I imagine if you don't want net exposures, it's harder to cover and make compelling shorts for complex sectors like biotech.
Consumers on the other hand, I imagine being fairly easy. Or maybe something macro-driven like mortgage finance?
What sector would you want to cover under a market-neutral framework like citadel or p72?
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Why the protraction? That was a valid comment
What was the comment?
Consumer sucks because of how much data there is
Doesn't that make is easier to cover? You could say the same about a lot of financials
no because everyone has it
Isn't the same true of every other sector? I don't get the distinction
Buy-side investors in consumer know with high certainty what the company is going to print on revenue/comps a week after the quarter ends. This is true in no other sector. This has caused investing in the sector, especially at the pods, to become extremely short-term focused, where people monitor alt data on a daily basis and react to small inflections. It also makes the trading dynamics extremely complicated. Buy-side bogey and fund positioning are now complicated second- and third-order game theoretic questions because you have to imagine what your peer investors are doing, given that they have the same alt data as you and are thinking through the same problems.
Following -- Platform Sectors
Likely chemicals. You can find almost every type of company in the sector. From great companies with pricing power and high valuations, to super cyclical “commodity-like” chemical companies.
Industrials - Paper, Lumber both extremely easy to cover
As someone who works in the field, biotech is easier to understand than people think especially from a long-short perspective. Happy to give a "crash course" in things to look out for in companies that will either make them succeed or flop. Have seen it many many time over and over again almost like clockwork over the years.
Hey man, you care to do an AMA or something like that on pharma/biotech companies? My team does a lot of healthcare/biotech IPO (Hong Kong) deals right now, and I've been reading some articles + a couple books. Still, you know a lot more about this field. Just a thought when I see you type "crash course"
Hi also curious regarding AMA on pharma/biotech companies. I’m interviewing soon for a boutique in the healthcare sector, curious to know where I can draw articles or if you could point me in the direction of any books as well?
Edit: I’ve made some headway in the form of consulting firms sector reports, search function on WSO, and the odd google search but want to know any other to draw from
Cheers
Hey - yep, happy to do one - will add the link of the post when it's up
Here is the Q&A: https://www.wallstreetoasis.com/forums/qa-pharmaceuticalbiotech-industry
Ok, I PM'ed you
Here is the Q&A: https://www.wallstreetoasis.com/forums/qa-pharmaceuticalbiotech-industry
Hey I'm the original poster. I would love a crash course. When are you free and what format were you thinking of? Could we do a phone call or zoom?
I'm waiting for a Q&A to be posted where I'm happy to answer specific questions. If you still need additional information after, happy to hop on a call. Sound good?
Here is the Q&A: https://www.wallstreetoasis.com/forums/qa-pharmaceuticalbiotech-industry
I feel like spec pharma could be another one if you know the players / are investing based on TA. Especially if you have a good feel for the dynamics with the generic players in that area. What do you think?
You are correct.
Downside, of course, is that you now cover generics/spec pharma and are watching your biotech friends get paid 5-10x what you do.
Based on my experience ,most strategies work robustly across industries for common data sets and haven't had much success in limiting the same strategy to a subset of industries . And for specific industry data, again mostly they don't work ,one of the main reason being less stocks, More stocks you cover the more performance of your strategy is expected to increase.
Actual, contrarian answer: power & utilities. Coverage has higher barriers than other sectors with multiple layers of regulatory frameworks, regional and bilateral dynamics, etc where truly deep specialists have an actual edge (e.g. the utility mafia) and plenty of tourists/generalists have gotten torched. A lot of sleepy, risk-averse, yield-oriented ownership helps as well.
I agree with respect to regulated utilities.
Utilities were always considered complicated because the analysis (modeling, etc.) was so much different than your standard Industrial. I had to cover Utilities for some months due to an analyst departure (on the credit side) and it took awhile to get comfortable with some of the nuances. But then you realize that, outside of a few utility commission decisions , these Company's could not be any more boring.
Power is certainly anything but straightforward, as you are accounting for both the volatility of commodities and the uncertainty of regulation.
TMT has been killing it for obvious reasons
The long tech, short brick/mortar secular pair pretty much blew up this past week.
long goodco/short badco in general blew up. Severe rotations like this week are just a part and parcel of this job.
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