moving from buy-side to sell-side

i know the typical path is to go from sell-side to buy-side, but how difficult is it to do the opposite?

through some personal connections I currently have an offer as an analyst at a top hedge fund (think BlueCrest, York, CQS, Graham Capital) where the role is trading/research, i would like to eventually move to the sell-side to a market-making role.

how easy would it be to get sell-side interviews after doing a stint on the buy-side?

 

This might be harder than you'd initially think. Many banks are reluctant to take on traders coming from a prop shop or hedge fund background as the work environment and risk policies are very different. I suppose you could move from a hedge fund to a bank desk but that applies more to prop desks or exotics rather than to flow market making in my opinion.

Out of curiosity, why would you like to move from a HF to a bank?

 
Best Response

Hey buddy, lower tier BB ER guy here. If your long term goal is investing, for the love of all that is holy, don't move from the buyside to the sellside. Granted you're in an internship, if you can get a return offer for the AM side of things, stick with it. If a sell side gig is all you have post graduation, then make lemonade.

I have yet to figure out who started this myth that sell side research programs provide better training. While I won't get into a discussion as to whether sellside research adds value to the investment process (that's a much lengthier discussion), what we do and what the buyside does is fundamentally different. Buyside folks are in the business of investing, sellside folks are in the business or generating trading volume and indirectly assisting the IBD of a large bank (not so much wall crossing as much as it is preserving relationships with company management). It just so happens that in the course of generating trading volume, we may engage in some activities similar to those you'd see on the buyside (e.g. modeling / valuation), but given the industry structure, the business is heavily tilted towards buy ratings.

I'd go into more detail, but it's late and I'm tired, respond if you have any specific questions about the training and such, and i'll be happy to answer.

 

^ Completely agree with the above. Do not move from a buy side position to the sell side just for a training program. You would be crazy to do so. If you're that worried about it, pay a few thousand for a Training the Street or similar program out of your own pocket. It's worth the investment.

Assuming you are a undergrad, you will almost certainly participate in a training program once you start full time. Also, I wouldn't worry about "f'ing up (your) investment career." Any decent buy side shop will keep the training wheels on and not allow you to make investment decisions the first few years. If they're really expecting you to make buy/sell decisions when you first start then you should probably join a different firm anyways.

 

I wouldnt say "Never move to the sell side from the buy side ER" necessarily. It really depends.

If you are at a reputable AM shop, that allows you to do actual research- then you obviously dont leave. Your pay and training may be lower than your sell-side counterparts, but you will have a huge leg up.

If you are at a reputable shop, but youre not really doing research? I would probably wait it out, depending on the firm and how long they require you to wait (2 yrs=OK, >3yrs=Naw)

The question get's difficult when you are at a less reputable AM firm. These firms typically underpay by a large amount, and really dont get much better when you get to PM. You also dont get the same "Buy side" status from hiring managers/HR. Largely because they dont know the caliber of employee, the caliber of training, or what you actually did (people at smaller firms tend to inflate their roles). In this case, its usually better to make the move to the SS- and the earlier the better.

"Sounds to me like you guys a couple of bookies."
 

Just a clarification in case anyone glossed over it, I premised my first response with "If your long term goal is investing" and was operating off the assumption that he/she is in an investing capacity in the AM arm of a large bank. Given this, I would reaffirm my earlier comment to not move over to the sellside under any circumstance if he/she is able to get a return offer on the investment side of their current internship.

Of course a sellside gig on a top ranked team at JPM/BAML/MS would be better than a no name fund managing trading volume). Not criticizing the foundations of the latter (in this post), but that's just a factual description of what the two sides do.

 

When I worked in PB for another BB, the CRM group were the dumbasses who did most of the interacting with current clients when they were pissed off or had a question (but mostly pissed off). Because most CRM's didn't know what the fck they were doing (how funding worked, why margin was x% instead of y%, etc.), they'd just forward the client's question/comment to the most appropriate department within PB, berate the hell out of that person until they solved the issue, and then give the client a nice cheery call back.

The GS name is obviously nice, but you're gonna have to work your ass off for a while to move into a more analytical, fundamentally-based research/investment group (if that's what you want to do). Otherwise, just stick with BS. I wouldn't do that shit just for the name.

 

Thanks HFer-wannabe. Since I've never worked in a bank before I didn't really know what the role was but it sounds like something I'd definitely want to avoid if I want to stay in the analytical realm.

 

yes - sell side firms will sponsor someone who they think could make money for the firm

im assuming your referring to research (given the HF reference) - if you have the track record / experience in following companies, preparing models/research/analysis - you'll get hired.

you have to understand that these licenses aren't that big of a deal - its more of a regulatory thing that you're expected to pass. its only an issue if you fail and keep failing

------------ I'm making it up as I go along.
 

Good point that nobody brings up on this board...the sell-side is litered with former hedge fund guys who couldnt hack it and go back to try to be in sales or market-making. Some of them actually do quite well. Another common move is for a younger guy to go work for one of the big hedge funds (the kind where just having that account can make you a wealthy salesman) and then leveraging those relationships into a sales position with a nice fat garauntee.

 

It depends on whether you prefer to be the salesman (working on behalf of your clients, face time, grunt work, etc.) or the buyer (getting your hands dirty in the due diligence process, building/managing a portfolio, etc.).

Odds of straight into buyside are approximately 11% (fewer openings, more competitive, unorthodox path)

Modeling is done on both sides

It is not always sell-side to buy-side although that is generally the case BC it is the more natural progression to do a 2-3 analyst stint in IB and then head off to a PE/HF shop.

 

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