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Buy-side versus sell-side analysts

Sell-Side Analyst Revisions

❶What do you guys think of other non-major-financial-hub cities around the world? The line becomes a little blurry as you move to no-name firms in no-name cities.

Equity Analyst

The Sell-Side Job Description
Equity Research Analyst/supervisor

Research analysts provide in-depth company analysis around future catalyst events and provide real-time opinions on breaking news throughout the trading day. You will be responsible for finding opportunities that other market participants may not be capitalizing on, either by discovering new information or considering existing knowledge from a different perspective. Analysts are embedded in a sector-focused trading desk and work collaboratively with traders who rely heavily on the analysis you provide to make trading decisions.

At SIG, we place a high value on education and development, especially for recent graduates. To learn more about the program and the role, visit https: We do not post salary ranges externally so any salary estimate you see listed on a third party website was not provided by SIG and may not be accurate. With our team of quants, traders, and developers, you'll explore the application of probability, statistics, stochastic modeling, and numerical analysis to real-world problems in the financial markets.

During the week summer internship at our headquarters, you will gain exposure to real projects and research in proprietary trading as you collaborate with a Quantitative Research mentor.

Our quant team consists of PhD-level researchers who are dedicated to the data-driven development and improvement of trading strategies at SIG. You will also participate in an educational program that offers insight into the world of finance while strengthening your quantitative skills. Included in the program are lectures on the industry and small group sessions with our tenured researchers, focusing on the mathematical puzzles we work on solving every day.

The Quantitative Research Analyst is a role that progressively grows in responsibility and accountability over the three-year period.

Analyst roles are challenging. They are held to high standards and evaluated and coached regularly. Once they've successfully completed the initial three-year assignment participants may: Successful candidates are interested in institutional asset management, they have demonstrated excellence in their studies, activities and internships; they are intellectually curious, analytical, progressive, creative thinkers; they are energized by working in a team based environment; and they are exceptional communicators.

The Opportunity Hamilton Lane's globally renowned Research team provides insightful analysis pertaining to private markets performance measurement, portfolio construction and risk. It interacts regularly with our global offices, reacts to external client needs, and provides proactive thought leadership to drive investment selection, client satisfaction and new business development.

Its work is highly technical in nature, involving complex problem solving, quantitative methods, and sophisticated data analysis tools. The team has a deep understanding of private markets investing and maintains a practitioner's knowledge of statistics, econometrics, and data science.

As a first year Quantitative Research Analyst, you will work with some of the industry's most highly regarded and experienced professionals to develop analytical techniques that drive asset allocation, investment assessment and portfolio forecasting.

Second year Quantitative Research Analysts continue to build on the skills attained in their first year however, as their skills deepen, they are expected to work more broadly across the global organization contributing to the success of both client and investment focused teams. In their second year, Analysts employ a combination of logic, analysis, and guidance to propose solutions to unique, unstructured problems.

Second year analysts are more proactive, they recognize when change is necessary and generate new and unique ideas to improve the efficiency and effectiveness of current processes. Whereas many sell-side analysts try to spend much of their time finding the best sources of information about their sector, many buy-side analysts spend that time trying to sort out the most useful sell-side analysts.

Learn more about the careers available in Becoming a Financial Analyst. Buy-side firms do not usually pay for or buy the sell-side research outright, but they are often indirectly responsible for a sell-side analyst's compensation. Soft dollars can be thought of as extra money paid when trades are made through the sell-side firms.

In essence, the sell-side analysts' research directs the buy-side firm to make trades through their trading department, creating profit for the sell-side firm. Additionally, buy-side analysts often have some say in how trades are directed by their firm, and that is quite often a key component of sell-side analyst compensation.

Although both sell-side and buy-side analysts are charged with following and assessing stocks, there are many differences between the two jobs.

