Equity Research Culture

pandaboy's picture
Rank: Chimp | 7

Not many people here have addressed the "CULTURE" on equity research desk, can someone provide me some insights on the following questions

  1. What is the relationship between junior associate and senior analyst like? Will the analyst closly mentored the associate or you kinda need to learn by yourself?
  2. What is the normal associate hour like ? Work over weekend ?
  3. One analyst usually only have one associate to follow him/her? or He/she have a bunch of junior monkeys doing grunt work?
  4. Does the working environment get very political sometimes ? Like in investment banking ?
  5. Is it more of individualistic work than team work?

Thank U guys for all the helpful insider scoop!

Comments (38)

Aug 21, 2009

In answer to your questions
1. The relationship between the Analyst and Associate(s) is the key determinant of how much you will learn and whether you like your job or not. Every relationship is different, so if you're thinking about ER, make sure to figure out if you like the Analyst, is h/she the type of person who wants to do all the work or wants you to do a lot of the work. If they have had other associates or have them currently, make sure to ask these questions of the associates as well. Ask the Research Director, salespeople, etc how they would describe that Analyst vs others in the department. You will work with that Analyst only, so it's important that you feel like you could work with that person for 2+ years.

  1. Hours are long, but not nearly as bad as IB. Maybe 70 hours/week. Longer during earnings season. You'll do some work on weekends, but again, it's not like IB.
  2. Analysts typically have 1-2 associates, depending on how much is happening in their sector.
  3. Definitely less political than IB. Research is very flat. You're generally either an associate or an analyst.
  4. You will work closely with the analyst and possibly another associate. You'll interact a good amount with other associates, but socially. You're not holed up in a cubicle staring at a screen. One of the great things about ER is that you have a lot of responsibility and leeway in figuring out what you need to do to get the job done.

Here's some good detail on the job, job requirements, prep for the job, etc.

Equity Research Associate Job Summary - http://bit.ly/19K7oM How to become an Equity Research Associate - http://bit.ly/bMC0N

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Oct 17, 2010

ok

Aug 21, 2009

Serial Monkey's comments show why it's critical that you figure out what type of Analyst he or she is. Some Analysts do keep their associates in front of a screen all day. Others involve their associates a lot in client interactions, client calls, etc. Spend time figuring out how that analysts works with their associates.

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Oct 17, 2010

ok

Aug 21, 2009

Thanks guys for the thorough comments, it helps a lot. ER so far sounds very interesting !

I just hv some more questions, hope u guys can enlighten me more !

  1. How is performance reviews given in research? If I only work with one analyst, my fate is pretty much controlled by him? He is the only one who is rating me for performance ?
  2. Another thing, does it matter how much trade I generate in junior level?
  3. What is the interation with sales people like? Do I call them up and update them with all the news of the stock or I formulate investment thesis about the stocks I cover?
  4. Lastly, but most importantly, how can u tell if the analyst is GOOD?
Oct 17, 2010

ok

Best Response
Oct 17, 2010

I think it varies, but the truth is that ER guys are paid to generate value-added insight on both the sell-side and the buy-side. That work is done alone.

I'm an extroverted guy in my personal life, and i felt the same exact way during my internship -- questioning whether that was really the best route. But from my experience, if you really enjoy analyzing companies and looking at stocks, there's not a better job for you. In a full-time job, you'll get more comfortable with the people around you, and find that you actually like being siloed during the day and reading and learning, and interacting with your team talking about the ideas.

On the buy-side, there is interaction of course, but most of the time it is in targeted pockets of time.

One aspect too that might be different is being at a BB -- I didn't go that route, so I don't know of the culture as well. But from what I've seen it just takes a little bit to get used to. Keep plugging and really give it your best effort. If you ultimately decide it's not for you, that's okay. But know that it does take some adjustment.

    • 2
Oct 17, 2010

^ To echo what golfer said, I also think that if it were a smaller shop, culture would be better and there would be more interaction. You will probably have to test those waters to see for yourself which you like better. Or, you could try to initiate the interaction at your current gig. If they reciprocate, great. If not, fuck em, just out work them for the summer.

Oct 17, 2010

The culture at your ER group might have a different dynamic from another bank/ ER group's culture. I am not sure why you are judging an industry because f the "limited" time you spent at one bank.

