Just talked with a professor who was an MD at an investment bank for 30 years. He said equity research is a dying field. Less and less institutional investors are even buying research and that ER is relying more and more on quant-focused strategies. I would love to hear opinions from people actually in the industry at the moment. Thanks
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Yeah, like people didn't ask this last year or the year before (or the year before that).
Seriously. OP's professor should focus more on teaching this kid how to use a fucking search bar.
Well seeing as the fucking search bar would give me answers dating back any number of years... and I was asking for industry professionals' current view on the outlook of their profession, I would say the route I took was the most appropriate. Thanks though, Arch.
Obviously fundamental shops with like 5 research analysts will have the capacity to cover all the names in their sector /s
and considering quant funds got shat on the past couple years (excl this year) wouldn’t ignore that..
Sounds good. One thing I have heard over and over is that Analysts and Associates are being spread too thin with the amount of coverage they are expected to keep up with, compared to what is reasonable for good research. Which only turns out a poor product. Thanks for the answer
Guessing the professor was in IB. IB loves to take all the credit for deals but in the SMid cap space at least in my experience, the relationships commonly can come through ER (companies want coverage so throw your bank on the deal so that ER will initiate, and the ER analyst is commonly talking to management and continuing the relationship). Buy-side pays for 3 main things: first and most important its relationships with companies (and analysts to get better sense of where competitors on street are positioning), second its data, typically industry level (which some buyside shops don't pay for directly and just get it from ER), and third is time savings whether thats grabbing a model to then customize to their liking, or reading a primer/report so they don't have to do the underlying leg work.
ER will always be around, while yes no need for 50 analysts to cover the Apples of the world, the SMid cap space is growing, while the large cap is flat to declining.
Who has the best smid analysts? Is Baird still big in that space?
Baird, Berenberg, William Blair seem to be the top in SMID research.
Dying may be a strong word but it is slowly eroding, similar to all of finance. It is by all means generally a good place to start your career, and you are paid well, but the comp pool has widdled lower through the years.
you think all of finance is eroding?? i don't know about that seems like a insane statement to me. Why do you think this?
.
Depends. Even if the market for ER is fine today, from your professor's experience (who sounds like an old geezer if he spent 30 years on the street), yet it is much, much smaller than it was back in those days. In its heyday Wall Street research analysts easily pulled 7 figures or more (they were also allowed to be much more involved in deals). There are a few who still do that well today, but it is the exception not the rule.
Find a good team in a growing space where you can build domain knowledge.
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