Q&A: Sell-side equity research analyst
Title says it all--well, almost. I specialize in alternative research for a specific sector for institutional investor clients (long and long/short funds, mostly $10b AUM or higher). I've been doing this for about a decade although I don't have a finance background and didn't come into this industry from the conventional route (I applied from the industry I now research). So, questions?
What is alternative research?
The typical BB sell-side report has a DCF, commentary, projections on revenue and earnings usually with a limited IRR extrapolation into the future from past trends. My work uses other sources of information to be more precise and predictive about very specific aspects of a company that the buy side can plug in to their own models to predict future numbers.
Are you at a place like Yipitdata?
Close enough, but they are much more of a data pipe than what we do, which is a bit deeper and less purely quantitative.
How are you paid for your research?
Both in trading commissions and hard dollars, with most from the latter.
From what I've seen, there's a mix shift from extremely low quality sell-side to extremely high quality sell-side, which started before MiFID II but was maybe exacerbated by it. This means a lot of alt research that doesn't really add value is getting scaled back, but also IMO a lot of traditional sell-side research is getting less votes unless you're at the absolute top and provide corp access or something truly unique. In the end, I think the middle is getting hollowed out.
Quant or not, what's important is having a non-financial background and unique experience in the field. My knowledge of the field I cover is something that no CFA charterholder can come close to. So if you have a very in-depth knowledge of how an industry works, you can leverage that to break into alt research, even if you know little about finance.
Hours are officially 40hrs, but I don't work that much. I'm at the highest level, so my work now involves more managing what others do than anything else, which has lowered my workload a lot. Comp is around 300k (I'd love to know how this compares to traditional sell-side ER), all in.
90% of my work revolves around earnings, and I am judged mostly on whether I predict an earnings quarter right--although this is changing as clients acknowledge a thesis can take 3-4 quarters to prove itself.
Yes--prefer not to say what companies, but my reports revolve around specific companies and I have a coverage universe of about 10 core names with about 20 secondary names.
Omnis nam rerum nobis odit maiores a et. Quas quos quasi ipsum. Impedit quod veritatis unde est. Sit aspernatur ullam dolorem sed id accusantium ut. Adipisci ipsam voluptas veniam illo ad et qui unde. Voluptas voluptatem ut voluptatem.
Placeat quae distinctio repellendus. Tenetur harum ut laboriosam illo. Reprehenderit molestias voluptatem beatae perspiciatis qui aspernatur. Placeat dolorem aut occaecati ea nisi eos. Doloribus dolore velit consequatur cupiditate ad. Nobis autem dicta laborum dolorem sint nam atque.
Cupiditate facilis fuga et cum enim temporibus voluptatum. Velit nulla optio rerum molestiae hic corrupti soluta. Omnis cum voluptas aut quae doloremque omnis odio autem.
Quidem earum sed doloremque reprehenderit id aut qui. Reprehenderit non ipsum nemo earum praesentium ipsum et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...