Power and Money do not change men; they only unmask them

Oct 17, 2010

Totally agree that research is an independent thing, and ER attracts introverts. That's what I love about it though. But that's just me. Once you get to the buy side things turn a lot more into a discussion, and there's lots of people you have to explain your work to. It's the same in sell side ER in many ways though because gathering information requires talking to industry experts, management, etc. So it's not all bad, but you definitely have to be able to tolerate a decent amount of solo work throughout the work week.

Oct 17, 2010

.

Oct 17, 2010

Am I the only one who thinks sell-side equity research is a crock of shit? All stocks somehow have a buy or hold rating with retarded price targets. Besides initiating pieces to learn about the industry, I feel that those reports do not add any "value".

Oct 17, 2010
Banker88:

Am I the only one who thinks sell-side equity research is a crock of shit? All stocks somehow have a buy or hold rating with retarded price targets. Besides initiating pieces to learn about the industry, I feel that those reports do not add any "value".

Research reports are the tip of the iceberg. For various reasons (relations with mgmt, banking deals, the sales-research dynamic, etc.) what is said in an earnings note or an update report is often kept pretty vague. The value-add is what is said on the phone.

Also, anyone who thinks "buy/hold" is the value that research provides doesn't understand the industry. A good sell-side analyst is many things and stock-picking is the least valued attribute. Being in the flow of information (both on the industry and the investor side), identifying multi-year shifts and themes, being a gatherer of buy-side consensus, providing a point of view that hasn't been picked up by consensus, are all valued more by the buy-side than a buy/hold/sell call.

Oct 17, 2010
Banker88:

Am I the only one who thinks sell-side equity research is a crock of shit? All stocks somehow have a buy or hold rating with retarded price targets. Besides initiating pieces to learn about the industry, I feel that those reports do not add any "value".

Yeah I agree with Banker88. When I read ER reports, I only look at the management commentary and the description on specific sides of the business which analysts believe will do well or not. PTs are absurd, there is truly no way to determine good PTs (depends on the industry, my industry is just all over the place). When they draw out graphs on price charts, or give earnings estimates, I tend to ignore it all.

My suggestion - do ER for a couple years then switch into a role with the particular industry you have been covering (or better yet, the companies you have been covering). Companies drool over guys with ER experience for Corp Strategy or M&A groups (hell, IBanking coverage enjoys ER as well, but you need to be more extroverted for that).

ER brings a lot of added value to the resume, but the introverted lifestyle is something you need to accept if you want to do research.

"Live as if you were to die tomorrow, learn as if you were to live forever."

Oct 17, 2010

The Research Department is a Cost - Center.

Oct 17, 2010

I was just curious as to what your guys opinion is on adding "being anti-social" to my interests section if i planned on applying for many ER positions in the coming weeks

GBS

Oct 17, 2010

I think it totally depends on the bank and the group. The different groups of ER are pretty isolated from each other and people tend to gravitate towards people alike so each has his own culture. I only know of two people who did internships in HR, and one of them was like you described but the other one was in a group where they all went out to dinner and drinks at least once a week, he got inveited to the VPs birthday party 2 weeks into the job with all the wives, and they all were close friends and hung outside the office a lot. In the downtime they had they played cricket in the office corridor. I know that's not the norm, but my point is you might want to consider to try to find a group where you fit in better on a personal level.

Oct 17, 2010

As a research associate, you have to be really hush hush all the time regarding what you are working on and so forth. It kind of breeds a culture where people really only talk to other associates within their own team (teams are usually 3/4/5 people) or sector (which at my Bb typically include 3/4/5 teams).

Kind of agree with the introvert thing, but please be mindful that an Analyst position is a serious sales type job. As you rise in the ranks in ER you will be spending an inordinate amount of time with clients, pitching ideas to them and sales, and (hopefully) lots of television / media appearances as well. Introverts can sometimes have trouble making that transition to more senior roles. But definitely agree ER does attract a more thoughtful, introverted type of person.

Oct 17, 2010
born2bebusiness:

Is the work culture as a buy-side analyst similar?

At my preftigious fund, yes. But I prefere it that way brother.

Oct 17, 2010

I guess it has it's pros and cons. For one, I've noticed my analyst has A LOT of autonomy over her work. She can work at home if she wants to for a day, and leave earlier some days etc. Also, in some ways it's nice that she can just do her work without being constantly pestered. At the same time a little more connection with other co-workers would be nice.

