Hi guys/gals,
I am currently working on the sell side in credit and looking to make the move to buy-side equity research post CFA. I plan on using the usual channels to find jobs but was also thinking of sending out my own equity research reports on the sector I cover (TMT) to potential employers. My understanding is that buy-side analysts only produce 3/4 page recommendations to their PM's whereas sell side reports tend to be much longer and more indepth. Could anyone shed some light on how I should structure a buy-side recommendation report or should I just send out sell-side style research?
Thanks.
Looking For Some Direction in Putting Together a Buy-Side Research Report (Originally Posted: 12/18/2011)
Hey Guys,
I'm an undergrad looking for summer internships and I've been lucky enough to get in contact with a few fund managers. A common theme after talking on the phone with them is that they want to see some of my "work" or something in writing.
I was wondering if those that work in the industry could provide some direction on how a junior analysts report would look like. I think just going over the major sections would be very helpful. Thank you.
Recommendation Thesis Background Summary Valuation Other considerations Risks
It's always a good idea to have one or two stock pitches ready and written up. Doesn't need to be long (they aren't gonna read more than a page or two), but summarizing the key points in your investment thesis. The actual categories you discuss will vary depending on the sector, but something like this would be a good start:
Tables at top of report: Summary metrics / Stock price chart (5 yr or similar) / Target price, mkt cap, multiples (PE, EV/EBITDA), margins
Investment thesis: highlight two or three key bullets that you think will drive the stock. At least one of these should be differentiated (i.e. the sell-side isn't talking about it). Highlight any competitive advantages, and particularly SUSTAINABLE comp adv. that the company has.
Company Overview: Brief (1 para.)
Growth trends - What's driving revenues, margins, etc? Any emerging mkts exposure? Cyclical vs. secular growth?
Risks - only need a couple. Everyone already knows that economic downturn is a risk, highlight unique ones for this company if you can.
Valuation - brief. What multiples are relevant? What's your DCF target price? Upside/downside. It helps if you have a reasonably well formatted model to show them, but they probably won't want to get into a ton of detail.
If you do this out of undergrad, you should do very well. This is really an MBA level template, and I doubt if most funds expect this from research associates. Good luck, and have fun!
Great, thank you!
All in all, it seems I shouldn't go over about 2 pages single-spaced?
+1 to jank for comprehensive breakdown.
you can get a lot of info for free on morningstar.
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