Moving to the buy-side from the sell-side

jjTN11's picture
Rank: Chimp | banana points 8

I have a dilema,

First, i little background:

I have been in equity research for almost 5 years covering consumer discretionary and healthcare services stocks. My goal is to move to the buy-side, more specifically i want to be in a fundamental-value oriented hedge fund (small to mid size based on AUM).

Now, i have some leads on some buy-side firms - mutual funds and hedge funds, non value-oriented firms - but no real opportunities yet. I do have i couple of options to go back to equity research to cover small cap banks and healthcare services.

My dilema is:

I have been out of a job since December.

  1. Should i go back to equity research to start earning some money again and move to the buy-side later?
  2. If i go back to equity research - should i start from zero analyzing small cap banks or go back to healthcare services?
  3. My goal is to eventually move to a hedge fund - would healthcare, financial services (in this case small cap banks) or another industry be more well received or respected in the buy-side?
  4. Should i just forget the sell-side, and say i'm not going to stop until i get to the buy-side with my current background?

Any thoughts, comments or feedback???

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Comments (35)

Mar 8, 2011

I guess the answer depends primarily on how badly you need the money. Why can't you continue your job search while working?

Mar 8, 2011
alexpasch:

I guess the answer depends primarily on how badly you need the money. Why can't you continue your job search while working?

He took the words right out of my mouth.

Mar 8, 2011

Go back to sellside for the dough and interview like a fiend on the side. ON coverage I'd argue small cap banks do not have a catalyst either up or down right? Plus you'd have to learn the space and wouldn't be the go to guy for that space, it'll take some time to build out enough to have ppl call you and care about what you say. I wouldn't.

Healthcare svcs -What names do you like.Why dont u just break out on your own. trade your p.a. like a man. just roll up some family money and just go @ it man. Some ppl on this forum did just that and are balling out of control now up like a gazillion %

Mar 11, 2011

Thanks for your input. So far i'm leaning towards going back to the sell-side, so i can make so $$$. However, i'm will continue to work towards moving to a HF. Which remainds me, do you know where i can find a list of newly launched HFs (in NYC, ATL, and Chicago)? I haven't had any luck online - one place was charging $4,000 for a list!! There has to be a free list somewhere....

Mar 15, 2011
jjTN11:

Thanks for your input. So far i'm leaning towards going back to the sell-side, so i can make so $$$. However, i'm will continue to work towards moving to a HF. Which remainds me, do you know where i can find a list of newly launched HFs (in NYC, ATL, and Chicago)? I haven't had any luck online - one place was charging $4,000 for a list!! There has to be a free list somewhere....

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Mar 11, 2011

Easier to get a job when you have a job.

If I had asked people what they wanted, they would have said faster horses - Henry Ford

Mar 14, 2011

there's a bunch of those lists popping up on the forums. do a little searching.

you should def. go back to your ER job and maybe apply to bschool while you're looking for a buyside job. I think columbia is your best bet for fundamentals buyside unless you can get into h/s/w and even then it still deserves a look.

Mar 15, 2011

Does anyone know a couple of emerging market funds in London?

Mar 16, 2011

$4,000 for a list is ridiculous. Bloomberg publishes this in the HF monitor every week. Ask a buddy w/ a terminal to kick HFN into a workbook for you.

Mar 22, 2011

Any thoughts on working at GS U.S. equity research? And how about thoughts on Carlson Capital in Dallas?

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Mar 23, 2011

both would be great, but Carlson is better.

Mar 23, 2011

What type of credit products are you in?

What makes you want to be an execution trader and not a quant or junior PM on the buyside?

    • 1
Mar 23, 2011

i just prefer the trading floor a lot more than the nerdy environment of research. also, as a trader, i can't help but notice the fact that the pay to difficulty of work ratio is a lot higher for a trader than a research guy.

Mar 23, 2011

Strange considering you were a quant

Mar 23, 2011

Hi Ed Chambers, any of these threads helpful:

Or maybe the following users have something to say: @patocallaghan123 @Katie-Hobbs @NuckFuts

Hope that helps.

Mar 23, 2011

Good question, my friend just got an internship at a PE firm. He was originally going to do M&A, then PE after 2-3 years, but once he found out it was possible to go buyside straight off, he went for that instead.

