Q&A: I'm an Equity Analyst/PM at an Asset Manager

HI, it sounds like you are in a great position, already having a job in the space. May I ask what sort of role you are looking for? You're already at a boutique - where are you looking to go?

Slowpoke:

Can you give us the range of your/industry comp from post-mba to portfolio manager?

Would be interested to hear this as well, thanks.

Sure. Right out of b-school, the first few years it was more $100K - $150K. It took a few years to get to the $200K range, then post-2000 tech bubble bursting everyone got frozen for a year or two. Around 2002-2003 it got bumped up to $300K, $400 in a good year. My best year I made $650K, and that was post-2008. However, past few years it is really competitive. I'd say $400 is going to be the "new normal".

ETA: My base has been $200-$250K for the past 8 years. It is all about the bonus.

I have an MBA, and not a CFA. I haven't found it necessary.

Typical day is digesting the WSJ, seeing what is on Bloomberg. I highly advise listening to Bloomberg Radio while you're getting dressed in the morning - great programs and you don't miss the important market-moving info. Then it is a lot of going through the news on the names in the portfolio (seems like someone is always announcing something), updating spreadsheets (I keep quarterly spreadsheets as well as annual forecasting models), looking at what is happening in the macro world.

The biggest thing I have to do, now that I'm at a small shop, is keep up with other analysts. It's the thing I miss most about being in a big firm - can't walk down the hall and get different perspectives, you have to dial or email for them.

You also have to go over the company's presentation to clients and potential investors, and keep that updated as well. You also need to monitor the portfolio for risk, concentration, etc.

You already have a great background in i-banking (as I did) - you've done accounting (presumably!) and know your way around a cash flow statement and aren't afraid to stare down the footnotes.

I'd re-frame your resume so that your accounting experience and saw-companies-from-the-inside aspect are emphasized. I worked part-time in b-school not because I needed the money, but because - after investment banking - I already had done accounting and finance, so homework seemed ridiculously easy and my Nintendo skills were getting a little TOO good due to the free time I had. Try to get a job working part-time, if you're starting b school in a top MBA program, you'll be in a city or town big enough to have at least some asset managers, registered investment advisors, etc. Get the experience while you can. You can also hook up with the school's internal endowment people - they often have a small carve-out for the b-school students. Get to know your professors - they will be endless help in hooking you up with people.

Don't be too hung up on "value" versus "growth". Landing the spot is the important thing.

I wrote above about a lot of sources I use: listen to Bloomberg radio, read the WSJ and Bloomberg.com, I think SeekingAlpha and ZeroHedge are great web sites.

I'd also not be interviewing at Goldman. That is formula for disappointment. Look at smaller shops, or the banks like JP Morgan Chase or Wells Fargo or B of A. You want/need a training program. If you have previous experience, you didn't do Excel modeling? That is very important.

I also wrote above that starting your own "model portfolio" where you pick companies you like, analyze them, follow them, "buy" them - then you can tell an interviewer that you are running a portfolio (and print it out and bring it with you) helps. Even better, spend $1,000 and buy some stocks for real. Everybody loves to interview someone who has "skin in the game" and has made purchases before - especially if you can back up your story with "here's my 3 bullet points of why I bought X; my model says it can go to $80 within 18 months, based on a 12 multiple to EBITDA".

Technical questions - I can't help you there. It's been a while since I've been asked that questions, plus I don't ask it myself. I figure someone who hasn't done Asset Management or i-banking before won't know or - if they think they know - they'll have to be given more detail anyway.

You sound like you have a fantastic background, esp if you've taken the courses, had a PA, and passed CFA L2. Most job postings I see want "2+ years experience" so you are very close to that. The big secret is: it's not what you know, it's who you know. Find out if your college's alumni office has some alums willing to talk "informationally" to people like you. Go to JOBS on Bloomberg and find a list of people looking to hire. How about some headhunters - have you tried making contact with some to hear what is best?

B-school is best for the networking and the job opportunities. Given your background, it's not like you will be learning a ton. But the networking/people are the key.

