Fast Track: Merrill’s new research chief is well grounded

If Candace Browning had been born as brainy and blonde as she is but a decade earlier, she could have aspired to be an airline flight attendant.

Fortuitously, though, she turned a strong hankering to travel – cultivated during her childhood as the daughter of a car dealer on St. Thomas in the U.S. Virgin Islands – into a career as an airline strategic planner and, eventually, an analyst.

“I wanted to see the world,” she says, “and I wanted to make a lot of money.”

Now Ms. Browning, 47, is getting to do plenty of both as the recently appointed director of global securities research and economics at Merrill Lynch & Co. Inc. in New York. Like Sallie Krawcheck, who runs research and retail brokerage at Citigroup Inc.’s Smith Barney Inc. unit, she is a self-styled, independent-thinking Wall Street analyst of the old school. In Ms. Browning’s case, that means the leveraged-buyout-crazed airline industry of the late 1980s.

Earned distinction

Ms. Browning is famous in aviation circles for writing a research report in September 1988 while at Wertheim Schroder & Co. of New York that sparked a bidding war for Northwest Airlines parent NWA Inc. of St. Paul, Minn. Her research eventually led to NWA’s $121-per-share buyout in 1989.

“That report separated Candace from everybody else,” says her friend Karen Firestone, who formerly worked as a buy-side aviation analyst but now manages $6 billion for Fidelity Investments in Boston. “She is dogged,” adds Ms. Firestone, “but in a nice way.”

Ms. Browning’s reputation as a critical thinker strongly grounded in traditional financial analysis led Merrill management early last year to bring her back from a stint in London to run equity research in the Americas.

It was a particularly thorny time for the firm and its research staff. The technology bubble had burst, and analyst Henry Blodget had left in disgrace. Merrill was already under the scrutiny of New York Attorney General Eliot L. Spitzer.

Ms. Browning’s job then was to craft for the entire research department a mission statement emphasizing accountability and rigorous analysis, and to align analysts’ compensation with the success of their stock recommendations.

These two objectives continue to be the focus of her current role, but now she is preaching to a cast of 600 analysts worldwide, triple the number that she oversaw as head of U.S., Canadian and Latin American research. In total, 1,000 of Merrill’s 49,600 employees report to her.

Ms. Browning, who is one of three women on the firm’s powerful 21-member operating committee, does not find the numbers overwhelming. On the contrary, she is most comfortable with things she can measure. “I learned that from Gordon Bethune, the CEO of Continental Airlines,” she says. “People respond to metrics. If you measure something, people will pay attention to it.”

Quality control

The effort to get the outside world to have faith once again in Wall Street research, however, is running into serious turbulence. Ms. Browning’s approach is to improve the quality of Merrill’s research reports and to make sure they have an impact, like her breakup-valuation analysis of NWA back in the 1980s.

Buy-side firms, she points out, have slashed their own research staffs in response to the economic environment. But they still need ideas, she notes, and so do institutional salespeople and traders.

“Companies have stopped giving guidance,” she says. “Now you really need an analyst to crunch the numbers.”