In just over a decade, Ryan Savage transformed himself from an Australian surfer dude into Canada's top stock picker during 2010.
His journey began when the native of Cochrane, Alta., took a year off to travel after first-year studies at the University of Calgary and reached a peak with several smart picks in the oil and gas sector last year.
Mr. Savage follows large-capitalization international stocks in the energy sector for GMP Securities LP, where he landed almost two years ago after several years in research at TD Securities Inc. During 2010, his picks delivered a better return against his benchmark than those of any other analyst, winning him recognition as the top stock picker in the 2011 StarMine Analyst Awards. (Read the full details on how StarMine selected the winners here )
StarMine, a service of Thomson Reuters, recognizes top analysts in several categories. In addition to honouring the 10 top stock pickers , it celebrates 10 analysts for being tops in earnings estimate accuracy . Others are recognized for stock picking and earnings estimate accuracy in different industry sectors.
Mr. Savage's ride to the top is not as circuitous as it might sound. More than two decades ago he started studying stocks and market patterns in his high-school library. He decided that working in equities one day would make for "a cool job."
When he went travelling after his first year of university, Mr. Savage wound up in Australia and after several months of enjoying sun and surfing, decided to enroll at Bond University in Robina, Queensland, where he earned a Bachelor of Commerce degree. He had planned to stay in Australia's surfer's paradise after graduation, but a Canadian romance brought him back home to Calgary, where he joined a small accounting firm and later a boutique investment firm.
At 33 years old, Mr. Savage is one of the younger equity analysts in Canada and his clear assessment of what it takes to be good at the job probably helped his rapid rise: a passion for numbers, a competitive spirit, high energy, the ability to thrive in a stressful environment and a respect for others - especially veterans of the industry.
"If you're not a competitive person, this industry is just not for you," he says. "In equities, the classic battle between bulls and bears defines the market."
To win, Mr. Savage works 70-hour weeks and immerses himself in numbers, starting with a company's financials and extending to the economics of specific countries, their tax policies and political situations. His research involves endless reading. It also involves travel to remote areas of the world.
"You must go and see the country and see the assets and get a feel for what's going on on the ground. Everyone says oil and gas is below the ground. But what you want to see is how far away these sites are from infrastructure, how difficult it is to get the trucks in," he says.
A while back in Tajikistan, Mr. Savage sat down for a mid-afternoon lunch with village leaders. His Western appearance was a novelty for some of the locals as he tried to understand the relationship between a big energy company and the regional leaders. "Do they perceive Western encroachment as positive, do they want a share in it? ... I want to get a feel for where their heads are," he explains.
International energy plays offer diversification for North American investors and the opportunity for some huge wins, especially with new technology being used to tap existing sites. But the sector carries many risks. "You can nail it and get multibagger returns, or you can miss and see some horrible returns," he says. "I've had plenty of sleepless nights in my time. It's an intense job."
Mr. Savage goes into overdrive calculating not just financials but also data to reflect what he calls "qualitative risk." These risks can include a country's political climate and a region's track record for supporting foreign investment.
Early last year he pushed hard at GMP for investment in Colombia. One of his top picks was Pacific Rubiales Energy Corp., a Toronto-based firm that produces oil and gas in the South American country.
It was a tough sell. Colombia faced a federal election and the possibility of an ultra-left party getting elected. So Mr. Savage's analysis included popular sentiment in the country and various scenarios around taxes and royalties under different governments. At the end of the year, Pacific Rubiales had an annual gain of 124 per cent.
Looking forward, he thinks China and India will wield huge influence as they seek security of supply, and Canada's oil sands remains a key target for them both.
Generally, the tipping point where investors will question a lot of the international projects Mr. Savage follows is when the price of a barrel of oil dips to about $70 (U.S.) or $75, he says.
With oil prices still close to $100 a barrel, "for new projects the economics are potentially pretty robust," he says. "But the thing you do have to watch is with a high commodity price environment, what happens if the commodity turns against you. There can be huge swings."
Ryan Savage's top picks
Among Ryan Savage's current buy recommendations are Pacific Rubiales Energy , the largest independent oil and gas exploration company in Colombia. The company is headquartered in Toronto and listed on the TSX. Mr. Savage has a price target of $46 on it.
He also likes Petrominerales Ltd. of Calgary, which develops and produces oil resources in Colombia and other parts of Latin America. He has a $45 target on the stock, which recently traded at $28.64.