I don't think it matters what path you take (SS, Bschool, smaller BS shop). I know people who've been successful doing each. However, a LOT of places want MBAs. Maybe the quant shops (AQR, Bridgewater) will take you without it. Have you looked into the quant areas of, say, BlackRock or the big shops? They often have a need for junior people with experience and passion. Good luck, I think you'll do great.

I am very new to Wall Street Oasis so can't give you an opinion. I find LinkedIn amazing (job postings, ability to see if you know someone at a hiring firm who can network you in), and between The Ladders, Manhattanjobs.com, Doostang, etc. my inbox is constantly flooded - the key is, when you find an opening somewhere, to see if you know someone who can make the introduction for you and get your resume to the top of the pile. You can also work in the corporate finance/business development part of a non-financial services company and get a look at financials from the inside.

Recruiters are a mixed blessing, I have found. If there is an opening, they will be happy to shepherd you through and be receptive to you. If they don't have anything, they are unlikely to keep you in mind. So you have to go to each recruiter's web page and see what openings they have.

I don't have any other job boards I can suggest, and I can't comment on your job search strategy, except to say that you need to network your way into companies - it is far more effective than emailing a resume to a posting.

The large firm I was with was a political minefield, and I was very unhappy. One thing with very large firms, there always seem to be these Machiavellian types who scheme and are political. I am not. At a big firm too, there's less of a "wear many hats" aspect, which I happen to like (looking at futures and options and shorts, rather than long-only). The comp was fairly equal, with potentially more upside at the smaller firm. I liked the direct line into the head of the company, rather than "talk to this person to see if the head guy has time" or cornering him on the trading desk.

There are positives and negatives to large vs small. The smaller firm had brighter, more nimble people; the large firm was more sclerotic.

Look, my spouse works in credit research and it is a completely different ball game. Once you do credit you will be doing fixed income/loans/etc. The closest you will get, MAYBE, is with convertibles. I think credit is a fine place to be and if you choose to go that route, you should embrace it and not look at it as a way station. Very difficult to make the switch. There is a lot of credit choice too - high grade vs high yield, distressed, etc. The distressed guys always seem to do well, BTW. If you want equity research, then pursue that.

CFA Level 3.... maybe someone would hire you without real-world applied modeling experience. That I don't know - mostly I have hired either experienced people or right out of b-school. I think it is VERY hard to make switches nowadays. Everyone on sell side wants to be on the buy side it seems to me.There are enough buy side people out there that they don't need to recruit sell-side people (whose analysis is often superficial "what did they earn this quarter and what will they earn next quarter" rather than deep-dive). The only exception I have seen is SC Bernstein sell-side, which people really respect.

Well, first of all the easy stuff - do you follow BlackRock on LinkedIn? Have you perused their web site (it has a ton of information). Jeffrey Rosenberg, their chief investment strategist for fixed income, seems to write a lot. Read all of his work.

Mostly what I have found on interviews is that it is like dating. Mostly they want to talk about themselves. Don't try to be all "I know this and this and this and I'm interested in this". Ask how THEY got their start. Ask what THEY want to see happen to their business - or what they think will happen. Be sure to know how rising interest rates might affect their business. Have an opinion on whether rates will rise (and how quickly) - but don't be too firm about it, make sure you can nod sagely and agree when they say what THEY think.

There is no magic source on the asset manager industry. Ben Graham's "Intelligent Investor" is a classic. Google the big money managers and see how they got their start - Ray Dalio, Paul Tudor Jones, Lee Cooperman, Shelby Davis, Peter Lynch, etc. etc. Read Warren Buffett's last 3-5 years' worth of Letters to Shareholders in the Berkshire Hathaway annual report.

Having an educated opinion that you can defend, while still allowing for adjustments when times/events change - that is the key. The #1 thing you can say to an asset manager is: "I'm not looking to match an index on the upside - I'm looking to protect investors on the downside". Clients HATE losing money. They're OK if you only make 10% and the market's up 15%. But they HAAAAAATTTTTEEEE losing money. You beat the market by not being down as much as the market in bad times.

