The best and worst of Wall Street 2011: AnalystsDecember 12, 2011: 5:00 AM ET
FORTUNE -- Bigger was not always better when it came to picking stocks this year. Meanwhile, banking's loneliest defender soldiered on. --Alex Konrad
Small is beautiful. In a year in which a lot of well-known analysts got crunched, the best-performing was Donna Jaegers, who works at a tiny firm (D.A. Davidson in Denver) and picked small-caps in her sector, telecom. Fortune asked Zacks Research to rank analysts in eight sectors based on their calls over the first three quarters of 2011, and Jaegers virtually lapped the field, with picks that were up an average of almost 20%. How'd she do it? Avoiding the giants -- where she says it's hard to make money in telecom and wireless -- and nailing a couple of takeover calls, primarily among data-management companies. Jaegers tabbed Savvis, a cloud-computing company, as a potential target at just under $27 in December 2010; five months later it was bought by CenturyLink (CTL) for $40 a share. Similarly, Jaegers pegged Terremark, another cloud-services provider, as a strong buy in late 2010 when the stock was at $12, and Verizon (VZ) acquired it two months later for $19 a share. In all, Jaegers posted her best year since 2007, and among the best in the analyst world. Will she repeat that success in 2012? As she puts it, "The pressure's on."
Financials on the S&P 500 have fallen 24% this year, but they've had at least one steadfast defender, Dick Bove (rhymes with "No way!"), who gets points for consistency if not accuracy. Throughout 2011, Bove has told investors to buy banks, including Citigroup (C), down more than 40% this year, and Bank of America (BAC), down about 60%. With 46 years in the business, Bove remains a regular on the financial TV shows, but some skeptics question whether he can still make money for investors. "I don't think Dick understands the nature of modern banking any longer," writes Barry Ritholtz of FusionIQ. For his part, Bove stands by his picks. "Where I blew it as an analyst in 2011 was not properly gauging the fear in the market." He issued a mea culpa in November; for some investors, that was about a year too late.
The best and worst of Wall Street 2011
- Venture capital and private equity
- Hedge funds
- Mutual funds
This article is from the December 26, 2011 issue of Fortune.