Mar 23, 2011

thanks joefish, so what would a 2nd year M&A analyst compared with a 2nd year buy-side analyst, say in Private Equity Dept at BB or top PE houses..any thoughts?

Mar 23, 2011

The only benefit of doing banking before PE is the training and comprehensive/diverse exposure to different types of transactions. I started on the buyside and think that I could have gotten a lot more out of my experience (at least starting out) by going through a formal BB analyst training program. I also think that the sell-side serves as a rite of passage for those who eventually make the jump.

Mar 23, 2011

it's pretty damn hard to find really good buyside options out of undergrad. it's not like tpg and KKR are recruiting undergrads on a regular basis. Blackstone is the exception and they already get the cream of the crop.

Mar 23, 2011

junkbondswap: what is the benefit of starting at PE? will you consider back to banking after PE work?
btw, how is PE group at BB sounds like, compared with top PE houses? i knew the pay is not the same, anything else?

Mar 23, 2011

I went straight to PE from undergrad and I agree with junkbondswap. Starting at a BB provides diverse experience and a great training program. Depending on the BB, you also get a "name" on your resume.

What I've often wondered is exactly how polished of a skill set the average analyst has after a 2-year stint. Obviously this is contingent on the group you worked in, but I'm still curious generally speaking.

Starting in PE does have its perks if that's where you'd ultimately like to end up. Already being in the industry makes it easier to lateral from firm to firm. You'll be competing for Associate positions with banking analysts who haven't been doing PE for 2 years. PE also provides exposure to the management consulting mindset (providing you do some work for portfolio company initiatives). Lastly, in my opinion, having PE on your resume definitely helps for B-School.

Clearly all PE firms are not equal in terms of quality. Everyone that goes to PE from ugrad doesn't end up at BX, KKR, TPG, or the like. However - if you want to do PE and have the opportunity to join an active shop upon graduating, I would seriously consider it.

Mar 23, 2011

Please rank the below 5 buyside opportunities to go to the buyside directly as an undergrad given current market conditions and future prospects / transferable skills..

Please assume pay , culture, people are all the same, fund size all > $5bn

-Real Estate Private Equity

-Mezzanine fund

-Secondaries Private Equity

-Traditional corporate Private Equity

-Distressed Debt fund

Mar 23, 2011

I think an analyst's skillset probably varies wildly bank to bank and team to team and it's all up to the individual. If you really enjoy the work and are genuinely interested, then IBD is clearly a great career option, whether for 3 years or longer and you can pick up many valuable skills other than the abilty to BS. PE at a junior level is probably a bit less structured than a BB analyst program, some people would prefer this, some would not.

I think this article from dosk is a pretty good read and makes some excellent points.

Personally, if I had the chance to start at a small PE firm or an i-bank where I would have many more people in my age group, I'd take i-bank every time. The people make the experience, I'd rather be in a bullpen with 10 assholes and 10 friends than in a PE team with 4 decent guys and 2 dickheads. What can I say, I'm a people person

Also, obviously one can make the switch IBD to PE, but I don't hear of too many doing the opposite, so you should bear this in mind also.

Mar 23, 2011

Don't know if you should be factoring in "market conditions", no-one can predict what's going to happen to PE, despite what people may tell you...

In saying that, I've been advised to take a good look at distressed debt private equity by this senior M&A dude I know, so I would tentatively rank that no. 1

I know nothing about real estate PE....but it sounds muthaf*ckin' boring zzzzzzzzzz

Wait a sec, isn't Real Estate PE what estate agents do!!!? :P

Mar 23, 2011

By definition, mezz and distressed debt are not private equity.

Mar 23, 2011
smuguy97:

By definition, mezz and distressed debt are not private equity.

Oops

Mar 23, 2011

The idea is that sell-side banks have an incentive to spend time training their employees--your contributions to returns are minimal and they generally make a commitment to a 'culture' that involves internal promotion. On the buy-side, you are expected to have certain skills and you contribute very directly to alpha; as a result, learning opportunities are "on the job."b

Mar 23, 2011

i agree and why i joined a sell side bank out of ugrad. my question is, if i have an opportunity to move over to a top distressed fund 7 months into my two year analyst stint, do i take it? i am inclined to think i would if my opportunity pans out.

Mar 23, 2011

why wouldn't you take it?

Mar 23, 2011