deep research and the pod investment process
i keep hearing people from SM/LO backgrounds critique the pod research process. I'm sure the difference of pod ideas vs. SM/LO ideas are outlined elsewhere on this site, but how is the research process different?
Why do some people think the pod process is superfluous vs. why is it often suggested on this site that "if you want to just pitch ideas and have career growth at parity with your ideas/research, go to a pod." is there something i am missing here -- why is there a disagreement.
Definitely a lot of convergence with SM and MM research processes at times. Especially into a print. Exact research process will vary from pod to pod, have met some PM’s at the larger shops with processes that don’t really include “real” dilligence as far as this site would be concerned.
In general, there’s a stronger focus on identifying the bull/bear debate and the drivers which impact these perceptions short term and then trading on a incremental change framework based on their trajectory at MM’s (and some SM’s.) Big focus on positioning, sentiment, factor exposure and pitching tight pairs too.
As I understand it, LO is much deeper work on business quality, identifying sources of compounding growth and moats with a longer term outlook, layering in valuation.
Business quality/valuation as an objective metric matters less if you’re trading quarters and intra-quarters. Focusing on earnings upgrade/downgrade cycles, incremental data points and feeding them into your rev build/margin bridge scenarios, positioning and then sizing up the multiple on guidance shifts/beats will be more important at an MM*
*but this will be entirely dependent on your PM, the specific parameters they have to produce in, specific LO/SM will be v different too.
very good summary, I second this
You cannot generalize for pod shops. I know a guy who worked at 2 different pods doing merger arb. In the first pod the PM had the analysts doing 30-50 page slide decks on each name. In the second pod the guys were doing simple 1-page write ups and using sell-side models. It all comes down to the PM and his process.
Interesting, do you know how the performance of both PMs played out?
Funnily enough, both pods blew up! But that's really the issue with the pods....the tight draw down limits make it difficult to succeed in certain strategies. You can look it up but I believe MLP has canned numerous merger arb pods in the last few weeks.
My pod’s research process is much more in depth than the SM I worked at
in what ways did your research process change. did you guys just do more dilligence at pods
Who the fuck cares about deep research or "analysis"?
buy the stock if things are improving, short it if things are worsening.
Good data + good narrative = buy. shitty data, mgmt sounds shitty = short. sure, sometimes people "misunderstand" stocks but usually stocks that are moving up keep doing so because of good news, and vice versa
stop making this some type of intellectual exercise. a bunch of morons pontificating on podcasts about business quality when their stock is down 50% because estimates have come down.
What if the data and narrative are good but the stock keeps underperforming
Then the data and narrative aren’t good enough. It’s all about perception vs reality.
im just trying to understand the day-to-day differences in the job, but thanks
Did Steve Mandel or some LO PM fuck your girlfriend or something? Simmer down fella
Happens to the best of us
Genuine question as I never worked in public equity: How much deep research do you need until it becomes a mental masterbation exercise?
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