Worst ER Sector?

While there are several interesting ones (TMT, Internet, Fintech) I am curious on your take on the worst ER sector to cover. 

This could mean

-- Least interesting (subjective but still, paper & packaging anyone?)

-- Worst exits

-- Lowest comp ceiling

Not gauging by sweatiest, since oftentimes these are for coveted roles that have strong buyside exits (internet). 

Thoughts? 

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Comments (22)

Sep 14, 2021 - 6:51pm

-- Least interesting and worst exits: Paper and packaging, utilities, health care services (hospital, senior living facilities, etc), anything oil and gas, machinery (Caterpillar and Deere ...), banks / insurance, shipping (most marine shipping analysts have been laid off anyways), metals and mining (sorry the last one might be a growth sector right now, give it time tho)

Comp ceiling ties to deal flows, so you know the hot sectors. 

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

Sep 14, 2021 - 10:40pm

If I have to guess, probably net capital outflow from the sector so no banking activities. Most names have not been value creating entities so market cap has gone down over time, which means less trading commission. 

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

Sep 15, 2021 - 7:06pm

I can imagine one just shorting and longing CAT to glorious wealth (at right part of the cycle), so no disagreement there. 

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

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  • Intern in IB-M&A
Sep 16, 2021 - 10:43am

How is financials one of the worst? Could you please explain? I thought they would understand the economy, IR, yields, etc. better.

Sep 16, 2021 - 11:40am

The accounting is completely different for banks and insurance companies. They are a gauge of the general economy but yet you will not understand how another industry works via following banks or insurance companies. Not to mention they are getting disrupted by fintechs (think alt banks like SoFi, Chime, and stuff). 

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

  • Research Associate in ER
Sep 14, 2021 - 9:08pm

Healthcare services is actually really hot right now - lots of companies blending into the digital health/HCIT space.

Sep 15, 2021 - 7:07pm

Oh yeah, like ONEM and stuff. 

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

Sep 16, 2021 - 6:29pm

Excuse me, it's called "Energy Transition" now (still ShitCos). 

Instagram: @dickthesellsider | Substack: dicktoad.substack.com

  • 1
Sep 16, 2021 - 8:37pm

Chemicals, just anything highly specialized and somewhat niche (semis and gaming are great industries but tough transition to a generalist buyside role). Financials and insurance have a bit of the same issue too.

I tend to think the very broad sectors - internet, tech, business services, most of industrials, software, consumer, retail, healthcare services are pretty good places to be.

Sep 17, 2021 - 1:48am

Financials are by far the worst, especially banks, you can only be depressed by covering this sector and being yourself in a bank (not one day without hearing about restructuring, fintech will kill you all...). One good thing with insurance, nobody really understand (and certainly not an equity analyst, even former actuary) how they make money, so you can really bullsh*t hard and as nobody wants to cover this sector it's usually a good hiding place.

  • Intern in IB-M&A
Sep 20, 2021 - 5:54am

Interesting view, would be good if you can share few more points about insurance sector if you are in it. I like Warren Buffett's point on it and how they uses excess cash for further investments.

  • Associate 1 in ER
Sep 19, 2021 - 1:33pm

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