In the latest shuffling of Wall Street's bank analysts, Anthony R. Davis, a four-year veteran of Dean Witter Reynolds, is moving to Dillon, Read & Co.
Mr. Davis is expected to assume his new post Monday. Before working at Dean Witter, which is merging with Morgan Stanley & Co., Mr. Davis was an analyst for eight years at Wheat First Butcher Singer in Richmond, Va.
Mr. Davis' move comes a day after word that PaineWebber Inc. had hired away analyst Ruchi Madan from Prudential Securities Inc. to replace analyst Lawrence W. Cohn, who was fired. And veteran Wall Street watchers say the latest outbreak of mobility among analysts has only just begun.
Mergers in the investment banking sector have reduced the number of positions for analysts at major firms. At the same time, investment banks and commercial banks have escalated the battle for talent. Observers say that moves by analysts reflect those changes.
Indeed, Morgan Stanley analyst David B. Hilder is expected to cover the banking industry for the combined firm after the merger is finalized.
Meanwhile, Alan Johnson, managing director at Johnson Associates, a compensation consultant based in New York, noted that interest in equity research has gone up dramatically in the last year.
"It used to be that research was an afterthought; now it's a key strategic business," he said. "Clients want a strong research capability, so analysts are key in developing investment banking relationships with clients for stock and debt offerings, and M&A advice."
The demand for strong industry research departments, has in turn, changed the job of the analyst.
"Research used to be driven by technical expertise; now it's driven by your business impact," Mr. Johnson continued. "It used to be more of an academic discipline."
Mr. Davis agreed.
"The role of the analyst has broadened," he said. "It's not so much analytics as it is the relationship and interpretation of market preferences, and the feedback that analysts can provide. Clearly, the Chinese Wall is very much in place, but in terms of providing intelligence to the increasingly institutional portion of the market, its preferences are very important."
Mr. Johnson added that the convergence between investment and commercial banking has created opportunities for smaller firms to approach brand-name research people, and they are able to pay quite well.
That seems to have occurred at Dillon Read. Last month, the firm lured Michael Lewis and Harry Radovich, both insurance industry analysts, from Dean Witter. Mr. Davis will continue his coverage of regional banks in his new post.
"I'm excited about the move," Mr. Davis said. "Dillon Read is a blue- blood firm in terms of history and legacy, and its banking operations have done beautifully. Revenues of the equity division have moved ahead sharply over the last four years."
Dillon Read has been without a major banking industry analyst since Felice Gelman left three years ago to join Wall Street veteran Harry V. Keefe at Keefe Managers. Late Wednesday ING Group NV announced that it had withdrawn from talks to acquire Dillon Read.
Lehman Brothers, often rumored to be a merger target, is also in the market for a bank analyst since Michael Mayo and his team of analysts left for Credit Suisse First Boston earlier this year.
