From operations to Equity Research

Looking for advice on breaking in to equity research after 1yr in operations at BB and another 2 with a SIFI Custodian. for the past two years ive been following the markets on a daily basis to gain a better understanding of its intricacies. Ive also enrolled in the CFA program (sat for level 1 in june and awaiting scores) and begun to learn financial modeling. once my modeling skills have improved i'll use them to practice stock picking and build my own portfolio. what else can i do besides networking to help stand out as a candidate with just an operations background?

 

Hey there - I'd recommend writing up short investment reports that more or less summarize your investment thesis within 1 page (excl. charts and graphs). When I was going for the buy side, a decent portion of the jobs asked for investment write-ups as part of the application.

However, in the case of sell side, this appears to be more of a hit or miss. While the training from writing up these reports is probably useful in helping you organize your thoughts, actually sending in the report yields mixed results. Specifically, I've seen such reports hurt applications if the analyst covers the company in question and just so happens to have taken a strong, different view than that recommended.

Happy to go into more detail, but this is obviously in addition to the arguably more useful task of networking and building a background that highlights a passion for the markets. Best of luck in your search!

 

Thank you very much! with regards to the research reports, do you mean something along lines of an actual research report that would get published quarterly or something more to the point? Also besides the things that I've mentioned above what else can i do to show that this is something i'm serious about.

 

Thanks! Sure thing, initially I was working with some recruiters (I thought they would be able to market be better), however I realized that they were really just trying to get me a job similar to mine so that they could make the commission off me. They said that no company would hire a back office ops guy with no equity research experience. So I went out on my own and scoured the web. It taught me a couple things: 1) the big job sites are not useful at all 2) the more you put in the more you get out (more on that in a bit) 3) find the general vicinity you would like to work in and find companies there that you would like to work for, email/call them. My big break came from applying to a job on linkedin out of all places. Now seeing that the job already had several hundred applicants i figured it was a lost cause. But I decided TO STAND OUT FROM THE CROWD, how? Well, I messaged someone that already works at the company asking for more info on the role, to start a dialog. One thing led to another and I was invited for an interview.

Long story short, you really have to set yourself apart. Dont be annoying but be persistent. For equity research you really have to know the balance sheet and all other financial stuff cold.

Hope that helps!

 

Other thing to look at is industry experience. People like former engineers, pilots, chemists, etc. often have an easier time moving into ER than back office finance because they understand the busines model, proprietary technologies, etc. in a way that no pure finance type ever will. Having someone with that understanding can be crucial to a good reserach team.

Here is another way to broaden your network: most of them will be willing to talk if you need input writing an example pitch. Give them a call, ask them about your company, and if something opens up with that company later get back in touch.

 

It is very hard to lose the thinking of "stains" because of state school and ops, but trust me, that WILL NOT matter...the only bad thing about ops is that its hard to break out. You already overcame this obstacle, so don't fret..future employers will not look down on you for having done it. In fact, many smaller HF's may look on this favorably, because at 10-50 man shops, everyone does a bit of ops. Even PMs

Now that you have the ER job, you almost feel like you would have rather been unemployed for 7 months then have the back office stuff on your resume (trust me, i understand that thinking) but the only people that care about that stuff are the users on WSO.

The state school thing is slightly different. Unless you are an absolute standout, It will be harder (only slightly) to overcome and compete with ivy kids in ER. But again, after a while, employers mostly only really look at what your current job is, where you are doing that job, and how your performance has been.

The CFA is the gold standard for research, so of course I would recommend that. your gpa and BB would set you up nicely for an MBA business schools">M7 school if you break 700, so that would also be nice - though I don't think it is neccesary or that it would necessarily help you for HFs. MBAs are not necessarily heavily recruited outside of H/S/W/C..totally different story with ibanking - you would be in pretty good shape with all ibanks if you wait a few years and got into a good mba

 
wannabe2013:
It is very hard to lose the thinking of "stains" because of state school and ops, but trust me, that WILL NOT matter...the only bad thing about ops is that its hard to break out. You already overcame this obstacle, so don't fret..future employers will not look down on you for having done it. In fact, many smaller HF's may look on this favorably, because at 10-50 man shops, everyone does a bit of ops. Even PMs

Now that you have the ER job, you almost feel like you would have rather been unemployed for 7 months then have the back office stuff on your resume (trust me, i understand that thinking) but the only people that care about that stuff are the users on WSO.

The state school thing is slightly different. Unless you are an absolute standout, It will be harder (only slightly) to overcome and compete with ivy kids in ER. But again, after a while, employers mostly only really look at what your current job is, where you are doing that job, and how your performance has been.

The CFA is the gold standard for research, so of course I would recommend that. your gpa and BB would set you up nicely for an MBA business schools">M7 school if you break 700, so that would also be nice - though I don't think it is neccesary or that it would necessarily help you for HFs. MBAs are not necessarily heavily recruited outside of H/S/W/C..totally different story with ibanking - you would be in pretty good shape with all ibanks if you wait a few years and got into a good mba

Thank you. This was helpful and definitely encouraging. I think I will shoot for taking the L1 CFA exam in December and subsequent to that I think I'll give the GMAT another try. Depending on how those work out I'll re-visit the idea of an MBA.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 
  1. It really depends on what you want to do long-term. You say you love ER but want to possibly pursue IB b/c others there are talking about it.

  2. As an analyst they are fine. It's not that difficult moving from sell side to buy side as an Analyst. You don't need the MBA per se, but most Analysts do have one.

  3. Definitely if you want to be an Analyst, although it's not totally necessary if you go to a top MBA. It is 100%, at least, one or the other..

