5/20/17

I have an interview in a few days for a position as an equity research associate with and O&G investment bank in Texas. I have spent the last 2.5 years in investment banking, but out of the blue this firm reached out to me, and now here we are.

I am familiar with investment banking, but I am not quite sure what research guys do other than research. What are some key items that equity research associates look for in projects? What are some key financials used in determining things? I am really drawing a blank as to what (other than my modeling and due diligence skills) will translate over to this job.

Any advice? Thanks!

Comments (24)

5/17/17

Are you really a VP lateraling in as a senior associate and unsure of the responsibilities of a research associate?

I'm not poking fun at you, it is just that you may want to consider the strength of the group if they haven't explained what your transition will be like despite them reaching out to you.

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5/17/17
<span itemprop=name>FinanceBrah</span>:

Are you really a VP lateraling in as a senior associate and unsure of the responsibilities of a research associate?

I'm not poking fun at you, it is just that you may want to consider the strength of the group if they haven't explained what your transition will be like despite them reaching out to you.

No offense taken. My firm is not a traditional investment bank, and to be honest, my title is just a title to impress people. We don't have a research group in our firm, so I am doing all of the day to day research.

5/17/17

If this is TPH like I think it is, you'll be doing a lot of the same valuation analysis that you're used to. Look at some of the companies they cover (won't let me post the link but it's under research on their website) and their b/s/h ratings and you'll get a pretty good idea of their process.

5/18/17

If I got a dollar every time i shook my head in disappointment at how wrong sell-side research analyst are, I'd be very very rich.

Best Response
5/19/17

Sure, sell-side analysts can be wrong. Hell, I'm wrong all the time. Is predicting the future easy to you?

The sell side gets a lot of shit from the buy side. However, it's easy to throw shit from the sidelines when you're not putting yourself out there.

Is the buy side creating financial models and publishing them for the investing universe to see? No.
Is the buy side creating price targets and publishing them for the investing universe to see? No.
Is the buy side creating buy/hold/sell ratings and publishing them for the investing to see? No.

I imagine if you put yourself or the buy side guys into a sell side role that they would often times be wrong.

Additionally, creating research forecasts isn't the only thing the sell side does and for most buy side investors, isn't even what they find most valuable.

Just my two cents.

ask why, asshole

5/20/17

Well said.

Sell-side is an easy wife to beat but I wish that my co-workers had half the knowledge of the companies they own.

5/20/17

this is a complete nonsense and the biggest BS I've seen in a while. having been on both sides, I can tell that the most important thing is if you're putting the money where your mouth is, and it is much, much more important than making publicly available recommendations when you're not investing yourself.

5/22/17
<span itemprop=name>Mr. Skilling</span>:

Sure, sell-side analysts can be wrong. Hell, I'm wrong all the time. Is predicting the future easy to you?

The sell side gets a lot of shit from the buy side. However, it's easy to throw shit from the sidelines when you're not putting yourself out there.

Is the buy side creating financial models and publishing them for the investing universe to see? No.Is the buy side creating price targets and publishing them for the investing universe to see? No.Is the buy side creating buy/hold/sell ratings and publishing them for the investing to see? No.

I imagine if you put yourself or the buy side guys into a sell side role that they would often times be wrong.

Additionally, creating research forecasts isn't the only thing the sell side does and for most buy side investors, isn't even what they find most valuable.

Just my two cents.

Very well said. Been on both sides - neither is easy

5/20/17

You are one of those people that do not really grasp the value of sell side research. Let me help you. See, the sell side research is not there for you to download it from your Bloomberg terminal and make you rich after you read the header "B/S/H" and target price. It's there for you to quickly get an overview of the company and it's latest data, and add that to YOUR analysis. There, now you know.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.

5/20/17

yeah, sure. much value added when 20-30 guys are simply repeating the facts published by the company - which I've also seen myself on earnings release. thanks.

5/20/17

If you guys were so much better than the sell side wouldn't you be beating your benchmarks?

5/21/17

we are beating our benchmarks consistently. cant speak for others.

5/21/17

and just to make it clear - I am not claiming that sell-side research has no value whatsoever. There are guys who are willing to make out of consensus calls - and buy-side listens very closely to what they have to say to decide whether it is true or not. But those who are afraid to stick their necks out bring very little little value to both the firms they work for and the clients.

5/21/17

I don't know how it is with your investment process but I don't think the actual calls are the only thing of value sell-side research offers.

