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What is the point of sell-side analysts?

I think sell-side’s value at the core really comes down to specialization and industry knowledge. A lot of sell-siders have previously worked in the industry they now cover. I talk to super smart dudes at hedge funds all the time, and while they can break down an individual company pretty well, they have a tough time placing it in the context of the industry. Everyone can build a model, but if you don’t understand the industry’s s/d trends how accurate are you earnings projections going to be?

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thepinkman Wrote:
——————————————————-
> greengrape Wrote:
> ————————————————–
> —–
> > I work in SS ER. There’s so much wrong
> information
> > in this thread, it’s sad.
>
> Working in ER doesn’t automatically qualify you to
> be someone to comment on the vibrancy of the
> industry. Afterall everyone thinks their job
> “special” and lose big picture focus.

You are messed up. You would rather get opinions of SS equity research from people who don’t work in the role, and go with those opinions?

Just scanning the first several posts, I already see totally wrong statements, and I guarantee those people have never worked in equity research.

I’m not even going to bother replying now. What’s the point? You don’t want to hear it anyway.

It’s post like these that make me never want to post anything real, and instead just use the forum for a few laughs.

*grabs popcorn*

I like this superior return guy ova here

SS ER is basically marketing to hopefully generate IBD deals and for pitching ideas to clients with the hope in generating more S&T. It’s sales. Technical sales, but still sales. The real money in SS ER went away about 10 years ago.

But most everything in finance is sales. SS ER isn’t much better or worse than other roles in finance.

You can make a good living and produce solid contacts. It’s a relatively prestigious position and most on this forum would be extremely lucky to get such a job… but they won’t.

i know one CPA in a 5-man local tax shop who thinks he’s the hottest $hit in the finance world… not sure why im sharing this story, it felt somewhat remotely relevant to the thread

Who here has ever built their own model, I am talking BS/IS/CF linked together and started to play with various models, like cost of equity/debt, growth in one divison, costs margins etc…

Now how many people went right to the 10K/press releases and listened to the CEO/CFO earnings call. Know how long an earnings call is?

Now approximate how long it takes to gather all that, and create a model, understand the business and what main drivers can change the valuation.

Now who here has read sell-side reports, jumped to building a quick revenue model and saw if their investment thesis had anymore value than creating a model from scratch for hours.

You have to do both those things first before you understand the value of sell-side.

adehbone Wrote:
——————————————————-
> Who here has ever built their own model, I am
> talking BS/IS/CF linked together and started to
> play with various models, like cost of
> equity/debt, growth in one divison, costs margins
> etc…
>
> Now how many people went right to the 10K/press
> releases and listened to the CEO/CFO earnings
> call. Know how long an earnings call is?
>
> Now approximate how long it takes to gather all
> that, and create a model, understand the business
> and what main drivers can change the valuation.
>
> Now who here has read sell-side reports, jumped to
> building a quick revenue model and saw if their
> investment thesis had anymore value than creating
> a model from scratch for hours.
>
> You have to do both those things first before you
> understand the value of sell-side.

Wow. You sound like a real big swinging Dick Tracey.

Maybe it comes across that way.

It is not unusual to be asked to build a model before an interview for a buy-side or boutique banking interview, I have been through that exact process. If you have as well, and did not think sell-side research helped, would like to know.

Even in trading, we use macro/sell-side research the same way, you read it understand what could effect your product area and then create your own model/view. But alot of the work and understanding of the material is done by the sell-side/research houses.

