Hi,
I am still a bit far out from applying to ER associate positions, but I would like to know which opportunities are good and which aren't.
I've seen many posts that says you want a good bank, analyst, and a sector with good deal flow, so which sectors and banks are the best in terms of getting the most out of being an ER Associate?
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Tech, biotech, semiconductor, etc. in non-recession times. Others can chime in.
Right now, energy is the place to be. In recession times, consumer staples, precious metals, healthcare, most industrials etc. These can be very boring industries for most though.
In my opinion, anything in tech, internet/software/semiconductors is the best in terms of covering an interesting sector, and if your analyst has a good reputation and is II ranked being able to meet really cool people.
The bank you work for is less of a factor when applying to jobs, it really depends on the Analysts. For example, Wedbush's Michael Pachter is probably the #1 analyst covering digital media/interactive entertainment, A lot of analysts covering the same companies at top BB's don't have his level of management access, but another analyst at a MM or boutique firm might have a better research product, etc.
I guess the best sector to cover is a sector that maybe you know allot about or are passionate about
Found Michael Pachter's associate
How do you even go about finding these good ER analysts? Is there a league table of some sort for them?
Institutional Investor ranking is the main one, tipranks can show what analysts have good returns. But it all comes down to who is ways on the shows, who is asking the questions in earnings calls, but you really have to be in the know to know who the top analysts in each sector are
Yea, lots of analysts make it a career goal to make it to the top rankings in Institutional Investor. I'm not too sure about the validity of these rankings from a 'theoretical' viewpoint (same way how rankings of PMs is trash, they are returns which already happened and everyone is working from a clean slate the year after), but then, the role of a sell side analyst is to provide unique angles on critical factors which certainly can be quantified to a ranking
https://www.tipranks.com/experts/analysts/michael-pachter
You sure? He has a 0.21 star rating on tipranks (out of 5 stars), his calls average a -7.10% return. It's hard to argue with those sort of numbers lol
His 10 year Netflix flounder was an absolute joke
Covering “hot” sectors like internet/software/consumer discretionary can be cool and you’ll have more tangible exposure to the companies you cover. However, those aren’t relatively hard sectors to understand and build expertise in, and as a result, your utility to the buyside is lower than it would be if you’re covering something like financials / semis / biopharma where industry knowledge is nuanced and there’s a real need from the buyside for really smart specialist talent.
Regarding analyst selection, honestly can ignore II ranking which doesn’t mean much for how clients view the analyst’s franchise. Instead, pick a couple of companies and read their quarterly transcripts. See which analysts are getting early questions in Q&A and which analysts are asking thought provoking questions. Chances are, they’re one and the same group of people. Those analysts are the ones you want to work for as they’re going to be respected by both their coverage and by investors and ultimately will be good people to learn from.
this is so wrong. using your example, who is out there saying software is an easy sector to understand? Yes, biotech is very nuanced in terms of industry knowledge, but a great software or semis analyst needs to be just as specialized -- in terms of sellside coverage and utility to the buyside. Any industry where the pace of innovation is vitally important to a company's long-term opportunity (ie biotech, software, possibly internet) requires specialization, on buyside and sellside.
I completely agree with your comment about ignoring II ranking and instead reading some transcripts for analysts asking the best/ most interesting questions. But if you're just looking at which analysts get the first few questions for any large cap (and most mid-cap) stocks, especially say in software, you'll probably quickly notice a theme -- that its the BBs that get prioritized. Now, that's not to say that wouldn't be a good team to join -- if you are joining a top-ranked team at a BB, you can seriously accelerate your career trajectory. however, top ranked doesn't always mean best learning experience. And just because an analyst isn't II ranked doesn't mean he/ she isn't highly respected by clients.
My advice for OP: decide what matters most to you - is it learn as much as you can, is it work at a BB for the clout, or is it something else (ie worklife balance, location/ WFH, etc). Pick the sector you know or that you want to work in, start prepping for interviews (practice stock pitches, learn some basic industry jargon, follow industry/ secular trends). As others said, tech (software or semis), energy, healthcare, REITS are probably most stable through up/down swings in the market.
Thank you!
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