Hey guys, I’m looking for a little bit of honest perspective from the buy side, about how you choose to interact with the sell side. Does anyone here on the fixed income buy-side frequently recieve calls from sales coverage? What would you recommend to a broker cold calling you? Do you even listen to cold callers? Do you ever listen to their ideas/pitch? What grabs your interest when you get a call? What kills your interest? Would you rather them call with a bond or trade idea or a promising relationship? Are you more likely to hear them out if they work for a larger firm? How would you feel about an unsolicited Bloomberg message/email about your coverage and would you reply? What part of the day/week/month are you more likely to take calls seriously? If you can include how large your firms/departments AUM is in your reply it would help a bit
PS - I’m in generalist middle market fixed income sales if your wondering why I’m asking.
Dont be shy.
Sorry dude. The entire forum is trying to follow numi’s steps, so if you have questions about applying to business school, you’ll get an answer in no time.
My worry with cold callers would be whether or not you have the authority to pay them. Our brokers are chosen by our CIO and some other senior staff in conjunction with the relevent PM. If I start using some other broker and they subsequently expect payment, that would cause issues internally. Generally I would ignore any unsolicited calls or emails.
Relationship - maybe. pitch/ideas - naah But then, relationship with broker/dealers is decided firm-wide and not just by one analyst or an asset class manager, when it comes to allocating soft dollars. So, it might be an issue there too! I don’t know if a fundamental, bottom-up shop will entertain pitch/ ideas from a sales guy. Just my opinion, and also what happens at my shop.
Iginla2010 Wrote: ------------------------------------------------------- > Relationship - maybe. > pitch/ideas - naah > > But then, relationship with broker/dealers is > decided firm-wide and not just by one analyst or > an asset class manager, when it comes to > allocating soft dollars. So, it might be an issue > there too! I don’t know if a fundamental, > bottom-up shop will entertain pitch/ ideas from a > sales guy. Just my opinion, and also what happens > at my shop. What is your firm type and AUM?
I used to get calls @ my old job. GKST stands out (Chicago FI B/D), an old guy @ UBS called me all the time…got to the pt where I had to just tell him he was wasting his time. Sell side should not be telling anyone on the buy side what to invest in…imho. They are selling a service so they have a vested interest in getting someone all hopped up on an idea in an effort to solicit business. Nothing is worse than coming in to the office in the morning and hearing one of our sales reps @ RayJay, GS, etc etc tell me what we need to be buying…they are sales guys…not stick pickers.
Thanks jbisback. So lets say hypothetically you run a FI shop and aren’t covered by XYZ Securities. How would you prefer for the rep to contact you to initiate coverage? Would you be ok with an email that says something like “we dont cover you yet and we make markets/originate in X product you buy is it ok to call you?”
^ you are not very clear about what a fundamental, bottom-up buy side firm does. Your posts suggest that. What I and jbisback said above is that buy side analysts do not entertain sales guys at all. you are better off trying to sell to a pension fund or a foundation, rather than wasting your time. If you tell me to initiate a coverage on x company and I think it’s a crap investment, you’ll never be successful, even if you start throwing $$/even gold at me. I am just speaking from my experience at a buy side shop. Maybe there are shops out there that do! Good luck! I am in Canada, by the way.
1morelevel Wrote: ------------------------------------------------------- > Thanks jbisback. So lets say hypothetically you > run a FI shop and aren’t covered by XYZ > Securities. How would you prefer for the rep to > contact you to initiate coverage? Would you be ok > with an email that says something like “we dont > cover you yet and we make markets/originate in X > product you buy is it ok to call you?” I think he meant initiate coverage of the account, not a particular company – at least that is my read. Anyway, most buyside shops have someone who handles these sort of relationships, usually a trader. The HF I work for has one trader, and part of his job is to set up coverage with the Street and make sure the right people get paid at the right times to keep the channels open (First Call research, analyst access). He doesn’t spend a lot of time talking to sales guys though, and certainly doesn’t take pitches on specific names, although he does get about a million emails in every morning from sell side sales guys pitching the latest and greatest tickers (none of which get read or forwarded). In terms of wanting to talk to the Street, our approach is probably similar to most of the rest of the buyside: Don’t call us, we’ll call you. I’m not sure if that answers your question, but basically we try to avoid the sell side since they usually try to extract dollars from us somehow.
Iginla2010 Wrote: ------------------------------------------------------- > ^ you are not very clear about what a fundamental, > bottom-up buy side firm does. Your posts suggest > that. What I and jbisback said above is that buy > side analysts do not entertain sales guys at all. > you are better off trying to sell to a pension > fund or a foundation, rather than wasting your > time. If you tell me to initiate a coverage on x > company and I think it’s a crap investment, you’ll > never be successful, even if you start throwing > $$/even gold at me. I am just speaking from my > experience at a buy side shop. Maybe there are > shops out there that do! Good luck! Yeah we are talking two different things. I’m talking about covering a company for brokerage, ie working with PMs/traders to execute portolio decisions, source paper find liquidity etc. I don’t care what type of analysis you do on your end. I just want to help you trade whatever it is you decide to buy or sell.