MattLikesAnalysis Wrote:
——————————————————-
> i’ll say again. ss analysts get paid to support
> the advisor network. without ss analysts, the
> advisor network does not exist and advisors at
> firm x (with no ss research) do not have any
> competitive advantage as they are merely mutual
> fund pushers…
>
> non-savvy individual investors would have no
> access to individual stocks without ss
> analysts…
>
> think about it: why would the main function of ss
> analysts be to support equally savvy investors?
> the main function is to support non-savvy
> investors. look at who has the most research
> breadth in North America… Raymond James… what
> do they do? the majority of their revenues come
> from wealth management (very little IB revenues)
> i.e. their advisor network contributes the bulk of
> revenues and those revenues support a massive
> research network.
Nice Promo

SuperiorReturn Wrote:
——————————————————-
> greengrape,
> instead of being a little phag and complaining how
> wrong everyone is, why not post and clarify since
> you are an all mighty sell side analyst who sukks
> bankers cock for 100K a year.
>
> stuffy arrogant fu ker

Yeah, please clarify. This is the second time you tell that many statements made here are wrong. Why don’t you explain why?

Although buy side is dominated by the top-heavy players, there are thousands of smaller fundamental long only or long/short fund. For example, in the locale I’m at there are at least 20 firms each managing between $300 mil. to $1 bil. Those firms will have probably 6 analysts tops.

You do the math on the quality of analysis. 6 buy side analysts covering 500 names each in their investable universe, or a team of 3 sell side analysts covering 18~20 names.

As much as I hate to admit it, we need the help of sell side analysts to get some heavy lifting done. Frankly, if a brokerage firm doesn’t have any sell side research, it would not get any trading business from us.

hahahahha….now we’re talkin!!!

greengrape Wrote:
——————————————————-
> SuperiorReturn Wrote:
> ————————————————–
> —–
> > greengrape,
> > instead of being a little phag and complaining
> how
> > wrong everyone is, why not post and clarify
> since
> > you are an all mighty sell side analyst who
> sukks
> > bankers cock for 100K a year.
> >
> > stuffy arrogant fu ker
>
> f*ck you.
>
> I have no intention at all of responding to this
> now. I’m all up for a real discussion on the
> pros/cons of a SS ER position, and sorting out
> what is true/false, but you are exactly the kind
> of trash that drives people away from forums, and
> just attracts flamers looking for amusement.

have you read this thread? thats exactly what people were doing
you’re the one that came here like a beta phagot posting how ridiculous everyone was and how youre the big man in finance.
i fukked your ugly immigrant mom

"I talk the truth only.two month ago I pass the exam to study the econmic master" - qqqbee, Sept 1, 2010

This could have been an interesting thread, but clearly is SS > BS? generates more emotion than CFA > MBA?

Chad, perhaps we could do with a couple of moderators to prevent guys resorting to swearing at each other.

adehbone Wrote:
——————————————————-
> Who here has ever built their own model, I am
> talking BS/IS/CF linked together and started to
> play with various models, like cost of
> equity/debt, growth in one divison, costs margins
> etc…
>
> Now how many people went right to the 10K/press
> releases and listened to the CEO/CFO earnings
> call. Know how long an earnings call is?
>
> Now approximate how long it takes to gather all
> that, and create a model, understand the business
> and what main drivers can change the valuation.
>
> Now who here has read sell-side reports, jumped to
> building a quick revenue model and saw if their
> investment thesis had anymore value than creating
> a model from scratch for hours.
>
> You have to do both those things first before you
> understand the value of sell-side.

Never been in ER SS or BS. Have bought the WSP course on financial modelling and am part way through the first example model linking the IS/BS/CF using 8 or so financial statements from 10K to conf call transcript (found that perversely entertaining btw…). The financial model runs to more or less 250 lines of excel where most lines have to be manipulated and linked with varying degrees of complexity. The time and effort for me to read the thing page by page, let alone do the grunt work is substantial (not even inputting the data). I have a new found respect for you analysts (not that I did not have any respect before, just didnt know what it involved before). I have been going through this at work for several days now. And this is just to get to the starting line. And I have my CFA (great complement to level 2 accounting fwiw). The sheer scale of the model is mindblowing compared to other things I have worked on. No wonder you guys have to work 95 hours per day (or at least the grunts do). And I hear the pay is moderate at the beginning (though you all become hedgies at the end so it is worth it as long as you do not die of overwork in the meantime).

Kudos.