Mizuho Americas Bucking Trend with Equities Build-out

May 23, 2017

While others have been pulling back from the equity research business, Mizuho Americas LLC is one of the few that is building.

Mizuho Americas announced May 17 that it added two equity research analysts to bring the team total to 15, up from six in the early part of 2015, according to the company's head of U.S. equity research, Sheryl Skolnick. In an interview, Skolnick said the bulk of the build-out is not yet complete.

"No, we're still growing," Skolnick said. "We still see significant opportunity."

Mizuho Americas is not the only company building in equity research. Aegis Capital Corp. and Seaport Global Securities LLC have also decided to grow their teams.

Similar to Aegis and Seaport, Mizuho Americas has been looking to take advantage of market dislocation. Mizuho Americas' two most recent equity research analyst additions, James Lee and Tom McCrohan, were previously with CLSA Americas LLC, which announced earlier this year it was shutting down its equities research business.

Others, such as Avondale Partners LLC, BB&T Corp. and Brean Capital LLC have shut down or significantly scaled back their equity research offerings.

Many companies have reduced their exposure to the business in the face of headwinds from reduced trading volumes and commissions. Skolnick understands the market dynamics but believes her team can succeed.

"There are other firms that are pulling back," Skolnick said. "They perhaps don't have the same benefits that our platform offers."

In Skolnick's view, to find success a U.S. equity business needs access to a balance sheet, a global view and collaboration with coworkers who can provide other services to clients. Skolnick said Mizuho Financial Group Inc. provides all of those.

Skolnick said the parent company is dedicated to the U.S. market. "Our equities business is seen as the second pillar to the very well-regarded and well established Japan equity research product," she said.

Mizuho Securities Co. Ltd.'s equities business in Japan was recently recognized in Institutional Investor's 2017 rankings. The publication ranked Mizuho Securities No. 1 among Japan's sales teams and the research team tied for first in the team-based Japan category.

Skolnick said the research teams in the U.S. and Japan have worked together on projects.

"We can and have produced global-reach research, for example, that is written jointly," she said. "It's published simultaneously in three geographies in two languages."

Skolnick added that she has taken steps to have equity analysts work more closely with those in the fixed-income businesses, whether it's high-yield, convertibles or other areas. She said the more analysts can learn about nontraditional products, the better research they can write.

"When you can interpret a credit market event for equity investors, it is very helpful to their investment process," she said.

Skolnick noted that Mizuho's U.S. build started to accelerate in 2014, and that it has been profitable. For now, the sector focus includes technology, healthcare, energy, real estate investment trusts, and consumer. Skolnick noted the research team has recently added homebuilders to its coverage, and she sees the possibility for more expansion, whether into new sectors or by extension of established verticals.

"We certainly see potential opportunities to go deeper as well as to go wider," she said.

 

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