What do you guys think about a career in ER in 2020? I know S&T is in a bit of a pickle, but isn’t dead yet, whereas IB is still going strong. Is ER in the same boat as IB or S&T? A family member of mine who runs a small (~$300M AUM) HF told me the only place he would recommend me to go to at an investment bank is Equity Research, but he’s only fundamentals driven and I know most HFs now are using quant strategies. What are your guys’ opinions on ER, is it a place to be for ppl who aren’t comfortable with the IB hours or is it sort of on its way out the door like S&T and not a great place for an undergrad to start their career? Thanks for the info!
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bump, following
A few thoughts on equity research (ER):
ER – While ER’s heyday is gone, it still is a great place to learn a sector and financial modeling. For someone starting out their career, it can really help shape your direction. One of the key things to know about ER is not every sell side analyst is the same. I’d suggest you review the Institutional Investor rankings, which still carries a great deal of respect in the ER field. If you end up working for a top sell side analyst, you’ll be trained very well and you have the potential to move into either the buy side covering the same names or if you like at one of your coverage companies (either in an IR, strategy or internal M&A function later on). However, I can’t stress enough that where / who you work for is key. Not all ER roles are the same! Some banks have really great coverage analysts that provide great value add and others, not so much. There’s also a vast degree of quality among the sell side firms themselves and what they’re good at, Bernstein has some of the best ER analysts and I’ve know ppl make the jump from there to the buyside. There are some very good smaller niche biotech sell side teams at banks most ppl never heard of (i.e. Leerink). The hours in general are better vs IB, but you’ll be very busy during earnings season (good luck pushing earnings notes and update models on several names in one day) and frankly if you cover the same names over a few years it can get a bit boring.
Regarding your fundamental vs quant comment:
HFs – Yes, quant is definitely a big segment of the HF universe, but I wouldn’t minimize the existence of fundamental HFs. All the multimanager (MM) platforms have vast arrays of teams covering various sectors / strategies you didn’t even know existed using fundamental analysis. Sure, some augment this with the assistance of quants, but most do not. There are also plenty of single manager fundamental funds out there in certain niches that have nothing to do with quant.
Best of luck.
Insightful, thanks for sharing! By chance, do you know if there is a way to view the II rankings without paying for them? I've been going form bank to bank (they always announce when their people make the list), but this isn't a very sound way to gather the list IMO.
Truth
What is a good SS ER firm to make the jump to buyside eventually?
I would echo the above, WHO you work for is infinitely more important than where you work. Since the teams are small, if you work for a douchebag analyst you will have a terrible experience, and vice versa
Is GS seen as a top place to work in ER in your opinion?
You’re kinda slow, aren’t you?
Yep read this bloomberg article just published today about human HF's vs quants
https://www.bloomberg.com/news/articles/2020-12-30/human-run-hedge-fund…
bump man
Certain firms are slimming down, while others are growing. As the other poster said, highly dependent on your analyst and coverage universe. As someone who has covered both a shitty sector and a great sector with lots of compounders, I can emphatically say that coverage can be a huge motivator or a big kick in the balls. Definitely wouldn’t say the big investment banks are the only place to go. Some will certainly give you a good name on the resume and solid exposure, but others have a reputation as IB shills who don’t give a shit about putting out quality research. Plenty of boutiques that are sirloin rock solid and will give you more rapid advancement.
Is GS seen as a top place to work in ER?
Not from a research perspective. Again, this will depend heavily on the analyst, but for the most part not particularly.
How strong is DB's ER platform broadly speaking and also is the Internet sector team stronger than the Biotech sector team?
DB ER is a sinking ship, be careful.
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