Equity Research experience and take away for aspiring monkeys
Thought I’d post some the PM diarrhea I’ve sent to monkeys (who ask intelligent questions). Here we go…
I graduated college with an Econ degree from a top 20 school in the US but not an Ivy. Side-note, monkeys get way too hung up on target, semi-target, non-target on this board. In my book, dumbass vs. non-dumbass is much more important and you can usually tell pretty fast. Anyway, I started a tech business after school, and then sold out (Clearly not for FB level valuations or else I’d be buying Patrick out for shits and gigs).
I've always been interested in public markets, but from the buy-side perspective. I grew up praying to be adopted by Soros or Robertson, well not quite, I love my parents. I randomly applied to a MBA level internship, even though I wasn’t in a MBA program, on Craigslist (Sketchy sounding, huh?) at a boutique research firm. Take away: There are no limits. You want something, reach for it. Don’t be afraid of rejection.
I had one phone interview. We ended up chatting for over 2 hours and was offered the position on the spot, said there wasn't going to be anyone else who could know the market like I did. Take away: KNOW THE MARKET. Keep on top of the news like no other, and I don't mean just following the WSJ macro ticker (do that as well) but pick some companies and follow them like a mad man. Learn them inside and out. Yes little monkeys, that means reading the transcripts and filings. Learn the management's names, its always great to be able to say, "blah blah blah at such and such company is such a prick, does he think he is going to be able to bullshit guidance every quarter." People want you to sound like you're already an insider. ER/investment game has its own lingo, learn it.
I get questions about where to find this information. I say at bare minimum print out the last 2 years worth of press releases, 10Ks and 10Qs (especially focus on MD&A). Read them as you build your model, start with the most recent and work backwards incase there have been adjustments. Also read the earnings call transcripts as well, especially the questions. They will provide color on what the sell-side community finds most important and give you a better idea about what drives the stock. I find printing the transcripts out and highlighting while lounging on a couch a more enjoyable way to do this. In fact I print out everything and highlight, makes going back over much quicker.
As for picking companies, don't pick ones in the sector you are most interested in and if you do pick some smaller players, ones not covered by as many analysts. Sounds counter-intuitive but you aren't going to know as much as an analyst who covers these companies full-time for their job and run the risk of sounding like an idiot/getting torn apart. Analysts can be very defensive about their viewpoints so by picking something they don't know they can still see your process without arguing over the little things. For example, if you wanted to do retail I'd pick companies like HOTT (brand resurgence) or DSW (growth story). Also, don't ever try to pitch AAPL in an interview, especially as a college kid. It is by far the most unoriginal pitch out there. Pick something you can strut your stuff with.
My internship experience was amazing. I built models, wrote research, called execs, went to industry conferences (shameless networking) and basically got to do everything a research associate does. After my internship I hit up every analyst at every bank and said I was looking for a position. Even if I hadn't met them I said we had briefly met (these people meet so many people they never really remember anyway). I've had guys call people on my behalf talking about what a charming person I am and in reality they've never even met me despite being at the same conferences. Why did they feel comfortable doing this? Because they could tell I knew my stuff and was “in the game”. Its the Wayne Gretzky quote, "You miss 100% of the shots you never take." But at the same time this is as far as I stretch things. Never mislead people about your skills or your knowledge/experience. Anyone who knows anything will figure out you’re full of shit within 5 minutes.
Research is a tougher business to break into than IBD, in my opinion. Research associates stay places longer, its not the 2 years with your analyst class and you're out, less of a machine. A research department is like a mall food court, the line could be crazy at Captain Hook Fish and Chips but non-existent at All-American Burger. You only have one boss, your analyst. Make them happy, you don't have multiple MDs and VPs pulling at you so it’s really a 2-3 person team and that’s your world.
I never wanted to do IBD, deals are boring to me. I plan on staying in sell-side research for probably a year or two more, at the most, and then want to switch over to a HF. The biggest downside in sell-side research, for me, is we don't have any money at stake (position wise). I love the winning/losing aspect of the buy-side. As far as I'm concerned, on the buy-side you either make it rain or you're out the door, there is no room for anyone mediocre to hang around and why do anything if you aren't going to be the best.
