Buy-Side Analysts vs Sell-Side
If I'm not mistaken, buy-side ER analysts work in the asset/investment management side of the business advising PM's on which securities to buy....and sell-side ER analysts work in the IB side trying to sell securities to the institutional clients?
just a few questions
1) Why would someone do buy side over sell side, or vice versa?
2) I often see 200-page+ research reports published by top-tier IB firms made public on the Internet. Do buy-side analysts write these? Or are they sell-side analysts? or do both types of analysts publish these types of reports?
3) Are the Analysts you read in the WSJ and see on Bloomberg, buy side or sell side analysts?
thanks!!
If I am not mistaken, buy-side analysts keep their recommendations "private", while sell-side analysts can make their recommendations public?
The reports made public by banks' research departments are sell-side analysts. The buyside almost uniformly tries to keep its information confidential.
As far as one over the other, a publishing sell-side analyst has the ability to gain alot of publicity, be very well known on the street, and make a good deal of money. That being said, research is definitely a cost center whose revenue is driven by trading commissions. Its harder to tie your performance in with a P&L than it would be on the buyside.
The buy-side has the ability to be more lucrative, especially if you work your way from being an analyst to running your own money. It is easier to directly correlate your performance to P&L as your firm is investing off your advice. Often good sell-side analysts are picked off by the buyside. Often sell-side analysts are probed for a small incremental piece of information about a stock rather than their overall view.
you generally have to start off on the sell side then move to the buy side. buy side analysts dont have to waste their time writing huge reports. its also a better lifestyle and as said have MUCH more upside potential. im not really sure about AM, but certainly at top tier HFs.
Thank you for the information - It is really helpful.
1) I heard sell-side analysts generally earn more money because of the transactions they bring into the firm - Is that true?
2) If Buy-Side Analysts have better hours...more upside potential...don't have to write lengthy reports, why would anyone want to do sell-side?
^^
1) No. The "transactions" they bring to the firm only consist of trading revenue and you also have to pay the trading desk some of that commission. Bankers bring big transactions to the firm. Buysiders have huge upside potential because if they are making great calls, the firm is making great money. Its a much more direct correlation.
2) Thats a big debate. While obviously the sky is the limit on the buy side the "ceiling" on the sell side is a pretty high one. Alot of people build experience and reputation on the sell side then move to the buyside. I can name lots of sell side analysts but very few buy side analysts. Maybe stay on the sell side for publicity?
fuck publicity, its all about the $$. analysts stay on the sell side bc its much safer and you cant get blown up by making a few bad calls as you can on the buy side. need to determine your propensity for risk.
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