Covering small stocks vs large stocks?
Curious about the consensus view of pros and cons of covering large or small companies in equity research?
Is there much difference in the work?
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LDN2018Apps, shame nobody has responded. Maybe one of these topics will help:
Hope that helps.
In sell-side ER, the money and commissions are in the large cap stocks because the largest funds tend to trade the most liquid and largest stocks. Often times you'll see VP's start off with covering tiny stocks so they can get their foot in the door and once they're able to prove they can generate good ideas for clients, they take on larger companies. The pro of small stocks is that you can get coverage easier, there's less competition on the street, and you have better access to management. Con is basically you make less money.
Buy-side ER dynamics on the other hand, has a very different dynamic that relates to fund size and liquidity. I'd much rather stay in the small cap world in buy-side ER whereas the $$ are in large caps for sell-side.
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