On the compensation front, sell-side analysts often make more, but there is a wide range and buy-side analysts at successful funds particularly hedge funds can do much better. Working conditions arguably tilt in the favor of buy-side analysts; sell-side analysts are frequently on the road and often work longer hours, though buy-side analysis is arguably a more pressurized job.

As the job descriptions might suggest, there are significant differences in what these analysts are really paid to do. Compensation for buy-side analysts is much more dependent upon the quality of recommendations the analyst makes and the overall success of the fund s.

The two jobs also differ in the role accuracy plays. Contrary to what many investors expect, good models and financial estimates have less weight to the role of a sell-side analyst, but can be critical for the buy-side analyst. Buy-side and sell-side analysts also have to abide by different rules and standards. Sell-side analysts have to pass several regulatory exams that buy-side analysts do not even have to take. Likewise, buy-side analysts typically enjoy less restrictive rules on share ownership, disclosures and outside employment, at least insofar as regulators are concerned individual employers have different rules concerning these practices.

So basically he had a strong intellectual curiosity. True that there is no direct question that you could ask to uncover that. This post contains some ridiculous stuff including all the language about you being so much smarter then everyone Seriously dude you need to get over yourself.

On 1 no junior kid that I hire is going to make me money other then by grinding away at ideas that I give him to explore To be honest when I hear an investment pitch from a junior-type I am really more concerned with what it says about how he would work and how much hunger he has to suceed as opposed to whether the trade is actually one I would put on.

If you are hiring a kid in his early 20s to actually make investment decisions I seriously question what is going on where you work In addition to my post above, I also want to echo the comp statements. It may seem odd that the hallowed buyside is coming in below your BB banking offer but do NOT let that influence your decision at all. It is just silly and not to mention, lifestyle on the buyside is far better than for any bankers I know. Thanks for the informative comment.

In addition, a lot of stuff I've read about pitches points to the importance of knowing why others are wrong, and knowing what is your "edge" on the street. How do I know what "others" are thinking? For example, I might look at a stock X and see various sell-side analysts holding different ratings. Suppose I think that their overall consensus is wrong. From what I've gathered reading these forums, it seems typical for buyside firms to completely disregard sell-side research.

So what's the best way to get a hold of the consensus opinion that is being acted on, the consensus opinion that presumably is being priced into the stock? Thanks for the reply. Are there free database tools that I can use or do I need to pay for them?

I don't want to disrespect WhiteHat by thread jacking, but I also realize other readers might be interested in my response. I'll keep this short as a compromise and you or others can follow up with me off the thread if you want to go into more detail.

I should clarify my comment since the buy side is a big place and you have technical traders, swing traders, quant traders, and a bunch of other stuff going on. The list goes on and on and there are many iterations. You need to find the intersection of value, good business, and timing. It might be 1 in 10 or 1 in 20 stocks within a set of criteria that is seriously mispriced. The rest is noise. It depends on how "busy" the stock is.

If it is much smaller and has done nothing for years, there may not be anyone looking at the stock in detail. I always like it when I ask management when was the last time they spoke with an investor and they have to think about it for a while. But I am a small and microcap investor, so that makes sense for me. I rarely spend much time on stocks above a billion because those almost always have good coverage on the sell side and buy side.

You sound like a cold and calculated person, I like that. Would you ever consider working at Bridgewater? Generally would have to pay for the robust ones Bloomberg, CapIQ, Factset but I would imagine there are basic free tools out there I've had to do this for a hedge fund interview before, and if you come in with a prepared short they may be impressed that you are even thinking about shorting stocks.

This post seems mostly directed at the hedge fund industry, but do you think a lot of this applies to PE as well? I've done some more research and I think Private Equity is where I want to be. I don't think that I care where I do PE i. I won't care if I'm not at Silverlake and instead at a boutique in Atlanta instead as long as I'm in , but do you think your principles still apply to PE? Also, how realistic is it even on the HF side to do it from a non-target?