Everyone is selling something and everyone wants something. Once these guys hit the PM/MD stage of their life, they have the money, they probably have a wife (or two) but, although in most people books that is success, it doesn’t necessarily mean happiness. I’ve had some pretty dark conversations, helped some guys dodge the prostitute from the night before while he’s shown me pictures of his kids, and gotten to take a peak into the future (your 40s/50s). These experiences have taught me more about life than my “work”. Get into this business if you really enjoy it, I know it sounds cliché but don’t just do it for the money, you’ll hate your life if you do/the odds are stacked against you ever making it to the top manager level. I don't really know how I ended up at this point but just be relaxed and save the drinks for when you got the job. Anyone who can be relaxed and hold their own can really go places.
anamerican: Cool. Making up
Cool. Making up stories and posting it on WSO.
Nice job attention whore.
ER harder than IBD?
IBD is boring?
Wow. You are some 25 year old hipster type who has no idea about the fuck he is talking about, and rants on trying to glamorize what you never accomplished. Get a cert user account and talk.
Didn't know IBD was so sensitive. I never said ER was harder, its just different. IBD hours are much longer, you guys work "harder". The point is its just different work and not for everybody.
Didn't want this to turn into an IBD vs. ER war. Different strokes for different folks.
anamerican: You calling me
You calling me gay?
Ban this clown.
Solid post Tiger. I had an opportunity to do a similar internship at a small hedge fund but took a non-research position with a large AM place where I knew I could get a FT offer after the summer. It's worked out well but I eventually want to get into research because that's my passion.
+1 Good stuff.
+1 Good stuff.
Had no idea sell-siders could
Had no idea sell-siders could be so cool.
Kidding.
Maybe.
+1 though.
I hate victims who respect their executioners
Follow BH & Co. on Twitter: @DumbLuckCapital
twitter.com/DumbLuckCapital
BlackHat: Had no idea
Had no idea sell-siders could be so cool.
Kidding.
Maybe.
+1 though.
Lets not beat around the bush, anyone worth a damn is waiting to go buy-side at the first chance.
tiger2012: BlackHat: Had no
Had no idea sell-siders could be so cool.
Kidding.
Maybe.
+1 though.
Lets not beat around the bush, anyone worth a damn is waiting to go buy-side at the first chance.
What sectors do you cover? I'll call you like 9900 times and make u look good, then we'll poach you if you're at a bank we hate
I hate victims who respect their executioners
Follow BH & Co. on Twitter: @DumbLuckCapital
twitter.com/DumbLuckCapital
BlackHat: tiger2012: Blac
Had no idea sell-siders could be so cool.
Kidding.
Maybe.
+1 though.
Lets not beat around the bush, anyone worth a damn is waiting to go buy-side at the first chance.
What sectors do you cover? I'll call you like 9900 times and make u look good, then we'll poach you if you're at a bank we hate
Consumer/Retail. As for banks, I'd be more curious about which ones you like. I think pretty much every ER floor in NYC has enough kool-aid to put Jamestown to shame.
GetOnTop: anamerican: You
You calling me gay?
Ban this clown.
Agreed. What an asshat.
Nice post OP.
Turbo leverage for capital explosion -- BD Capital
My WSO Blog
tiger2012: BlackHat: tige
Had no idea sell-siders could be so cool.
Kidding.
Maybe.
+1 though.
Lets not beat around the bush, anyone worth a damn is waiting to go buy-side at the first chance.
What sectors do you cover? I'll call you like 9900 times and make u look good, then we'll poach you if you're at a bank we hate
Consumer/Retail. As for banks, I'd be more curious about which ones you like. I think pretty much every ER floor in NYC has enough kool-aid to put Jamestown to shame.
Yeah that's my sector all day long, awesomeness. And good point, I was going to edit my post and say wait a minute we hate all banks... but you never really schedule a sit down with an analyst to hear his thoughts on the stock, it's usually about more specific things like management's attitude towards certain stuff, quality of assets if they've been out to certain sites, etc.
Research houses I do like... Blair, Stifel, DB for healthcare obviously, CS, Barclays for retail/hardlines, and a few random analysts from other places but broadstroking it those are probably my favorites. Personal hatred for GS and JPM's research divisions as well.
I hate victims who respect their executioners
Follow BH & Co. on Twitter: @DumbLuckCapital
twitter.com/DumbLuckCapital
BlackHat: tiger2012: Blac
Had no idea sell-siders could be so cool.
Kidding.
Maybe.
+1 though.
Lets not beat around the bush, anyone worth a damn is waiting to go buy-side at the first chance.
What sectors do you cover? I'll call you like 9900 times and make u look good, then we'll poach you if you're at a bank we hate
Consumer/Retail. As for banks, I'd be more curious about which ones you like. I think pretty much every ER floor in NYC has enough kool-aid to put Jamestown to shame.