  4. It could be done if you go to a top program and lateral in as an Associate. My question is why you would want to if you love what you're doing? Simply because other guys there want to? The grass is always greener...

"It is hard to fail, but it is worse never to have tried to succeed." Theodore Roosevelt
 
Something Creative:
1. It really depends on what you want to do long-term. You say you love ER but want to possibly pursue IB b/c others there are talking about it.
  1. As an analyst they are fine. It's not that difficult moving from sell side to buy side as an Analyst. You don't need the MBA per se, but most Analysts do have one.

  2. Definitely if you want to be an Analyst, although it's not totally necessary if you go to a top MBA. It is 100%, at least, one or the other..

  3. It could be done if you go to a top program and lateral in as an Associate. My question is why you would want to if you love what you're doing? Simply because other guys there want to? The grass is always greener...

Thanks for this as well. To answer the things from your 4th point...I know I should be thinking for myself and all that...but I feel too green to know what's best for me right now. So when I heard a couple of the older guys voicing their early regrets, I got a little spooked (maybe they were joking who the hell knows). And yes I absolutely love what I'm doing right now, yet I never experienced anything else. I don't want to hate/bash on operations (well maybe a little) but I think being a school bus driver would've been a more rewarding career choice. It just destroys your ego and your feelings of self-worth (at least that's how I felt). With that said, my love for research could very well be relative and premature. As for right now, it's a new and exciting world.

I'm just trying to not waste time again and visualize how I should be developing. Thanks again for your reply.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 
whatwhatwhat:
No, that was helpful. Thanks for describing your experience. I'm surprised you were given work to help with. I'm guessing that's not common practice at a BB and more dependent on the analyst. Is that correct?

Yes definitely depends on the analyst...I think I just got very lucky there. For example, I don't ever see the same thing happening if someone like me were to email my analyst right now.

Reddog, please don't mind me. I'm just a bitter idiot with regards to that whole experience. I have plenty of friends still working in support who are perfectly happy. I also don't know what credit risk people do and how it's comparable to trade support. All I know is that it wasn't for me and that I am extremely happy where I am right now.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 
Flake:
whatwhatwhat:
No, that was helpful. Thanks for describing your experience. I'm surprised you were given work to help with. I'm guessing that's not common practice at a BB and more dependent on the analyst. Is that correct?

Yes definitely depends on the analyst...I think I just got very lucky there. For example, I don't ever see the same thing happening if someone like me were to email my analyst right now.

Reddog, please don't mind me. I'm just a bitter idiot with regards to that whole experience. I have plenty of friends still working in support who are perfectly happy. I also don't know what credit risk people do and how it's comparable to trade support. All I know is that it wasn't for me and that I am extremely happy where I am right now.

Just out of curiosity, what does trade support do? This is the description I found off of google. Is it at all accurate or completely off base?

A trader's assistant uses math skills and complex computer algorithms to evaluate investment opportunities and provide recommendations to a firm's head trader or portfolio manager. For instance, a trader's assistant at the bond trading desk may advise senior traders on investment opportunities in bonds, convertible bonds or credit default swaps (CDS). A trade support specialist also may partner with a risk manager to assess market and credit risks implicit in corporate securities exchange transactions.

I'm genuinely curious.

 

That is like a junior trader role. Way off. Not even close...the trade support I'm talking about has to do with trade entry/capture, p&l reporting, reconciliation of trade breaks, etc...

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 
zerotolerance89:
Sorry for bringing back old thread, Which Operations department were you in?

"Trade support" for one of the fixed income trading desks. Trade booking/entry, doing the traders' P&L at the end of the day, reconciling trade breaks with counterparties...fuck I'm falling asleep already.

Oreos:
Good story, well done!

Thanks. I actually want to delete this post. Seeing how well-behaved I was when I first started posting makes me sick.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 

how were you able to do one-off projects for the senior analyst? the work done as a research associate is highly confidential...esp if you are working on downgrades/upgrades. trying to get a feel for what kind of work you were doing for the team.

just curious, you seem really bitter about your experience in what you describe as "middle office"...is there a particular reason for that? like you, i made the career switch into ER but i dont regret my time spent in audit.

 
bulgebanker:
how were you able to do one-off projects for the senior analyst? the work done as a research associate is highly confidential...esp if you are working on downgrades/upgrades. trying to get a feel for what kind of work you were doing for the team.

just curious, you seem really bitter about your experience in what you describe as "middle office"...is there a particular reason for that? like you, i made the career switch into ER but i dont regret my time spent in audit.

He cleared me with compliance. Also, he never communicated what he would be doing to the target price or his recommendation. While shadowing I did basic stuff like updating the models for earnings releases and creating any tables/charts for the reports (I was there during earnings season).

When I had to go back to my old role, he had me work on building a model and writing up certain sections of the initiation report for a company he would be initiating on in about 3 months. The stuff I wrote was straightforward, like the company management page, company background and history, competitor analysis etc. I wasn't working on the investment thesis or anything that involved his view/opinion/recommendation. Basically, I was never doing anything really stimulating but I still enjoyed it compared to my regular job.

I don't know what audit is like but I'm glad you weren't as miserable as I was. What I do know is that I hated it there and I don't owe people an explanation as to why, it just sucked. I think I hated the people there the most. Congrats on the move by the way.

Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 

Good story, well done!

"After you work on Wall Street it’s a choice, would you rather work at McDonalds or on the sell-side? I would choose McDonalds over the sell-side.” - David Tepper
 

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Under my tutelage, you will grow from boys to men. From men into gladiators. And from gladiators into SWANSONS.
 

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