How often will a HF Analyst or Associate need to listen to earnings calls?
Keeping up with the news is (of course) a huge part of the work being done as an analyst or associate, but how often is that just listening in and taking notes on an earnings call? They present essential information but I wonder about the difference in getting that information updated in models and consolidated immediately in real time vs. a few hours or days later based on research reports.
How often do you listen to earnings calls and what exactly are you listening for?
What desk you sit on and role would be helpful.
i'm a l/s analyst.
If it's an important position in the book then i'm on the call, and excited about it.
otherwise, an intern is listening to that call and taking notes. i've briefed him on the position/what i'm looking for.
very idiosyncratic what's being listened for. put simply most important is incremental information which helps affirm or dispute a critical thesis
because i 90% don't trust interns i'll be reading the call later.
Seconded
This is helpful! Wondering what the interns would be doing to mess up though. What kinds of things are they listening for (to affirm the position) that are so complicated?
Or do interns just have a goldfish's attention span?
In my experience, interns just don't know what they don't know. Something important can quickly be said in an almost passing manner and it just gets missed. Or, there is industry-specific lingo that doesn't get picked up. Sometimes the team will spend the whole call talking about their top-line, when the real hero of the quarter was something that happened with working capital that'd be great to hear about. Earnings are out almost always at least an hour before the call which gives the intern some time to review and context for the call. Going into a call without any context is tough. I have done exercises with interns and young analysts where, after an earnings call or management call, we compare notes on what they thought was important vs. what I thought and go through the thought process.
If you're at a MM pod covering 30-50 companies, you should be on every call, every quarter. I update my model as earnings come out and jump on the call right after. Some calls will provide details about what the management is seeing and expects that you just don't get on the press release. Many stocks move in reaction to what mgmt says on the call, and I think this is one area where humans have an advantage over algos (management meetings are another area).
Some days when calls overlap, I prioritize names where I'm involved long or short. My PM will dial into calls if he's free to help in this case. But by the time I go to bed, I'll have listened to every earnings call for my companies that reported that day.
Do your PM like to use his own models or do not care? How important is model to your research? How much time (%) do you spend on updating your models?
We build our own models but use street models to build out historical when launching on new name. In general I think street is awful at modeling, especially when companies don't guide the upcoming quarter or year.
Model is absolutely critical when you trade quarters. If a company will whiff or crush expectations, that's an actionable item. Less so I think when you're a long-term holder.
I update them maybe 3-4 times a quarter based on data, sell side notes (if it's something new that mkt doesn't know), and meetings/calls.
As an intern at a SM LS fund, most of the analysts defer those calls to me
Distressed HF/PE. I probably listen to 10-15 earnings calls or less in a given quarter related to names we’re actively involved in and their core customers/suppliers/competitors. Usually they’re in a few different industries so they end up nicely spread out on the calendar.
Credit. HY will do stressed. I listen to calls in real time if its a stressed situation, if I have any element of concern or if it fits easily into my schedule. If its a run of the mill performing company, I'll check the numbers first and decide whether or not I'll listen to the call vs. read the transcript. I prefer transcripts because its more efficient. I'm also on the WC so this shapes my decision. I'm not waking up at 5am for a par+ bond that has been preforming well. Also, we don't trade that aggressively, more buy and hold, so nothing on my end to be gained by being live on the call super early. I'd imagine I'd have a different approach in equities.
I listen to most calls - even if not real time. The tone of voice and the way things are said are very helpful in my view - I think listening vs. reading informs the intuition
I actually feel the opposite, I don't want tone of voice or an accent or anything to bias me in any way. I exclusively read the transcripts for that reason and never listen to the calls. That said though, we're more LT focused so what happened in a quarter doesn't tend to be all that important to me unless there was a drastic change (and for the most part the businesses I'm after won't have such a change in one quarter).
One thing I never understood was why do earnings instead of transcript reading? At least at longer term single manager funds. You're not going to make that decision in one day anyways, and it's like 1.5 hours to get through a call vs. 20 mins to read a transcript and take notes.
I worked for a guy who would prefer listening to it because you can hear the tone of managements voice while they are speaking. If they say everything is all right but have a shaky voice, then what is said is prolly not entirely accurate.
Same here. When mgmt gets asked a hard question and they use filters like "uhhhh" "ummm" "you know" you can tell they're bullshitting but transcripts drop out fillers so the answer sounds more confident than it really is.
On the sell side, you read the transcripts a lot closer. For each of my covered companies, I listened to the call live, then read the transcript again later in the day, and then wrote a note about it. Over the next few weeks, I would read the transcripts of ~80% of companies in the space outside of my coverage universe.
Obviously, the buy side covers more companies and doesn't have the luxury of doing all this, but having this almost encyclopedic knowledge of what everyone said in the quarter helps add value when talking to the buy side who is getting overwhelmed during earnings.
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