And in response to FlakieBear, didn't mean to stereotype the entire industry because it's true I have only been at one firm - it is more me trying to understand whether this is typical.

"A real entrepreneur is someone who has no safety net underneath them." - Henry Kravis

Oct 17, 2010

Keep in mind too that this a difficult time for equity markets, and research departments are being pressured to come up with the next "nugget" to drive trading. Volumes are down across the board, and many analyst bonuses are dependent on commissions, so there is more pressure now than ever before on alpha generation.

Smokey, this is not 'Nam, this is bowling. There are rules.

Oct 17, 2010

How did you start a summer internships a few weeks ago, when it was still spring? Wut?

Aug 31, 2009

you get paid the same as other first-years, but after 4-5 years your pay diverges between the best ER people and best traders.

But its still a good living haha

  • Anonymous Monkey
  •  Oct 17, 2010

From my short experience in the industry, as a junior level, and general knowledge I would say pretty confidently:
1) Yes.
2) Not very. A large part of sell side is client facing/ you don't know when you might be needed. I am sure it is possible but I have not heard any analyst talk about working from home on a regular basis.
3) Not sure what you mean by gruntwork, but I would say yes as in most of the time is spent writing notes+reports/ calling clients. A very VERY small part is spent on building/adjusting models, but as a Junior role you probably wont be building models or doing much more than inputting values.

Oct 17, 2010

Effectively the above apart from 1). Sell-side is very laid back in comparison (to IBD) and you can DEFINITELY be confident that most nights you'll be able to go our for your planned dinner etc.

Oct 17, 2010
  1. One thing I hate about investment banking is feeling chained to my desk. Can't leave at night for dinner plans, can't go out to lunch, etc. Is this the case in sell-side research at a junior level as well?

This highly depends on your firm, your overall team/bandwidth, your senior analyst, and the industry you cover. Especially as a new analyst, I wouldn't be especially confident that you'd get to go home for dinner at night all the time, but that also depends on what time zone you work in. Any time the market is open, your senior could get a call from a client and need you to whip something up or help him talk through a model ASAP. Also you will have sales/trading calling you throughout the day on the market. People at the firm I'm at, sell-side friends, and even buy-side friends are at their desk from market open to market close at minimum. You're going to have a huge ramp-up and learning curve coming into equity research, at least for the first year.

  1. How receptive are firms to you working from home some days or if you're travelling? Seems like a job that would be easy to do from home, but not sure if this is actually allowed.

Again this depends on your team. Senior analysts often are allowed to do whatever the hell they want. I rarely see mine in the office and many others work from satellite offices. You, the young gun, likely won't have that luxury. Perhaps once you are more established, they will allow you to work some days from home, but likely not.

  1. Do sell-side ER associates spent a lot of their time on gruntwork, or is it mostly actually researching the companies and modelling them?

Sorry to disappoint you here, but, again, this depends on your team. If your senior analyst is the macro guy that is very laid-back and gets paid to just maintain relationships with clients, sales, and management, you'll likely get to do a lot of modeling and writing. If your analyst is a control freak that is super particular about modeling, you'll be stuck doing the grunt work. Either way, count on doing grunt work at least until you establish yourself.

I'll add that ER grunt work is better than IBD "bitchbook" grunt work. You'll actually still be able to research interesting items rather than make a powerpoint.

Oct 17, 2010

Thanks so much for the feedback. Some follow-up questions:
1. Can you describe some of the non "bitchbook" gruntwork involved? I'm incredibly interested in equities and think that researching some random thing about a company like projecting out sales for a tiny division wouldn't necessarily be terrible gruntwork. But something like formatting a chart for hours on end would not be ideal.

  1. What is the environment like in ER? Is it very academic (much more so than banking)? Thanks
Oct 17, 2010
  1. So you won't be a pitchbook monkey like most first year bankers are. Your grunt work will include items like: entering in actuals after a quarter-end, taking notes on conference calls and relaying the most important themes to your team, researching certain statistical or economic data points for your senior analyst to put in a marketing deck, calling investor relations to straighten a few questions out, researching historical trends of XX if YY happens, going to conferences with other analysts and having to take notes, updating excel spreadsheets to show equity/multiple/relative valuation movements, getting put on the phone with private wealth management financial advisors that have no idea what they should be buying or selling for their client, putting together sales/trading meeting scripts for any upgrades/downgrades your team makes, helping do the grunt excel work for cross-sector projects/notes, etc.
  2. I have never personally worked in IBD, but from previous internships, experiences, and talking to friends ER is very much so academic. A lot of the job is reading and constantly absorbing new information to make yourself smarter. Knowing a little nugget of incremental information can turn your stock/industry calls from so-so to excellent.
Oct 17, 2010

