occasional long reports about paper grades such as last November’s 52-page piece on rising newsprint demand and December’s 100-page overview of the global containerboard market. “They are such thorough resources, I refer to them throughout the year,” says another client. Mark Connelly of Credit Suisse, who repeats in second for a third straight year, upgraded South African pulp producer Sappi to buy in March, calling the stock undervalued at $12.94. When the shares hit $18.44 in May, he downgraded to hold, on valuation. By mid-September the price had fallen to $15.03. Connelly displays “intellectual honesty,” says one client. George Staphos of Banc of America Securities rises from runner-up to third. (He is No. 1 in Packaging.) “George’s strength is in providing information that helps me make investment decisions,” observes one investor. Last October, Staphos upgraded Smurfit-Stone Container Corp. to buy, judging the Chicago-based paperboard manufacturer cheap at $10.46. Its shares rose 33.7 percent, to $13.99, by July, before getting caught in the broader market sell-off; by mid-September the price had dropped to $10.22, but Staphos remains bullish.