I feel that a buyside firm would be more likely to take a chance on an UG from Harvard than your average state school. The problem with PE is that the skills you need are honed in banking. Most PE shops, even tiny tiny tiny ones, won't look at you if you haven't already done banking. A couple major shops recruit straight from undergrad, but their target school list is VERY small.

The job is way less about coming up with investing ideas and it's much more about modeling, due diligence, and other shit that you learn in banking. I disagree that working on the sell side is a bad idea. Personally, I can think of at least 3 positions that are in my team's current portfolio that I wouldn't have been able to analyze if I hadn't spent some time in an investment bank. Also, working on the sell side can sometimes help you get to a better fund to start out at. The smarter they are, the more you learn.

It's nice to think that you can learn everything by reading books etc, but when I look back at the way I pitched stocks during my initial interviews after reading all the books out there and the way I started thinking about them just months later, the difference was pretty shocking to me.

I really don't believe you will be asked to recite your memorized story on the one or two stocks you wish to pitch, but rather you'll be asked on one picked for you. This way they separate the wheat from the chaff What do you think of FB? I just picked it at random, I don't care about FB. If you can't think on your feet, you don't stand a chance. Happen to know from personal experience, having even just a little bit of experience on the sellside goes a long way for many hedge funds.

It's a universally recognized skillset, work ethic, and test of toughness. I do know at least one person who went straight to buyside, then HSW, then an elite hedge fund, was unfortunately laid off during the crunch, and had a harder - not impossible, but it was an issue - time getting back because many dinged him on the fact he'd never worked on the sellside.

This is just anecdotal of course but in my opinion unless it's really a great offer think hard before passing up a little experience on the sellside. Building some connections on the sellside is a great way to be resourceful later to a fund ex. I find this a little hard to swallow. Was there a certain skillset or knowledge base he was lacking, or was the problem just that he didn't have a big bank's name on his res?

Because if it's the latter, then it's really only the connections that would matter, and even then that's a subtle intangible benefit at best. And it wasn't even a specific skillset, really.

The way he described it, it was more like "We just generally want people who've also been on the other side of the deals and more rounded" - it's subtle and weird but important to some funds, and all else equal I guess they prefer those who have it and they can afford to be selective that way. He landed fine on his feet at the end, so again it was not a huge issue but it was a hindrance I'd say. I guess the way to illustrate it is to imagine you have two identical yrs experienced candidates looking at the same fund opening, but one spent his first 2 yrs at a top analyst program working hard - it's not super straightforward and I'm biased having worked in banking, but I think I'd lean toward the ex banker and here's why: Just my theories and madness though, curious to hear your thoughts.

Also to be clear, I am not saying that entry level buysiders don't work hard - I really just have no idea what they do - I don't mean that facetiously at all, I really just have no experience with it. The traditional value fund isn't going to be that focused on "deals". My guess though is that your friend was dinged because the places he was interviewing at were populated with ex-bankers who were biased towards scooping up more of their own kind.

I think I'd lean toward the ex banker and here's why: With an ex-banker you definitely know what you're getting, not that that's a good thing. I'd say having put in more hours isn't a good thing nor is it a bad thing really, except maybe burnout potential , and unless the buyside position is shitty I can't imagine a situation where the junior analyst who worked at a BB is going to have a deeper understanding of companies or potential investments.

Deadlines are nonexistent at an investment firm, and if my own experience as a semi-retard in the grammar field have any weight, nobody cares about grammar or punctuation either. But if you have a shot at a name-brand gig on the buy side, even something like Fidelity or any of the other large structured analyst programs, I suggest going that way.

The pay is probably a little less but with what I've been hearing about bonuses lately I'll guess the pay gap is converging a bit. Don't have an ear to the ground on comp at the junior levels anymore though, would love to hear what people are seeing out there. To add, I feel the reason people are objecting is that most of the people on this sight go to the sell side with the intention to go back to the Buyside. I wouldn't blame people going to SS, it is an easier path to go down in that it is a road more traveled and there is a level of certainty in taking it.