Read this. Really good information and comments:
lifeonthebuyside (dot) com/life-on-the-sell-side-equity-research/

Sep 10, 2009
  1. What is the relationship between junior associate and senior analyst like? Will the analyst closly mentored the associate or you kinda need to learn by yourself?

totally dependent upon your analyst. in general, you should expect plenty of interaction with your analyst. research is fairly flat. despite the fact that everybody has an "internal title" (MD, VP, Associate, etc), it's divided into two main camps - you either cover your own companies or you do not.

my analyst takes a huge amount of interest in me.

  1. What is the normal associate hour like ? Work over weekend ?

at my bb, about 7:30 to 10pm give or take. latest i have gotten home is 5am, earliest is about 7:30 (friday). some work on weekends, nothing crazy. maybe a few hours.

long hours during earnings, when you have to publish a piece and update models. long hours when you are initiating coverage on a new stock. so when you're a new analyst and they assign you your first company, you'll be leaving the office at 2am every night.

  1. One analyst usually only have one associate to follow him/her? or He/she have a bunch of junior monkeys doing grunt work?

typical to have four member teams at my firm. one main analyst who runs the sector, one "junior" analyst who covers the smaller names, and maybe two associates. lots of analyst/associate teams and some much bigger groups as well.

  1. Does the working environment get very political sometimes ? Like in investment banking ?

definitely less of a charged atmosphere than banking. extremely analytical people, numbers drive, rational ppl, etc. like everywhere, you'll have politics, but imo less than in ibd.

  1. Is it more of individualistic work than team work?

yes, very much so. like others have said, you'll be on a team, and you will be working closely with individuals, but you're going to be "nose in a spreadsheet" for many hours of the day . if a trading desk has a locker room atmosphere, and a banking group has a frat boy atmosphere, the research group is much much more academic in nature.

Sep 11, 2009

1 relevant question - Which is more valuable for ER: the CFA or a top 20 MBA ?

Thanks

Sep 14, 2009

at my bb it was typically "either/or" CFA/top 20 MBA. lots of ppl had both. very few had neither. possibly some recently minted associates or "research assistants" who hadn't had time to get their cfa yet. a few md types who entered research straight from industry or from banking or some other non-traditional route had neither.

Sep 14, 2009

Especially if you already have a business/finance background, the MBA adds very little value in terms of skills. Of course, it will pad the old paycheck.

Back to the OP:

  1. What is the relationship between junior associate and senior analyst like? Will the analyst closly mentored the associate or you kinda need to learn by yourself?

My experience at a MM ER department. Analyst and associate are very tight. You spend a lot of time getting to know one another and you get to learn each others styles very quickly. The analyst will teach you all that he/she knows but it is up to you to make repetitious processes more automatic and efficient. t will make your life a LOT easier!

  1. What is the normal associate hour like ? Work over weekend ?

Typical hours for me are 7-6 on average...more during earnings...less during summer (August). No weekends thought the analyst usually is jotting thoughts down on the weekends. Remember this is for a middle market firm and does not even remotely compare to BB.

  1. One analyst usually only have one associate to follow him/her? or He/she have a bunch of junior monkeys doing grunt work?

In my case...I follow two analysts. That is good because I get to learn two different styles...it is bad because I have to do my work in two different styles in order to meet their standards. It is what it is.

  1. Does the working environment get very political sometimes ? Like in investment banking ?

More political for the analyst in terms of getting the sales people to sell your stuff and to get banking to bring in deals. There is always some sort of tension but I can't imagine it is as much as IB.

  1. Is it more of individualistic work than team work?

Much more individualistic! It is a good job for an introverted person that keeps to themselves and gets work done. Do Work Son! That's not to say we don't jerk around alot though. There is plenty of time spent sabotaging the new guys desk and other mischievious things.

Hope this helps.

Smokey, this is not 'Nam, this is bowling. There are rules.

Sep 16, 2009
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Jul 8, 2010