Forgot one more very important reason for sell-side analysts: 6. Hosting industry conferences. Industry conferences allow companies to interact, highlight their products and services, network, and of course get lots of facetime with the hosting broker dealer. Companies greatly appreciate invitiations and exposure at these events. From these events, the broker dealer establishes new IB, S&T and banking opportunities. The dealers that host these events are usually those with substantial research, and thus IB presence.
If you think buy-siders have less access to senior management and investor relations you’re nuts dude. Just because they’re not on a public conference call doesn’t mean they aren’t speaking in-depth and frequently with management - in fact they are doing so much, much more.
jcole21 Wrote: ------------------------------------------------------- > If you think buy-siders have less access to senior > management and investor relations you’re nuts > dude. Just because they’re not on a public > conference call doesn’t mean they aren’t speaking > in-depth and frequently with management - in fact > they are doing so much, much more. Yes, I must be nuts. Complete jiberish. So let me get this straight…you think a portfolio manager at ABC Asset Management, that has no position in Alpha Tech stock but is considering taking a position, is going to have an easier time getting a one-on-one by cold calling the CFO’s secretary than going through their sales coverage and having the SS analyst set up the call? Riiiiiight.
jcole21 Wrote: ------------------------------------------------------- > If you think buy-siders have less access to senior > management and investor relations you’re nuts > dude. Just because they’re not on a public > conference call doesn’t mean they aren’t speaking > in-depth and frequently with management - in fact > they are doing so much, much more. For equity, totally depends on the size of AUM relative to the market cap of asset class companies. The Dodge and Cox Stock Fund PM calls up Immelt, he can probably talk with him. If I call up Immelt…well, I don’t have his number.
brain_wash_your_face Wrote: ------------------------------------------------------- > jcole21 Wrote: > -------------------------------------------------- > ----- > > If you think buy-siders have less access to > senior > > management and investor relations you’re nuts > > dude. Just because they’re not on a public > > conference call doesn’t mean they aren’t > speaking > > in-depth and frequently with management - in > fact > > they are doing so much, much more. > > For equity, totally depends on the size of AUM > relative to the market cap of asset class > companies. > > The Dodge and Cox Stock Fund PM calls up Immelt, > he can probably talk with him. If I call up > Immelt…well, I don’t have his number. Yes, of course. I’m not implying that significant shareholders and huge buyside firms don’t have superior access…I’m talking about the vast majority of the buyside, with small, minority positions. The vast majority of the buyside relies heavily on SS for corporate access.
1morelevel Wrote: ------------------------------------------------------- > brain_wash_your_face Wrote: > -------------------------------------------------- > ----- > > jcole21 Wrote: > > > -------------------------------------------------- > > > ----- > > > If you think buy-siders have less access to > > senior > > > management and investor relations you’re nuts > > > dude. Just because they’re not on a public > > > conference call doesn’t mean they aren’t > > speaking > > > in-depth and frequently with management - in > > fact > > > they are doing so much, much more. > > > > For equity, totally depends on the size of AUM > > relative to the market cap of asset class > > companies. > > > > The Dodge and Cox Stock Fund PM calls up > Immelt, > > he can probably talk with him. If I call up > > Immelt…well, I don’t have his number. > > > Yes, of course. I’m not implying that significant > shareholders and huge buyside firms don’t have > superior access…I’m talking about the vast > majority of the buyside, with small, minority > positions. > The vast majority of the buyside relies heavily on > SS for corporate access. OK - I’ve got you then. Agreed - was looking at it differently. Good points sir.
I use sell side research to get quick summaries of areas I’m not as familiar with. On the buy-side, especially at smaller firms, you often have to cover a lot of companies in multiple industries and sectors. I don’t have time to read the full text of every little piece of news that comes out, so SS research summaries can be invaluable in those cases.
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.
It’s just my experience, but as a piss-ant analyst at a low AUM fund, I had no trouble cold calling companies and getting meetings and call-backs from C-level execs at companies with market caps between $2B-$500M. They were eager to take the meetings. If had a few Bil to throw around, I’m sure it would be the same story at larger companies.
NakedPuts Wrote: ------------------------------------------------------- > It’s just my experience, but as a piss-ant analyst > at a low AUM fund, I had no trouble cold calling > companies and getting meetings and call-backs from > C-level execs at companies with market caps > between $2B-$500M. They were eager to take the > meetings. If had a few Bil to throw around, I’m > sure it would be the same story at larger > companies. hey. you are NOT a piss-ant analyst. ok???
Know friends who work on trading equity desks and on the buyside. Let’s just say the newest jr analyst at Fidelity or a large pension fund (CPP). Could call any trade desk at a major bank and have instant service and access to their sell-side analysts. Likewise could call any F500 and get facetime with a c-level guy, tour of plants, answer questions about new products, etc… Most value funds will not even invest or take a position till they sit down face-to-face with a company’s management. wtf another explosion in japan…
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?
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.