Equity Research

What I meant was it seems like in general the sentiment is that you probably won’t want to be in sell-side research for more than a few years. Is buy-side research similar in that regard, our does it have redeeming qualities that make it better suited for more of a long-term career. I would imagine that many buy-side analysts probably aspire to be portfolio managers.

First, about analysts vs. PMs. The personalities and intellectual skills that make a good analyst are not always the same that make a good PM. Some people just like evaluating individual securities and investment options and are so good at that that they wouldn’t want to be a PM, which has a a whole bunch of other duties that they may find less interesting (monitoring portfolio features like beta, matching client needs, rebalancing optimally, etc.), or that take away from doing quality analysis of individual investments. So those people don’t become PMs and just choose to become senior analysts. AFAIK, the buy side finds this valuable, because the analysis experience pays off and doesn’t get cycled into the PM role. On the sell-side, sell-side analysts have more client contact and more freedom to make their arguments to an audience. Some people really like that. I myself tend to like the portfolio strategist role, which is more of a sell-side job because PMs tend to feel they can be their own strategists. On the buy-side, there is a product specialist role, which is more about explaining portfolio strategy to fund clients, sort of “the sell-side of the buy-side.”

so the normal route should be sellside then to buyside i take it?

So back to pimp’s original comment about being bored in ER, are people experiencing boredom on the buy-side?? I’m going into an MBA program this Fall and am aiming for a buy-side role. However, I’m a bit worried that 3 years out of school that I’ll be bored with a buy-side role…Do people seem to be more engaged and happy with buy-side roles? Also, what exit opps are there out of the buyside?

Usually the exit ops on the buyside are a comfortable retirement, bankruptcy, or jail.

I guess my boredom stems from the sector I currently cover. My aim is to capitalize on growth opportunities with the firm I work with as they don’t have coverage in other regions yet, so I am hoping to pitch for coverage of a new sector in a new region at some point next year.

So would it be reasonable to conclude that buy-side roles are harder to come by and are more competitive than sell-side roles? Also, how do they compare to IB, PE and VC in terms of barriers to entry (easy to jump aboard or tough ship to catch)? Just trying to map out a 5 year plan.

Frank, survival mode refers to sell-side ER being a cost center - you don’t actually charge for your services, but you do them in hopes of the buy-side trading with your firm thereafter, which is where the goes. when it comes down to it, ER brings a really small amount of compared to trading, so who they’d rather fire first

Carson Wrote: ------------------------------------------------------- > In my opinion there will continue to be a role for > sell-side equity research in the future. Its > equity sales I’d worry about. What value add do > they really give for the large salaries and > bonuses they receive? If the research team is > channeling information from companies to > investors, then equity sales is channeling > information from research to client. It’s an extra > layer in the process that I think adds a lot less > value than does the research team yet usually they > will be on higher remuneration. That doesn’t make > sense to me and its a situation I think will > become untenable as buy-side firms move more to a > model of paying for research directly. I absolutely agree with this and made a similar post a few days ago in the hedge fund manager to pizza delivery guy thread. My guess is that equity sales people used to provide more value prior to the internet and that the business has been really, really slow to die off for some reason I don’t understand. Prior to First Call, notes were sent out by snail mail, so there was a lag before upgrades were known on a wide scale and things were generally less efficient in the market. In such a scenario, a sales broker could have added value by calling certain clients soon after the upgrade and telling them about the research. As it stands now, they earn extra high fees for doing practically nothing. When I call the sell-side, I always want to talk directly to the analyst, not some sales crony.

JT08 Wrote: ------------------------------------------------------- > I’m going into an MBA program this Fall and am > aiming for a buy-side role. However, I’m a bit > worried that 3 years out of school that I’ll be > bored with a buy-side role…Do people seem to be > more engaged and happy with buy-side roles? It depends on the firm and what you like to do. If you are slotted to cover one industry, as might be the case at a large buyside firm, it might not be that much different from the sellside. If you are a generalist and are looking at different companies and industries every day / week, then it’s hard to imagine getting bored unless it turns out you aren’t as interested in the stock market and companies as you expected to be. > Also, what exit opps are there out of the buyside? Exit ops?? A good buyside firm is THE SHOW. What do you mean, exit ops? How about a nine figure net worth and multiple super model girl friends (AT THE SAME TIME!)?

That’s an interesting comment about equity sales adding more value before the internet. It makes a lot of sense actually. It hadn’t really occurred to me before. Like you, I get a lot more value add from talking to the analyst than the sales person. I don’t have any say in it at this point in my career, but if I had to choose which brokers my firm deals with I’d base the majority of my decision on the quality of their research. Access to companies etc would then factor in. Quality of the sales contact would be one of my lower concerns.

Hey this is a great thread, glad I found it. What about salary expectations in Equity Research, from entry level Associate to one with experience, up to starting Analysts and those with years under their belt. Any insights on base and bonuses??

interesting little snippet, seems sell-side analysts do a better job (opposite to what I would have expected) http://www.cfainstitute.org/aboutus/press/release/08releases/20080716_01.html

Any Equity Research Associates in Toronto?? What’s the compensation like (and plz give experience level) Thanks!