Yeah that's my sector all day long, awesomeness. And good point, I was going to edit my post and say wait a minute we hate all banks... but you never really schedule a sit down with an analyst to hear his thoughts on the stock, it's usually about more specific things like management's attitude towards certain stuff, quality of assets if they've been out to certain sites, etc.
Research houses I do like... Blair, Stifel, DB for healthcare obviously, CS, Barclays for retail/hardlines, and a few random analysts from other places but broadstroking it those are probably my favorites. Personal hatred for GS and JPM's research divisions as well.
...Well now you're making me feel like an asian kid taking a shower after gym class with the Dallas Cowboys offensive line.
But seriously, good callout on GS-GIR. I recall talking to one of their recruiters once and he was trying to convince me that they took a "buy-side" approach to their research. All I was thinking was, "Yeah, you always need to sucker someone into covering your shorts."
tiger2012: BlackHat: tige
Had no idea sell-siders could be so cool.
Kidding.
Maybe.
+1 though.
Lets not beat around the bush, anyone worth a damn is waiting to go buy-side at the first chance.
What sectors do you cover? I'll call you like 9900 times and make u look good, then we'll poach you if you're at a bank we hate
Consumer/Retail. As for banks, I'd be more curious about which ones you like. I think pretty much every ER floor in NYC has enough kool-aid to put Jamestown to shame.
Yeah that's my sector all day long, awesomeness. And good point, I was going to edit my post and say wait a minute we hate all banks... but you never really schedule a sit down with an analyst to hear his thoughts on the stock, it's usually about more specific things like management's attitude towards certain stuff, quality of assets if they've been out to certain sites, etc.
Research houses I do like... Blair, Stifel, DB for healthcare obviously, CS, Barclays for retail/hardlines, and a few random analysts from other places but broadstroking it those are probably my favorites. Personal hatred for GS and JPM's research divisions as well.
...Well now you're making me feel like an asian kid taking a shower after gym class with the Dallas Cowboys offensive line.
But seriously, good callout on GS-GIR. I recall talking to one of their recruiters once and he was trying to convince me that they took a "buy-side" approach to their research. All I was thinking was, "Yeah, you always need to sucker someone into covering your shorts."
Hahahaha. Yeah dude they're just legit not good, like they think they are but ... meh
I hate victims who respect their executioners
Follow BH & Co. on Twitter: @DumbLuckCapital
twitter.com/DumbLuckCapital
I thought about it for a
I thought about it for a minute. A little self loathing is good for the sell-side.
Nice post. Especially liked
Nice post. Especially liked this:
I graduated college with an Econ degree from a top 20 school in the US but not an Ivy. Side-note, monkeys get way too hung up on target, semi-target, non-target on this board. In my book, dumbass vs. non-dumbass is much more important and you can usually tell pretty fast.
I'm doing everything I can to improve my chances but if I don't get to transfer to(or afford) a target or semi- then I'm not gonna let WSO groupthink discourage me and make me give up on something I'm very determined to do.
ER has always sounded very interesting to me. Thanks for this inside look. Still trying to decide which route to ultimately take and ER is definitely on the list. Of course, buy-side is always the goal as you said.
jeez thank you for commenting
jeez thank you for commenting on how people get waaay too hung up about target/ non-target on here. that's pretty refreshing
"Everything comes to those who hustle while they wait."
-Thomas Edison
I find ER to be much less
I find ER to be much less prestige focused then IB. Just looking at the floor and my analyst class the split between target and non-target undergrad is 50/50. MBA is a completely different story as mostly any associate who got in through that route is from a target. This is mostly because we only accept maybe 4 MBA associates a year for the entire department versus about a dozen undergrad.
Awesome.
Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
Curious about breaking in
Who are your favorites for
Thanks for the info!
YOU JUST GOT TROLLED
http://www.troll.me/images/red-foreman322/dont-you...
This was a very helpful post.
DELETED_ACCOUNT
Stuff about getting guys to
Good advice
Very helpful post. Do you
abs28: Very helpful post. Do
Nice post!
Great post OP, look forward
"WSO is like the 300 for anti spamage. None shall pass." -happypantsmcgee
"You stop being an asshole when it sucks to be you." -IlliniProgrammer
clashdude: Curious about
tiger2012: abs28: Very
abs28: tiger2012: abs28:
Would it be difficult for me
tiger2012: abs28: Very
Thanks, I enjoyed this. I'm
Was researching ER and I
hopesanddreams: Was
Great Post
BlackHat: tiger2012: Blac