It is about listening, as much as it is about talking. Oh, and have a couple of buy ideas - give them a couple of ideas that they can potentially make money on. I don't know how it works in the fixed income world, in the equity world it's "I like IBM because their sales are growing at X%, margins are expanding, competitors don't have the depth of product line, and the real upside is their China business is going to explode because of their contract with Y government agency. EPS will grow from $2 to $4 with no acquisitions and no leveraging of the balance sheet, and people are missing that". That is what people want - a few good ideas.

I cannot tel you for certain. The people who have been successful have networked, networked, networked. Use your school's career office. Call on alums who are willing to talk "informationally" - they can often keep you in mind. Your professors are another source. There are part-time jobs available in the field. That summer between first and second year - get the best job you can in the field you want. Get your resume in tip-top shape for the job you want - hire a professional to review it. Make sure your LinkedIn profile reads well - lots of recruiters use LinkedIn. The quant shops always want people with engineering degrees - make a list of them and network your way in (or see if on their Careers page they have an opening).

One interesting fact I learned is that 80% of NYSE volume is from "black box" traders. It is the future (or, the future is already here). We have a quant team where I am now. It is just a different set of interests. I want to know a company's customers and competitors, what their margins will do, new avenues of business, etc. The quant guys want to know "will earnings grow?" (who cares why or how), "is the company's price correlated with GDP/housing starts/personal income?" (so, can it be programmed to generate a buy or sell trigger). I would argue that the macro side is more important to them and the micro, firm-specific side a lot less important. They're not looking to know company managements.

Quants have a more "trading" mentality than a "long-term relationship, get to know this company and its industry inside and out" mentality. They need volatility and price changes. I need a company's intrinsic value to be recognized by the market.

I have no idea what sets the MBA apart from the CFA except better contacts and perhaps greater family wealth (a lot of CFA's I know couldn't afford to take time off to go to B-school). No judgment, JMO. I know people want to equate them. But the honest answer is: some hiring people consider them equal, some people prefer MBAs, some people CFAs. There is no one answer.

Is age a factor? I just don't know. If you're 40 and looking to make the move, maybe. But I think having some years of analytic experience helps. THe problem is that so MANY sell-side people are looking to make that move, so it is about getting your resume to the top of the pile and networking your way into a place.

Who makes the best analyst? Someone who loves investing, loves people, is a bit competitive. Some of the most brilliant investors can be jerks (read up on Gabelli or Steinberg or Pickens or Icahn). I knew I wasn't going to be like that. I wasn't going to make 7 or 8 figures. I was happy with mid-to-high 6 figures and quality of life.

GPA is ridiculous. I haven't been asked about my GPA for years. I think that is for first 5 years out of school (undergrad) and maybe 1 year out of B-school.

My performance is measured by a benchmark, but at the end of the day the clients want to know how you did vs the S&P or the Dow, they're not looking at anything else. Consistent returns are less important than NOT LOSING MONEY when the market goes down. Clients are a LOT happier if you're down 5% when the market is down 15% than they are upset if you're up 5% when the market is up 15%.

I don't know if you're for real, or perhaps a Nigerian prince, but why would you want an internship in Canada with Canadian companies when your interests lie elsewhere?

It is simplistic to say you get "too buried in their cube and their spreadsheets", especially if the senior analyst or PM dictates what you do, but I absolutely agree with the concept. My best ideas and insights have come from speaking with others. If you're researching a company, its competitors, its customers, its suppliers - all of them will have excellent insights. I'm also a big fan of talking with other analysts. Maybe they've come up with an insight or know of a development you don't. Institutional clients I am mixed about - they can help with "what is the big money looking at right now" aspect.

I've written at length above on how you can stand out (so - part of being a research analyst is asking the RIGHT question, and not the SAME question). Have your own PA (or a model portfolio). Listen to Bloomberg radio (they have awesome guests - just heard Abby Joseph Cohen this am), read Bloomberg.com - find a Bloomberg terminal and play around and get to know it. Have 2 or 3 stock ideas that are a "buy" that you can pitch at an interview. I've said this multiple times, and the answer doesn't change. Love what you do, be articulate about what names you like and why, and be easy to get along with.

