Starting out in buyside equity research in a few days -- any tips?
Hi! This will be my first job out of undergrad and I was wondering if anyone could share any tips or advice they wish they knew when they were starting out? I'm especially nervous about my ability to sift through tons of annual reports, finding meaningful trends, and canceling out all the noise within the market. I guess a lot of this uncertainty and apprehension comes from how results-driven buyside is.
Any tips and advice will be greatly appreciated!
I suggest focusing on understanding businesses and the financials first. Be good with the technical stuff first, spread the numbers with no errors. If you have a good boss / PM, pay attention to the questions (s)he asks company management or sell-side analyst, PMs are usually very good at knowing the few things that really matter for a business.
As you evolve, pay attention to how stocks move, that's when you develop ability to ignore noises and sniff out signals.
Well congratulations on the job. Always exciting and terrifying to start something new.
This type of work involves building relationships and your knowledge base in the sector(s) you are focused on. Realize it will take a lot of time, and will never stop.
Avoid watching the daily ticks for your area. Focus on learning about the industries that are your area, in addition to the companies that you cover. Sometimes this means reading the odd transcript or annual report of a supplier, or related industry. Just know that it takes time, years.
Talk with IR when needed. Make it clear that you are getting up to speed. Even though I know my sector really well, my first call for a company is IR before wasting time with others. Use them but don’t abuse them
Avoid burn out. How you do this is up to you. But set a reminder for 6-months from now to pause and assess what you doing, how your are doing it, and how you are setting aside time for yourself.
Bloomberg. If your firm uses it and has a decent number of terminals, use that online help button when needed. It can save you a ton of time finding the right data.
Ask questions. Don’t pester the PM, but if they are good they will love to talk about the investment process or other items. This also applies to your direct report. Presumably a more senior analyst. If they are good they will teach and mentor you. Hopefully that is the case.
Good luck.
Since you're coming in at an entry-level role I would on a few fundamentals / behavioral aspects:
1) Always have a great and humble attitude. Don't complain about the team you're on, the analysts, being given menial work, etc. This goes a long way. You may have been a superstar in undergrad but nobody cares now. You have to prove yourself all over again. Nothing is beneath you.
2) Demonstrate great interest in the sector you cover. If your analyst(s) are meeting with a company or sell-side analyst, ask to join the meeting/call. Ask the analyst what they think and their views. You should be in >95% listen-only mode your first year. The people you're working with have covered the industry for many years or decades. You're not going to have some incredible industry insight a few months into the job. Ask lots of questions when appropriate.
3) Make sure your work is accurate. This is probably the #1 thing for an entry-level role. If the analyst asks you to build a comp sheet or basic model, make sure it's accurate and reliable. This is the route to being given more work and responsibilities.
Your #1 job as an associate is to help the analysts and take boring stuff off their plate. Once you prove your ability to do this and begin building knowledge about the industry the door opens to higher-level responsibilities.
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