Equity Research experience and take away for aspiring monkeys

tiger2012's picture
Rank: Orangutan | 332

Thought I'd post some the PM diarrhea I've sent to monkeys (who ask intelligent questions). Here we go...

I graduated college with an Econ degree from a top 20 school in the US but not an Ivy. Side-note, monkeys get way too hung up on target, semi-target, non-target on this board. In my book, dumbass vs. non-dumbass is much more important and you can usually tell pretty fast. Anyway, I started a tech business after school, and then sold out (Clearly not for FB level valuations or else I'd be buying Patrick out for shits and gigs).

I've always been interested in public markets, but from the buy-side perspective. I grew up praying to be adopted by Soros or Robertson, well not quite, I love my parents. I randomly applied to a MBA level internship, even though I wasn't in a MBA program, on Craigslist (Sketchy sounding, huh?) at a boutique research firm. Take away: There are no limits. You want something, reach for it. Don't be afraid of rejection.

I had one phone interview. We ended up chatting for over 2 hours and was offered the position on the spot, said there wasn't going to be anyone else who could know the market like I did. Take away: KNOW THE MARKET. Keep on top of the news like no other, and I don't mean just following the WSJ macro ticker (do that as well) but pick some companies and follow them like a mad man. Learn them inside and out. Yes little monkeys, that means reading the transcripts and filings. Learn the management's names, its always great to be able to say, "blah blah blah at such and such company is such a prick, does he think he is going to be able to bullshit guidance every quarter." People want you to sound like you're already an insider. ER/investment game has its own lingo, learn it.

I get questions about where to find this information. I say at bare minimum print out the last 2 years worth of press releases, 10Ks and 10Qs (especially focus on MD&A). Read them as you build your model, start with the most recent and work backwards incase there have been adjustments. Also read the earnings call transcripts as well, especially the questions. They will provide color on what the sell-side community finds most important and give you a better idea about what drives the stock. I find printing the transcripts out and highlighting while lounging on a couch a more enjoyable way to do this. In fact I print out everything and highlight, makes going back over much quicker.

As for picking companies, don't pick ones in the sector you are most interested in and if you do pick some smaller players, ones not covered by as many analysts. Sounds counter-intuitive but you aren't going to know as much as an analyst who covers these companies full-time for their job and run the risk of sounding like an idiot/getting torn apart. Analysts can be very defensive about their viewpoints so by picking something they don't know they can still see your process without arguing over the little things. For example, if you wanted to do retail I'd pick companies like HOTT (brand resurgence) or DSW (growth story). Also, don't ever try to pitch AAPL in an interview, especially as a college kid. It is by far the most unoriginal pitch out there. Pick something you can strut your stuff with.

My internship experience was amazing. I built models, wrote research, called execs, went to industry conferences (shameless networking) and basically got to do everything a research associate does. After my internship I hit up every analyst at every bank and said I was looking for a position. Even if I hadn't met them I said we had briefly met (these people meet so many people they never really remember anyway). I've had guys call people on my behalf talking about what a charming person I am and in reality they've never even met me despite being at the same conferences. Why did they feel comfortable doing this? Because they could tell I knew my stuff and was "in the game". Its the Wayne Gretzky quote, "You miss 100% of the shots you never take." But at the same time this is as far as I stretch things. Never mislead people about your skills or your knowledge/experience. Anyone who knows anything will figure out you're full of shit within 5 minutes.

Research is a tougher business to break into than IBD, in my opinion. Research associates stay places longer, its not the 2 years with your analyst class and you're out, less of a machine. A research department is like a mall food court, the line could be crazy at Captain Hook Fish and Chips but non-existent at All-American Burger. You only have one boss, your analyst. Make them happy, you don't have multiple MDs and VPs pulling at you so it's really a 2-3 person team and that's your world.

I never wanted to do IBD, deals are boring to me. I plan on staying in sell-side research for probably a year or two more, at the most, and then want to switch over to a HF. The biggest downside in sell-side research, for me, is we don't have any money at stake (position wise). I love the winning/losing aspect of the buy-side. As far as I'm concerned, on the buy-side you either make it rain or you're out the door, there is no room for anyone mediocre to hang around and why do anything if you aren't going to be the best.

Everyone is selling something and everyone wants something. Once these guys hit the PM/MD stage of their life, they have the money, they probably have a wife (or two) but, although in most people books that is success, it doesn't necessarily mean happiness. I've had some pretty dark conversations, helped some guys dodge the prostitute from the night before while he's shown me pictures of his kids, and gotten to take a peak into the future (your 40s/50s). These experiences have taught me more about life than my "work". Get into this business if you really enjoy it, I know it sounds cliche but don't just do it for the money, you'll hate your life if you do/the odds are stacked against you ever making it to the top manager level. I don't really know how I ended up at this point but just be relaxed and save the drinks for when you got the job. Anyone who can be relaxed and hold their own can really go places.

Comments (36)

Aug 16, 2012
anamerican:

Cool. Making up stories and posting it on WSO.

Nice job attention whore.

ER harder than IBD?

IBD is boring?

Wow. You are some 25 year old hipster type who has no idea about the fuck he is talking about, and rants on trying to glamorize what you never accomplished. Get a cert user account and talk.

Didn't know IBD was so sensitive. I never said ER was harder, its just different. IBD hours are much longer, you guys work "harder". The point is its just different work and not for everybody.

Didn't want this to turn into an IBD vs. ER war. Different strokes for different folks.