Also, the coveted IB BB positions are a lot more visible to the top graduating seniors because the IB positions are not as fragmented as the Buyside positions particularly HFs. The "target" candidates know its there and know what they are going for like OCR. Bankeralla touched on this subject before when and why she chose to go IB. Please check PM's I've sent you To be fair, when we are defining the universe of hedge funds as long-short equity funds, a lot of this is probably applicable.

However, different types of strategies almost require you to start out on the sell side. Also, banking would be completely useless for most of those types of strategies.

We deal mostly with derivatives at my firm and it would be impossible to imagine hiring someone from banking without other derivatives experience.

Someone fresh out of college would be easier to hire if they had a highly quantitative background than someone from banking, because they would be at least as useful as the banker, but cheaper. There are times when taking the buyside gig in a no-name city can be a disadvantage. Obviously, if you have an offer at buyside firm that has been heard of you can take it and will likely be fine.

The line becomes a little blurry as you move to no-name firms in no-name cities. I currently work at an unknown firm in a midwest state.

We are institutionally funded by Fortress I say this because you probably will still not be able to figure out what the name of the firm is. I still heavily doubt that I would get two looks by any of those firms or headhunters for that matter simply because they would see the name of my firm, my non-target background, and toss that shit out. It is just the reality of top firms.

They like IB backgrounds but will happily take you if you went to a decently reputable buyside shop too. I am two inches from a promotion that will put me above 2nd year IB. And that is when that brand-name IB matters. What can you do, and what would you like to do at that point? I'm probably not the only one who would like to hear more on this, if you could elaborate. And when you say, "that is when that brand-name IB matters," do you mean that if you had Morgan Stanley IBD on your CV, you could move up faster at your small midwestern shop?

To elaborate, we have a very "upside-down" triangle structure. It looks like this title; age: Analyst 23 , Analyst 28 , Associate 31 , 8x Director avg. Previous analysts have left largely because they could not make the leap to director.

His words were "why would they give you that job when they can hire someone with years experience? This is where having brand name can matter. If my resume goes MS IB 2 years - unknown buyside years, the recruiter will see two things: BB experience and buyside experience. Maybe I am wrong, but if they see years at unknown buyside in midwest, 9. Unless I networked in and they had a very good feel for what I do.

Then, sure, the odds are in my favor. As of now, if I can not make the jump to director I am hoping to network into a large fund.

I'll scale down "large" until I get in somewhere. Once you are in, all that matters is skill and your firms promote culture i am sure you would agree. People who say they pee in the shower, and dirty fucking liars. The King said "A couple major shops recruit straight from undergrad, but their target school list is VERY small" Hi The King can you or anyone else for that matter name which PE firms recruit straight from undergraduate and which target schools are on their target school list?

Oh, get a buyside job out of undergrad? Just get a buyside job out of undergrad? Why don't I strap on my buyside job helmet and squeeze down into a buyside job cannon and fire off into buyside job land, where buyside jobs grow on little buyside jobbies?! What about getting into buy-side sales institutional sales and then going to b-school and ending up as a Research Analyst?

How would you recommend that? How could you be top ranked at a fund considering the less of analysts in your experience level? Not to mention you probably wouldn't have a discernible track record so it would be hard to tell if you're actually good. Lol for the first part I was just following on with his top-ranked comment, didn't actually mean anything by it seeing as nobody ranks analysts that I know of And as for the second part, hopefully you've contributed a few ideas years into your analyst stint.

So hopefully you'd have some ownership of ideas by then, which is what I mean by a track record. WhiteHat, I sent you a PM regarding this topic. Please take a look when you get the chance I hate you because you could not describe my situation any better regarding everything mentioned. I've found it extremely hard to get my foot in the door despite what I think has been a better experience. I've had to learn everything ravenous posted by myself and almost everything he says is correct in my view.

