Title says it all--well, almost. I specialize in alternative research for a specific sector for institutional investor clients (long and long/short funds, mostly $10b AUM or higher). I've been doing this for about a decade although I don't have a finance background and didn't come into this industry from the conventional route (I applied from the industry I now research). So, questions?
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What is alternative research?
The typical BB sell-side report has a DCF, commentary, projections on revenue and earnings usually with a limited IRR extrapolation into the future from past trends. My work uses other sources of information to be more precise and predictive about very specific aspects of a company that the buy side can plug in to their own models to predict future numbers.
Are you at a place like Yipitdata?
Close enough, but they are much more of a data pipe than what we do, which is a bit deeper and less purely quantitative.
How are you paid for your research?
Both in trading commissions and hard dollars, with most from the latter.
From what I've seen, there's a mix shift from extremely low quality sell-side to extremely high quality sell-side, which started before MiFID II but was maybe exacerbated by it. This means a lot of alt research that doesn't really add value is getting scaled back, but also IMO a lot of traditional sell-side research is getting less votes unless you're at the absolute top and provide corp access or something truly unique. In the end, I think the middle is getting hollowed out.
Quant or not, what's important is having a non-financial background and unique experience in the field. My knowledge of the field I cover is something that no CFA charterholder can come close to. So if you have a very in-depth knowledge of how an industry works, you can leverage that to break into alt research, even if you know little about finance.
Hours are officially 40hrs, but I don't work that much. I'm at the highest level, so my work now involves more managing what others do than anything else, which has lowered my workload a lot. Comp is around 300k (I'd love to know how this compares to traditional sell-side ER), all in.
90% of my work revolves around earnings, and I am judged mostly on whether I predict an earnings quarter right--although this is changing as clients acknowledge a thesis can take 3-4 quarters to prove itself.
Yes--prefer not to say what companies, but my reports revolve around specific companies and I have a coverage universe of about 10 core names with about 20 secondary names.
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