    • 1
Aug 16, 2012
anamerican:

You calling me gay?

Ban this clown.

Solid post Tiger. I had an opportunity to do a similar internship at a small hedge fund but took a non-research position with a large AM place where I knew I could get a FT offer after the summer. It's worked out well but I eventually want to get into research because that's my passion.

Aug 17, 2012
GetOnTop:
anamerican:

You calling me gay?

Ban this clown.

Agreed. What an asshat.

Nice post OP.

Aug 17, 2012

+1 Good stuff.

Aug 17, 2012

Had no idea sell-siders could be so cool.

Kidding.

Maybe.

+1 though.

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Aug 16, 2012
BlackHat:

Had no idea sell-siders could be so cool.

Kidding.

Maybe.

+1 though.

Lets not beat around the bush, anyone worth a damn is waiting to go buy-side at the first chance.

    • 1
Aug 17, 2012
tiger2012:
BlackHat:

Had no idea sell-siders could be so cool.

Kidding.

Maybe.

+1 though.

Lets not beat around the bush, anyone worth a damn is waiting to go buy-side at the first chance.

What sectors do you cover? I'll call you like 9900 times and make u look good, then we'll poach you if you're at a bank we hate

Aug 16, 2012

I thought about it for a minute. A little self loathing is good for the sell-side.

Aug 18, 2012

Nice post. Especially liked this:

tiger2012:

I graduated college with an Econ degree from a top 20 school in the US but not an Ivy. Side-note, monkeys get way too hung up on target, semi-target, non-target on this board. In my book, dumbass vs. non-dumbass is much more important and you can usually tell pretty fast.

I'm doing everything I can to improve my chances but if I don't get to transfer to(or afford) a target or semi- then I'm not gonna let WSO groupthink discourage me and make me give up on something I'm very determined to do.

ER has always sounded very interesting to me. Thanks for this inside look. Still trying to decide which route to ultimately take and ER is definitely on the list. Of course, buy-side is always the goal as you said.

Aug 20, 2012

jeez thank you for commenting on how people get waaay too hung up about target/ non-target on here. that's pretty refreshing

"Everything comes to those who hustle while they wait."
-Thomas Edison

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Aug 20, 2012

I find ER to be much less prestige focused then IB. Just looking at the floor and my analyst class the split between target and non-target undergrad is 50/50. MBA is a completely different story as mostly any associate who got in through that route is from a target. This is mostly because we only accept maybe 4 MBA associates a year for the entire department versus about a dozen undergrad.

Aug 21, 2012

Awesome.

Aug 21, 2012

Curious about breaking in from industry. I'm currently doing a F500 rotation program at an insurance company and am interested in doing ER after the program. Would I be pigeonholed into FIG or can I come into a completely unrelated industry group? How common is this move in general/any advice?

Thanks!

Aug 16, 2012
clashdude:

Curious about breaking in from industry. I'm currently doing a F500 rotation program at an insurance company and am interested in doing ER after the program. Would I be pigeonholed into FIG or can I come into a completely unrelated industry group? How common is this move in general/any advice?

Thanks!

I'd say get comfy in the pigeon hole if you're coming from industry, remember, thats the most important factor when selling yourself in interviews, you know the sector. Once you're in ER and pick up the research skills you'll have a chance to move sectors if you know how to network.

Aug 21, 2012

Who are your favorites for tech? My firm seems to have a hard on for CLSA and BoAML so thats the only shit i'll see lol.

Aug 21, 2012

Thanks for the info!

Sep 21, 2012

This was a very helpful post.

DELETED_ACCOUNT

Aug 24, 2012

Stuff about getting guys to recommend you without even meeting them - hilarious.

Thanks for the valuable post.

Aug 25, 2012

Good advice

Aug 25, 2012

Very helpful post. Do you have any advice on how to break in to ER if I currently work in DCM at a BB? Should I reach out to headhunters? Thanks.

Aug 16, 2012
abs28:

Very helpful post. Do you have any advice on how to break in to ER if I currently work in DCM at a BB? Should I reach out to headhunters? Thanks.

ER doesn't really use headhunters, especially for entry level positions. Try starting with networking internally. I'm pretty sure Flake has posted some good information on this route.

Aug 25, 2012
tiger2012:
abs28:

Very helpful post. Do you have any advice on how to break in to ER if I currently work in DCM at a BB? Should I reach out to headhunters? Thanks.

ER doesn't really use headhunters, especially for entry level positions. Try starting with networking internally. I'm pretty sure Flake has posted some good information on this route.

Is it the same for buy side research positions?

Sep 17, 2012
tiger2012:
abs28:

Very helpful post. Do you have any advice on how to break in to ER if I currently work in DCM at a BB? Should I reach out to headhunters? Thanks.

ER doesn't really use headhunters, especially for entry level positions. Try starting with networking internally. I'm pretty sure Flake has posted some good information on this route.

They actually do, for example Bernstein does

Aug 26, 2012

Nice post!

Aug 26, 2012

Great post OP, look forward to hearing more from you as you progress through your career!
+1

Oct 1, 2012

Thanks, I enjoyed this.

I'm trying to break in (ER), and in a number of ways, my experience has been similar. I hope for a favorable outcome like yours.

Cheers

Oct 6, 2012

Was researching ER and I noticed a lot of top ranked analysts (or ones winning awards) were Asian...
Is this just coincidence or do Asians make the best ER analysts?

Oct 7, 2012
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Oct 7, 2012