5/21/17

of course not - we're talking about industry connections as well, etc. - but the guy above made it look like the notes designed to present the company news are of particular value to the clients

5/22/17

Sell side research is just one data point out of many to input into a model or decision-making process. I have found the sell side quant researchers tend to be quite good. They expose me to data sets and vendors that I wouldn't have otherwise heard about. They develop proof of concept from new data sources/techniques/etc. which saves me time so I can jump into more sophisticated analysis right away. If an academic paper comes across their desk that is of interest to me or my firm, they will forward it along.

5/22/17
<span itemprop=name>pacificoast</span>:

yeah, sure. much value added when 20-30 guys are simply repeating the facts published by the company - which I've also seen myself on earnings release. thanks.

This certainly happens and we all know that corporate access and cues that a coverage analyst can pick up on from mgmt are many times more valuable than repeating guidance and updating a price target - but there is a reason the buyside will pay to see certain SS analysts.

I get that you are focusing in on the newsflow adding no value - makes sense. The other valuable thing about being well connected on the sell-side in this capacity is they get to talk to a whole slew of buyside guys and get their take on names; so if you speak to senior analysts/PMs at Citadel, Third Point etc. you will get access to what everyone is thinking - something a buyside analyst on his own doesn't get. That info when made anonymous and relayed can really help people understand what are catalysts and expectations for a name.

Lastly - there is a big misconception here that somehow buyside L/S guys are all target BSDs with high IQs and many SS guys are bums, FWIW I've met many weak senior analysts at the most prestigious buyside firms that come from semi-targets or lower. I couldn't believe the lack of knowledge some had of their names. With many teams competing against each other at the same shops, it was also comical to see the weak arguments they would present to go Long one shitty name vs Short another shitty name. Thankfully - I don't have to deal with that anymore.

5/22/17

good comment. thanks for the input

5/31/17
MonacoMonkey:

If I got a dollar every time i shook my head in disappointment at how wrong sell-side research analyst are, I'd be very very rich.

If I got a dollar for how many times i see hedge fund analysts flushed out of their pods or tiger cubs...well i'd have 20-30 more dollars a year. Buy side arrogance while consistently underperforming and churning is my favorite part of wall street.

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5/20/17

Interested as well. What's the day-to-day like at the junior level? During earnings season, I'm assuming there's a lot of updating models, price targets, blasting out earnings recaps, etc. What about outside of earnings season? Also, at the junior level, what is the level of interaction with buy-side investors? with management of the companies you cover?

5/22/17

At the junior level responsibilities can vary by team.

For me earnings consists of obviously reading the release, listening to the earnings call and taking notes and then helping my team with anything they need to get the note out in an efficient manner. This can involve writing portions to searching releases for specific data points/numbers to making calculations of ratios or different numbers for the analyst to use in the note. Then most importantly, checking every single number and statement that is in the note. Once the calls for the day are over and we have gotten the notes out, any downtime is spent updating company models, industry spreadsheets, and marketing packs.

Outside of earnings can involve a wider variety of tasks. Most teams have a weekly newsletter type product that the junior will play a major role in keeping up with. Notes outside of earnings also tend to involve much deeper dives into the industry or specific companies so you can be sent on massive data collection projects. Updating and maintaining spreadsheets for new data pieces is a constant part of the job. Also any type of M&A activity, or meaningful industry news will typically result in the team doing a note.

As far as interaction with the buyside, once you have passed your series exams and have a year or two under your belt, you will get tons of client exposure. Your analyst can only talk to one person at a time, so clients will talk to you when your analyst is busy or when they have some smaller questions. Also you will be constantly emailing clients models, marketing packs, event invites etc. Also most analysts host plenty of corporate access events, and you will get to meet management teams as well as buyside clients.

As has been mentioned before, the sell side doesn't add much value on Buy/Hold/Sell ratings. Sell side adds value by providing the buyside color that they don't have the time or resources to get. Maybe passing on that incremental nugget they squeezed out of management the other day at lunch or giving investors a feel for market sentiment gathered from spending the whole day on the phone. Most of the time, the buyside simply doesn't have time to dig as deep or they simply want to talk to someone about the little known intricacies of a company's financials or business.

5/31/17

Out of curiosity - I'm looking at as similar jump. I've been on buy-side a couple years at a smaller fund and recently contacted to move to a bulge bracket bank in ER a bit more senior (similar comp). I follow a rather narrow set of stocks and the coverage would be similar to my investment role now. Thoughts? I'm planning to stick it out for 2 years and do an MBA thereafter (will be 6 years out of undergrad at that point).

6/29/17

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