Sell-side ER to buy-side conundrum: Staples vs. Energy

Assist. VP in ER

Without providing too many revealing details, I did sell-side ER for a small handful of years covering the consumer sector, grabbed my MBA from H/S/W, and interned at a few hedge funds during the program.

My goal is to continue to pursue buy-side opportunities; which of these sell-side seats would likely appear more attractive and ideally be more of a poaching/transition magnet?

  1. Top 3 BB by II ranking standards, on a ~1-3 ranked II team. However, the team covers one of the Energy verticals.
  2. Top MM firm in top 10-15 by II ranking standards, on a new'ish team that's barely cracked the top 10 II rankings for their space - Consumer Staples.

I'm struggling to weigh which sectors would be more attractive vs. the II rankings which are the only proxy I have for the buy-side's view of the teams themselves. Any help would be greatly appreciated.

Comments (17)

  • Analyst 3+ in HF - Event
Jan 28, 2020

Option 1. Don't turn down the opportunity to work for a highly ranked team covering a highly specialized sector. You'll learn a ton, meet great people, and consumer staples will always be there. I would argue that it would put you in a good position to jump to a generalist spot on the buyside after a bit given you'd have the ability to understand more nuanced energy businesses in addition to vanilla consumer making everything in between doable to pick up.

  • Research Analyst in AM - Equities
Jan 29, 2020

I'd go option one. But you should really avoid going back to the sell side at all costs. With HSW and previous sell side experience I would think you wouldn't have too much trouble getting into one of the big long onlys.

    • 1
  • Assist. VP in ER
Jan 29, 2020

If I had the opportunity to avoid the sell side, I definitely (read: definitely, completely and in all ways) would. However, it's been tougher to get conversations going in this environment with my limited buy side experience despite the nice H/S/W tag on my resume.

Regarding the big LOs, they almost exclusively recruit for post-MBA positions out of their intern pool in my experience. I have had 0 traction with pretty much all the usual suspects despite having friends at those shops push my name to PMs.

  • Assist. VP in ER
Jan 31, 2020

Just another bump - more material opinions the better! Thanks!

Feb 1, 2020

To me, the industries are usually more important than top 15 vs. top 3. The best on the buy side want alpha, not pedigree to trot to clients and prospects. If you can develop expertise in an industry with high alpha potential, that's gold.

With that said, both of these industries suck, so I'm kind of at a loss. Both industries are relatively easy to understand. Neither really forces you to develop investing frameworks that may be useful in less easy to understand industries (e.g. technology, biopharma, internet).

I'm very tempted to endorse the energy route (because staples are so boring), but I just can't get over the dire condition of the sector currently. Generalists have given up. They've been burned too many times over the last five years to care about a sector that's less than 4% of their benchmark. Also, the climate change rhetoric is really gaining steam. It's a serious long-term headwind.

We will need oil and gas for a long time, but it may take ten years for the market to come back to energy stocks.

Staples gets you somewhat close to plant-based foods and cannabis, so it isn't all bad.

Jan 31, 2020

Some tough love coming here so brace yourself.

You've got the pedigree and knowledge. Figure out what is holding you back from buy-side roles and address it. You've interned at funds - ask yourself why didn't they turn into full-time positions?

Smaller funds, asset managers etc. could be a way in if you're willing to network aggressively. If you honestly think you've done everything you can in terms of reaching out to companies (not just applying to those that came to recruit on-campus) then take one of the bank jobs.

  • Assist. VP in ER
Jan 31, 2020

I appreciate the feedback. One of those roles offered me a FT, but I turned it down for what I believe were credible, material issues.

Otherwise, the funnel of opportunities after exhausting my network (alumni and otherwise) is almost non-existent (OCR opps were in the single digits so that was never anything I was relying on) and headhunters blatantly ignore my resume. I am for sure not limiting myself to brand name/large/prestige nonsense - I've been initiating conversations with anyone at any buy side shop that's been willing to chat. The recruiting environment has just been tough, though maybe it is in fact just me.

Regardless, these are my current options and I can only play the hand I've been dealt.

  • Analyst 3+ in HF - Event
Jan 31, 2020

What were those reasons?

Jan 31, 2020

Makes sense that long-onlys generally hire out of their intern pool. But why do you think headhunters are "blatantly" ignoring your resume? Seems like your experience is decent (sell side + HF internships). Are you an international?

Feb 2, 2020

Team II rank doesn't really matter when jumping to the buy-side. Often they don't even reflect which teams are good, but is an OK proxy I guess. 9/10 the investor community will not have a clue who is ranked where though.

However, if you truly believe one team is much better than the other then of course on the better team you have capacity to learn more, get more exposure to clients and field their questions. It's just more busy on the good teams, which can only be good since the main analyst also relies on the associates way more to do the work.

    • 1
Feb 2, 2020

Although option 1 gives you more likelihood of going to the buy side, you could take the challenge of #2 and really make a name for yourself.

  • Assist. VP in ER
Feb 3, 2020

Not to be brash, but not sure why I'd ever make the jump to the buy side any more challenging.

Feb 3, 2020
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