Does it matter what sector you cover as a new grad?

I will be starting in ER in a few months, but my sector/coverage is still undecided. If I am looking to exit to AM after 2-3 years, does my sector matter? For example, will tech be a lot better than packaging materials or semiconductors? Or is building transferable skills the most important part?

Comments (7)

 
  • Prospect in IB - Gen
Feb 22, 2021 - 11:59am

So are all ER exits usually limited to what you cover? Such as AM, corp dev, etc. If so, I guess it is important not to end up in some crappy sector that has like 4 decent companies.

 
  • Analyst 2 in Research - Other
Feb 22, 2021 - 2:51pm

It does, but imo it's still a distant second to which analyst/team you work for. Choose whichever team you get along with best or who has a rep for developing their associates or giving them better exposure. If there are two teams you can't decide between, sure let the sector be the tie breaker. Being in a 'hot' sector but with an analyst that either doesn't develop you/doesn't give you exposure/isn't enjoyable to work for/doesn't rank very well etc is not a good trade off at all, plenty of junior people quit the industry entirely because they don't like their jobs - and imo this is 95% due to the analyst/team issue and not because they weren't on their preferred sector. 

 

Yes, people eventually do get pigeon holed - but this doesn't happen in the first few years. If you discover a few years in there's a sector your dying to cover then you can always switch internally or externally, if you really like it that much you'll be doing personal research on stocks in the space on your own time anyway and you can show that to interviewers. For the buyside, yes recruiters would prefer if you're from the sector you're recruiting for - but in my experience they're fine if you cover an adjacent sector most of the time (unless it's something ultra niche like biotech/insurance). None of the sectors you mentioned are niche.

 
  • Prospect in IB - Gen
Feb 22, 2021 - 4:46pm

Thank you, this is awesome! Quick question: Is there any place to find ER rankings? For example, which banks have the highest ranked teams/analysts, who is the best team for a certain sector, top analysts, etc?

 
  • Analyst 2 in Research - Other
Feb 22, 2021 - 7:45pm

The main ranking is called II and it costs an arm and a leg to get access to. Depending on your firm the analysts' bio pages will list their ranking if they're in the top 3/5. If you google your analysts name you can also find rankings up to around 2016 as well (not sure why they stop showing up after 2016, maybe II changed its disclosure)
 

Ignore the Bloomberg analyst rank as those are useless. Mostly ignore starmine as well as it's semi useless. Other than that your firm's internal broker vote will show who gets traction with the buyside but you won't have access to that yet. 

 
Feb 22, 2021 - 6:20pm
  • Analyst / team culture first, sector second. Roll with someone who a. treats you well b. gives you exposure to clients (for your exit purposes) c. gives you responsibilities d. a good project manager who plans ahead and delegates well (most suck at that so it's not top priority). 
  • For exit to AM, try to assess whether the analyst is good at management access / brings in deals or has deep industry knowledge / can somewhat pick stocks, you obviously want to roll w the latter (cuz mgmt access / deal generation has nothing to do with alpha gen).
  • Also avoid analysts who just do "channel checks" leading up to earnings report, those are garbage firms and analysts (think DA Davidson, Wedbush, Loop Capital, etc.)
  • With all that said, don't end up on a secularly declining sector if you don't have to. 

Follow me on Instagram: @dickthesellsider

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