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#19 - JRL 9133 - JRL Home
Moscow News
www.MN.Ru
April 27-May 3, 2005
Vendor of Ideas
Russia's No. 1 financial analyst does not think of himself as such. In his work, he values team performance most of all

By Dmitry Dokuchayev

Steven Dashevsky of investment group Aton is Russia's foremost authority on finance. This is not a paid-for advertising or subjective opinion of this author. That description of Dashevsky emerged from a recent poll of the leading companies conducted by the rating agency RBC (Ross-BusinessConsulting). Dashevsky left his fellow analysts/strategists far behind in the race, having taken 55% of all possible points, against the 15% of his closest pursuer. MN asked Steven Dashevsky to share the secrets of his professional success.

To the uninformed, an analyst is someone like a Nostradamus or a Cassandra. What exactly does an analyst do?

My job is to analyze securities traded on the market, and to comment on current events that are connected with these securities and have an impact on their value. For example, suppose I have a client who is interested in the shares of oil major Lukoil. Before recommending a course of action to my client, I must analyze the financial standing of that company, estimate the present value of its shares and tell my client whether they are cheap or dear and whether he should by them or sell.

Can a financial market player do without analytical services today?

Securities trading has existed for several hundred years. If the analyst profession has proven necessary after having passed through all conceivable changes and reforms over this long period, then this says quite a lot. You must understand that an analyst does not know for sure whether particular shares will rise or fall within the next hour. If at least 70% of analysts' forecasts came true, these people would have quit their jobs long ago to take up full-time stock trading.

A good analyst provides plenty of information - the pros and cons, the risks and the opportunities, the financial and the value indicators - in short, everything the investor needs to know in order to make a decision.

What is the ultimate product of your work?

A forecast. Drawing up a forecast is always an ungrateful job, because if you disregard a single factor, your forecast can turn out to be useless, if not harmful to your client. Take this simple example: An analyst recommended a client to buy shares of the Tyumen Oil Company (TNK) because these shares would allow the investor to become a shareholder in the joint venture TNK-BP, which is the fastest growing and most efficient company in the Russian oil sector. The investor made a purchase. A week ago, however, TNK shares nose-dived due to the state's unexpected tax claims. What can you say about the work of that analyst? From the viewpoint of the outlook for the company, he did a good job. However, his advice proved useless to the investor.

How much does a good analyst earn?

From several thousand dollars a month to millions of dollars a year in the largest western banks. The amount of an analyst's earnings depends on the profits of the company for which he works, and directly on his contribution to its profits. Some analysts not only do brilliant research but also contribute greatly to bringing the analytical product to the market, to establishing contact with clients. In other words, they help sell their ideas - inside and outside the company concerned. Such professionals are of course appreciated more highly.

Do future analysts study at some institution, or do they learn their trade from practical dealings on the market?

Practical experience is definitely of utmost importance. You can't graduate from a higher educational establishment with a degree in market analysis. That's because this profession is rather unique. A good analyst has complete mastery of four trades. He is an expert on a specific industry; he is a professional accountant who understands financial reports; he is a person who can evaluate companies. Finally, he knows how to sell ideas: After developing an idea, he knows how to bring it home to as many investors as possible.

Where did you study to become an analyst?

Generally, there are two ways of becoming an analyst. You either know some market segment and then learn to make financial analyses; or you are a good financier, and you start learning the specifics of some sector. I did a stint in the real sector - with Philip Morris Ukraine in Kharkov. But I have a financial education. My first job was on Wall Street in an investment bank, as an aide to a trader. Later on, in 1998, I was instructed to work in the oil-and-gas sector, and I came to Russia. Since then, I've been an analyst in this country.

You mentioned America, Ukraine, and Russia. What is your citizenship?

I was born in Kharkov. Our family emigrated to America in 1991. I am an American citizen, but I live in Russia permanently, as does my wife and my daughter.

Basing on your experience, could you say if there is any difference between working in a Russian company's analytical service and that of a Western firm?

There is practically no difference because Russian analysts compete directly with their Western counterparts. In order to compete, you've got to reach - and often even surpass - the average professional level prevailing in the world. So I will risk affirming that the level of analytical departments in Russian investment companies is extremely high in comparison with Western banks.

What do you consider the greatest achievement in your career?

You know, the greatest thing I ever did was to recommend clients not to buy certain shares, to stand aside. We have documentary evidence of the fact that two days after Khodorkovsky's arrest, we predicted developments as they actually happened later on. We told our clients that under no circumstances should they buy Yukos shares. Despite the fact that there were moments of optimism in the Yukos affair and hopes for a resolution to the conflict, we adhered to our policy - and proved to be right. I say that with regret; it would have been better if we had erred.

Was there any grievous failure in your career?

Yes, certainly. Perhaps the recommendation that upset me most concerned [state-owned] oil pipeline operator Transneft. Aton was the first Russian investment bank to start analyzing Transneft when its shares cost only $320 apiece. When the share price rose to $450, we saw that the company was beginning to minimize profit in order not to pay out large dividends. Acting on that negative signal, we recommended our clients to get rid of Transneft shares. However, since the "Yukos affair" broke out, people have regarded the shares of state-owned companies as more protected against risks. Besides, Transneft has been performing very successfully. In short, despite our forecasts, its capitalization has doubled.

Whom of your colleagues do you consider your strongest competitor?

That's a difficult question. Analytical work is personalized in a way, as a marketing move: A company should be associated with a personality in people's minds.

But many ratings, including those of RBC, are subjective, being based on the degree to which this or that figure was promoted.

It seems to me that it's best to look at a company's team performance. The most important thing for us is not the fact that some investor puts a high value on Steven Dashevsky, but the fact that the investor considers Aton's analytical product the best in the marketplace.

FACT BOX

Steven Dashevsky, b. 1973, graduated from the New York University Baruch College with a degree in finance and investment.

Later on, he studied under the Chartered Financial Analyst (CFA) Program and obtained a CFA degree.

He worked as a researcher with Scudder, Stevens and Clark, Inc., and as a trader with Brown Brothers Harriman & Co. in New York. Later on, he was regional treasurer with Philip Morris in Ukraine. He has been with Aton since 1998 in the capacity of analyst responsible for the company's oil and gas department. In July 1999, he became senior analyst, and has headed Aton's department of analytical research since May 2002.

In 2001, NAUFOR (Russia's professional organization of stock-market participants) named Dashevsky the best analyst of the Russian securities market. In 2002-2004, he was recognized as one of the best Russian analysts according to the ratings of Thomson Extel and Institutional Investor. In 2005, he was announced the top analyst according to the RBC poll.

His pastimes are football and reading. He is married with a daughter.

RATING

The best analysts/strategists according to RBC's estimates

Analyst Company Weight (%) 1. Steven Dashevsky Aton 55.31 2. Dmitry Serebrennikov Finam 5.87 3. Stephen O'Sullivan UFG 8.92 4. Eric Kraus Sovlink 8.44 5. Al Breach Brunswick UBS 3.90 6. Kakha Kiknavelidze Troika Dialog 3.33 7. Paul Collison Brunswick UBS 1.42

Note: The "weight" of an analyst represents the share of companies that voted for him in the total turnover of the top 50 investment companies that participated in the voting.