bromion Wrote: ------------------------------------------------------- > I think he meant initiate coverage of the account, > not a particular company – at least that is my > read. Anyway, most buyside shops have someone who > handles these sort of relationships, usually a > trader. The HF I work for has one trader, and part > of his job is to set up coverage with the Street > and make sure the right people get paid at the > right times to keep the channels open (First Call > research, analyst access). He doesn’t spend a lot > of time talking to sales guys though, and > certainly doesn’t take pitches on specific names, > although he does get about a million emails in > every morning from sell side sales guys pitching > the latest and greatest tickers (none of which get > read or forwarded). In terms of wanting to talk to > the Street, our approach is probably similar to > most of the rest of the buyside: Don’t call us, > we’ll call you. > > I’m not sure if that answers your question, but > basically we try to avoid the sell side since they > usually try to extract dollars from us somehow. Thanks a lot. That helps. In my experience, no one is interested in starting a new relationship until we are running a deal they want in on. Then they want allocation and usually get squat. If you were on the sell side at a firm in the top 10 in Fixed income league tables, and wanted to start a trading relationship with a BS firm, how would you go about it?
I wouldn’t be the most experienced in this area, but I think a lot of SS houses try to do a pitch once a year to larger BS firms where they currently have no relationship. You could ask to meet the CIO - or whoever the decision maker is in that firm - for a short meeting. Then you’ve got 20 mins to talk through what you do, what you can offer that others can’t and generally try to build a relationship.
I manage a small portfolio, perform analysis, and trade for it. I field these calls all the time, a few a week sometimes. Its not uncommon at all - how else would you expect these guys to start relationships? They can’t just send out smoke signals. We are small (<1B), so we don’t get much of the top tier coverage, nor allocations in deals for the most part. I think the approach has to be tailored to the audience. Is the BS shop large and well covered? If so, you had better hope to just get on their list and have a chance to work an order. Even a few large orders will move the needle. Are they small? You might consider talking to them about providing liquidity, your willingness to use balance sheet (large shops will assume you do) and execute odd lots. And as for ideas, I think some of these guys above are nuts. I personally will take an idea if it comes from my head, someone else’s head, or anywhere for that matter. I dont care where it originates from, if it has the chance to be a money maker, I will look at it. What is unique to fixed income, are some of the mispricings across the curve and in structure. No single analyst is in a position to catch those mispricings, but a sellside shop with a boat load of guys looking at every bond that crosses their book can catch those things and pitch them to accounts. I think one thing the buyside takes for granted, and can be awfully arrogant about, is the sellside. We both need one another to conduct business in some way shape or form.
1morelevel Wrote: > Yeah we are talking two different things. I’m > talking about covering a company for brokerage, ie > working with PMs/traders to execute portolio > decisions, source paper find liquidity etc. I > don’t care what type of analysis you do on your > end. I just want to help you trade whatever it is > you decide to buy or sell. Yes, I misread your post, apologies. I think your best bet is to contact a trading rep on a BS firm. Your objective is to show them how your relationship will benefit this firm and their clients by efficient trade executions (which includes ability to completely fill pooled trades and competitive commissions). There is certainly opportunity because the commission budget makes allowances for “unallocated” commissions, where a broker/dealer not specifically on the approved list may be given a trade due to the broker’s ability to provide best execution. Though, these allocations are typically very small. Our firm currently deals with almost 25 brokers/dealers including about 5-6 in Europe, so we are neither small nor too large. Our in-house traders operate under a set of parameters to allow for reasonable flexibility but always shop bond purchases and sales to secure optimal prices at the time of a trade. Your best bet would be to start a relationship with one of the in-house traders because they make dealer recommendations to the PMs come time for budget allocation for soft dollars/commissions. Ask them out for lunch, coffee or beer - whatever works. Hope this helps!
Thanks to all - Now back to the orignal post questions for those that responded, or others - How would you feel about an unsolicited email or Bloomberg message that gave a few pointers and asked for pemission to call? Something like, Hi my name is 1morelevel I work for XXX Securities in Anytown, USA. we provide balance sheet, we are x number in league tables, i cover firms of your size, I’m in X city and we have x number of traders that trade x product, we can offer/bid odd lots etc. Would you be interested in having a short discussion about starting a new relationship?
thats the only way to do it. relationships wont materialize by themselves.
1more - speaking from my experience on the buyside, it helps to make your first pitch relevant. most desks have sector specialists, and each analyst is concerned with a particular sector or industry. A voice mail to a bank analyst on a tech idea is sure to wind up in the trash bin. Since most desks have already picked their key relationships, you have to advertise a value proposition (have you hired a star publishing analyst, perhaps you’ve assembled a key network of consultants that offer proprietary channel checks, or you can grant management access to undercovered companies). These are things that can get an analyst’s attention. Also make an attempt to screen for a fund’s holdings so you can make references to any overlaps to where you can add value on particular names. As far as making markets - liquidity is back. it’s tough to compete by saying you can trade odd-lots. tons of capital has been put behind credit, so most issues trade fairly easily now compared with 9 months ago.
if you are having trouble making headway with the analysts, call the trading desk or tell the secretary to forward your info to the PMs