What I wish people understood is - there is no "best path". It really is about your personality, networking, etc. It is competitive out there. You are one of a stack of resumes. To stand out you need people to help your resume get to the top of the pile, and have good grades from a good school.

My path happened to be investment banking to B-school to Asset Management. My spouse's was working in publishing to B-school to Credit Analysis. My best friend's was investment banking to B-School to executive recruiting. There's no one path, people! You can spin your story and resume any way you want.

Work hard, have good grades, be easy to get along with, have a PA, have a few stock ideas, be spreadsheet-savvy, be willing to learn and make the boss look good. That's the "path".

Sure, if you wrote one, why is that any different from having a couple of ideas to "pitch" during an interview? You just happened to write it down. Make sure it is current, make sure your investment thesis still holds, make sure you think it's still a "buy".

I don't mean to sound annoyed, but I've answered "why the switch" above.

The portfolio I manage with another PM is a few hundred million. We both can trade (each have a portion of the fund). As a courtesy I discuss what I am doing with him. We are long-term investors so it's not like anything is hugely time-sensitive, there's 5 minutes to tell him what I want to buy/sell. We talk all the time so he is aware of what I'm thinking before I pull the trigger anyway.

Given that the CEO's first name was indicative of his personality and capabilities as a leader, no.

Focus on firms that specialize in healthcare, and network your way into them. William Blair, Piper Jaffray, Raymond James, JP Morgan. Here are what are called "League Tables" showing the leaders in each sector: http://markets.ft.com/investmentBanking/bankingLeaders.asp

If you focus on what you HAVE (specialized, unique insight into the healthcare space) you will do well.

There is no magic answer as to "how to get to" these firms. You're not eligible for right-out-of-college training programs. I'd think about going to business school and spending the time there networking, working part-time in the field you want, and meeting with professors and the career office to be introduced to alums in places you want to work in, who will speak to you informationally. Have you been in touch with Career Services from your undergrad alma mater, and asked if they have a job board, or a list of alums who will speak to you? That is often a good place to start. They're there for you even after you've graduated.

You can keep looking at each firm's Careers section (I know Credit Suisse has a really comprehensive Careers page, for example) and see if they are recruiting for their healthcare team. Then you need to have a compelling cover letter you can send in, and a resume which focuses on your healthcare background. Have a few healthcare ideas to pitch.

Good luck!

You have the pros and cons. If you're starting out, go where you think there's better training. Then you can move on to where you have less of a safety net and can fly solo safely. A lot of the "hot" hedge funds prefer people with some experience.

I have a young relative who majored in accounting, worked for an accounting firm, and now does valuation work for a hedge fund. Lots of HFs have a need for people to do valuation/accounting work. That is what I would do. If it is a small enough shop maybe they bring you out as a full on research analyst.

Look, you can spin your resume (you should have multiple versions, depending on what you're applying to) and your background (have different bullet points depending on where you're interviewing) any way you want. So many of the questions here are: "Hi. Here is my very specific background. How can I get to a HF?"

People - there is NO ONE WAY. It is all in your hands. You network, you go over and over your story with your friends, parents, spouses, mentors until it sounds crisp and plausible. Be prepared for multiple firms to ding you. Maybe 1 in 10 or 1 in 20 will take a chance. That means 9-19 dings per lead.

Know your way around a balance sheet. Know different methods of valuation. Have stock ideas. Have a PA you can talk about. Know what is going on in the markets.

You must be young. The actively managed world isn't going anywhere, not when they're minting billionaires and people are looking for returns. There's a huge amount of money in the space. It's not going to 0. If you feel so hesitant about it, go look at Vanguard or work at a place that does ETFs. Or go into consulting or to industry if you feel that way. I'm not here to opine on the future of the industry.

"MSF"?? No idea what that is.

If you have a non-finance background, you can look for funds that specialize in what you do (if you work in healthcare, look for a fund that specializes in that, etc. etc.)