Mike Mayo's Baby Bear: Street Whispers

NEW YORK ( TheStreet) -- Rob Rutschow might be bearish even in a normal world, but for a Wall Street analyst, he's a downright Scrooge.

Wall Street analysts have a longstanding reputation for being exceptionally rosy on the companies they cover, and recent data from FactSet supports this view. Just 6% of the ratings on financial stocks in the S&P 500 are "sells," while 48% are "hold" and 46% are "buy."

Rutschow covers just 10 companies, but he has two "sells" and five "underperform" ratings, compared to two "outperforms" and just one "buy." (CLSA where he works, has no "hold" rating.)

The analyst says he has "had a bit of a negative bias for the last couple of years." That is understandable, since he covers the U.S. exchange sector, where trading volumes have been abysmal, and assets have been flowing out of the U.S. and into fixed income, where, for the most part, companies he follows don't stand to benefit.

Then again, bearishness may just be part of Rutschow's upbringing as an analyst. He learned his craft over 14 years from Mike Mayo, who takes special pride in being tough on the companies he follows. Colleagues Chris Spahr and Matt Fischer have also been with Mayo for several years and through several different employers.

Because he was interviewed over the phone, it could not be determined whether Rutschow blushed upon being asked whether he is currently the most bearish of the group. At first he thought the answer might be yes, but then he reviewed Mayo's recommendations (six "sells", seven "underperforms", four "outperforms" and two "buys") and decided "Mike is more bearish." Smart move: don't upstage the boss.

As for his stock recommendations, Rutschow's top pick and lone "buy" is NYSE Group ( NYX). He sees good potential for the exchange group to cut expenses, and he argues it isn't as dependent on trading volumes as many casual followers of the stock might imagine, since it also gets revenues from market data, listing fees and its technology businesses. With a pickup in trading volumes, Rutschow believes NYSE could grow earnings by as much as 50% over the next two to three years.

Rutschow believes his most controversial call is his "sell" rating on interdealer broker BGC Partners ( BGCP). In his July 26 downgrade of the company, he argued "a dividend cut is more likely in 2013 than at any time in the past." That's an especially big deal since the dividend yield is more than 14%.

Rutschow argues BGC will badly miss revenues generated from ELX Futures, an exchange backed by Wall Street to battle CME Group ( CME)'s dominance over the trading of Treasury futures, but which has seen volumes shrink "to an unsustainably low level," according to Rotschow. He also believes new regulations discouraging the use of over the counter derivatives will put a big dent in BGC's business as a broker of those products. The call has worked out well so far, with BGC shares falling nearly 16% since July 26, while the Financial Select Sector SPDR ETF has gained more than 10%.

Though Mayo, at 49, is just nine years older than Rutschow, he sounded like a proud papa bear writing about the analyst in an email from Hong Kong.

"Perhaps I've rubbed off!" Mayo wrote, adding that Rutschow "was the only analyst to have a negative rating on now bankrupt MF Global, and he went negative not long after the CEO Jon Corzine attended our conference at CLSA. So--yes--he is independent."

-- Written by Dan Freed in New York.

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