Bear Stearns tops Zacks' stock picker ranking in 2007

NEW YORK, Feb 21 (Reuters) - Bear Stearns BSC.N was the No. 1 stock picker in the second half of 2007, according to Zacks Investment Research's ranking published on Thursday, showing twice the returns of its nearest competitor Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) .

Of the thirteen firms ranked by the performance of their U.S. model portfolios, only three posted positive returns, with Morgan Keegan ranking last with a negative 17.3 percent.

For the second half of 2007, Bear Stearns took the top spot with a 12.08 percent total return. Goldman Sachs took second place with 5.04 percent and Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) took third place with 1.71 percent.

That compares with an S&P total return of negative 1.37 percent.

"In a year where many factors came together to negatively impact stocks, not the least of which was volatility and the market struggled to post a profit, investors became increasingly nervous over the direction of the market," Zacks wrote in a release, "This made stock picking difficult to say the least."

The Zacks' survey also showed that the firms that moved into large cap, defensive stocks from small caps in the second half of the year, posted better returns than those who didn't.

The model portfolios are made up of all the U.S. traded equities, including ADRs, that analysts at the brokers produce recommendations on.

Zacks calculates the performance of the brokerage model portfolios it tracks on an equal-weighted basis. Total return performance figures include stock price changes, dividends and hypothetical trading commissions for each change in the portfolios.

For the full year, the same brokers took the top spots.