Breaking into the buyside from a non-target - You can do it

I wanted to share my experience receiving a full-time buyside research offer from a firm with 30 - 40bn AUM to both help and encourage students seeking to get into buy/sell-side equity research out of undergrad. I am the first student from my school to be hired into the firm from undergrad. I go to a semi-non (in between a semi and non… That’s a thing, right?) – target state school. Okay fine its a non-target.

I remember reading these stories as a sophomore and being so inspired. I can’t believe I’m on the other side of the computer screen writing one now. Hopefully I can pass along the inspiration to the younger people who have the same ambitions I did.

Important Background Info
• First thing to note is the buyside equity research field can broadly be split up into two segments –
o Institutional managers: Funds that seek relative performance to benchmarks, and go long-only equities. Examples include: T Rowe, some asset management divisions of the large banks
o Hedge funds: Funds that seek absolute performance to benchmarks and go long/short equities. Most of these funds generally only hire experienced professionals (Just go to the analysts at a fund like Viking Global Investors and look at their LinkedIns). (Of course, many long-only equity funds today charge higher fees (performance) than an institutional manager would but still seek relative performance… Some people call these hedge funds but really they’re not)

What I believe helped me stand out
• Had a PE internship at a MM (~6Bn AUM) private equity firm my sophomore summer - which allowed me to talk about potential investments as companies rather than stock tickers on a bloomberg dashboard. If you get the opportunity to intern in PE/VC during college, I would highly recommend it, especially if you’re interested in public equity research. It was an amazing experience being able to review CIMs and write draft investment theses (of course these weren’t used at all, but nonetheless) for the associate I worked for. I had to network a ton and learn LBO modeling to get the internship, but it was completely worth it. Private equity really does change your view on how you analyze companies, which is why the top HFs (Viking, Lone Pine) nearly exclusively hire from there. I honestly wish I could have the experience of working in PE full-time without having to do banking
• Went down the banking route - I think people should almost always follow the banking route even if they’re looking to break into the buyside. There is a way that you can go hard for banking and go for equity research. I'd suggest doing this, considering the research world is getting smaller/harder to break into post-grad. I had a junior year banking internship in NYC that showed the asset manager I had great attention to detail / work ethic / etc. I also personally would not do sell-side equity research for many reasons… Many buyside firms would be just as inclined (if not more) to hire a two year IB analyst than a 2-3 year ER analyst. The top hedge funds almost always require prior IB experience because their work environments are very stressful and they need to know that you will be able to handle it
• Obsessive Investment Interest - While in investment banking they may not necessarily want "nerds" who are obsessive with the industry / work all the time (they want to see you're more well-rounded), I really cannot say the same for the buyside. The hedge fund world is the most competitive business game to play, filled with the smartest, hardest working people. The asset manager was impressed with the amount of reading outside of the classroom I had done in investing, the equity research reports I had written on my own time (and the “scuttlebutt” research I conducted for them), the knowledge I gained from managing my own paper portfolio, and my experience starting / managing my club on campus
• Networked insanely - Research is a small world, filled with people who are all very similar. I can't imagine how anyone can break into research without doing serious networking. This is crucial. Network with people and show your true interest in investing
• Modeling / Accounting / Research Reports / Technicals are a given – This really varies per firm. Usually you can get an idea for whether you need to know this stuff pretty quickly. Some firms have full-blown training programs and some do not. Personally, I see no reason not to understand this stuff as it just takes you reading the rosenbaum book and/or building a model once to understand it. Between your freshman and junior/senior year I think this is pretty attainable. Some firms require you to do a modeling test but mine did not
• Maintained grades / coursework etc. - While they say grades don't matter as much for the buyside, they're always going to check it out. Low grades show low discipline - we all know college classes aren't that important/relevant to a successful career, but we also all know that in college you have more than enough time to both do well in classes and spend time learning outside of the classroom. Firms like Point72 will even be more strict on this, along with test scores. You’re going to be working directly under an analyst who is going to expect you to have strong discipline. 3.8+ would be expected from state school kids. We all know how easy your classes are
• References matter – The fund hopped on the phone with two of my previous internships to interview them about how I worked / thought / etc. Always do a good job at prior internships because you never know when you might need a reference
• Clean Resume – Don’t have any errors, bold your firm / location and italicize your position / date you worked there, try not to have too many bullets that go over one line, and lastly have it shaped toward the industry you’re going for. For example, buyside research would rather see more work/investing experience, whereas IB would want to see more involvement on campus / well-roundedness. I had a hard time interviewing with IB (See previous post – getting denied by GS) because I clearly came across as a research kid.

The Interview(s)
• 6 total interviews, 3 superdays (firm sector analyst I would be working under). The other three were video chats and/or calls with: a different sector, HR, and the analyst I’d be working under
• 25 candidates (Nearly all except me were working full-times currently)
• Looked for an investing interest - As I explained earlier
• Lots of Q&A - I had done tons of research on the firm beforehand (website, 13Fs, employee profiles) and had lots of questions about their current holdings. So when I interviewed, it wasn't a standard interview, but rather tons of discussions about investing, their holdings, etc. I don't think much of any of my interviews were standard back and forth Q&A. Honestly if you’re going through an interview and it isn’t conversational, know there is a high likelihood you won’t get the offer.
• Peculiar questions - They definitely ask their fair share of brain teasers and questions that attempt to "read you". They want to see what you're like as a person, how you think about complex problems, how you’d build a model for a company, and how you deal with stressful situations
• Fit is still everything - Any job on this planet will require you to fit well with the people you interview with / will be working under. I had two superdays with the analyst I'd be working with where he grilled me, asked me all kinds of questions, and really sought to read who I was as a person. Make sure you have first impressions / soft skills down!

Hope this helps. Feel free to reach out to me if you have any questions!

Good luck to everyone trying to break into the buyside out of undergrad, especially my fellow non-target kids. Never give up, believe in yourself, and work your ass off. Most of your peers will choose to have fun during their first 2-3 years of college and then work hard the remaining 1-2; choose to do the opposite. It’s more than worth it.