Probably a tad light. Ravenous, this must be the 5th post I've read about you hating on target school kids. This is clearly something personal, stop hating. They frequently wear their class jackets to boston bars, strutting and acting like they own the joint. They just ooze success, confidence, swagger, basically attributes of alpha males. This is the dream. Glad it got brought back up to the front or else I wouldn't have ever seen it. I have a pretty strong predisposition toward quality of life when thinking about the future Or should I definitely try to break in to one of the more well known shops?

The only thing that worries me about option 1 is that turnover is low and it seems like progression could be pretty slow. Even if I'm killing it at a smaller shop it could take a long time to make the jump to a decision-making position and, bc of the lesser prestige, I'm kind of limiting myself in external opportunities. Even if you're "killing it" at a small shop? Also, long time to jump to a decision-making position at a small shop?

It took me years to get the hang of things with limited guidance but now I definitely affect portfolio positions and construction in a big way. Out of my last 5 stock picks, my boss has never even looked at 4 before. I'll say that the PM gets much more comfortable with your picks if you do well. My stock picks have been going through much easier last year as some of my highest conviction picks have panned out really well ex: It was a brutal to pitch but everything has panned out almost exactly like I expected better.

That took a while to get through, but as a result of that plus another few picks my last relatively high conviction pick got through in days. So in essence, if you "kill it" at a small shop and know what you're doing you will be driving decisions. Sucks when you want to lateral and comp probably won't follow as well as your performance but it is really cool to be in the driving seat albeit with oversight.

I think for a lot of people on this forum HFs are basically synonymous with long-short equity because that is the only strategy that college and high school students know of and can relate to. On the other hand, said students would be hard pressed to come up with a plausible investment thesis for a trade for say, structured products or global macro strategies.

Incidentally this is also the reason why it is so hard to generate alphas with long short equity strategies since there are hundreds and thousands of mutual funds, hedge funds not to mention individual stock pickers all scourging the same universe of stocks. It is hard to find and maintain an edge in an environment of virtually no barrier of entry. And to echo BondArb's point, these people are not morons. There are plenty of smart, hard working people in that space who are just smart and hard working as I am probably much more so in fact.

I just don't see how more a handful of them can consistently beat the market. For true alpha generation one is better off specializing in some niche field that most people have not heard of and can't easily get into. These are the areas you want to be in Students who do read financial news have more exposure to Loeb and his actions with Sony than with what a distressed credit investor might be doing.

Is it just looking at your past track records? You all seem to have a lot of conviction that you are the best of the best in a very competitive field? Just curious on this. Not hating at all as I've picked up a lot from all three of you. Thanks for your compliments. One thing to bear in mind is that with the less liquid strategies e.

I was speaking more to my experience in the long only space. I think you touch on a larger point though. Examples could be industry specidic energy, financials , geographically specific, or asset class specific. In my own experience this "expertise" or at least commitment to this niche can level the playing field versus more pedigreed candidates. Also Citadel Harvard, Princeton, Wharton Renaissance Harvard, MIT Some very smart guys from my undergrad made it to Cerberus and other funds like two others though informal recruiting but the names above actually came to campus.

Blackstone PE and Polaris recruit from Wharton as well. Wharton is the winner for undergraduate recruiting for buy-side but I can also imagine the competition being insane. My guess even at Harvard and Princeton if you have less than 3.

Don't underestimate the benefit of reaching out to alums. To the extent you've been working on putting together the whole package grades, internships, clubs, personal interest in investing, etc. While Wharton and Harvard may have the greatest number of grads working on the buyside, plenty of other schools have representation amongst the very senior ranks of prominent and successful firms. Don't at all think that you need a 3.

I have met brilliant non-target guys one from the University of Minnesota was a very, very sharp dude and there are kids at Wharton that after having taken finance cannot telll you the relationship between bond prices and interest rates. Very selectively from physics and math departments, so I am guessing you are right in that it is not corporate recruiting per se. Though to be fair, unlike the other places, I never saw the posting and someone could jut have been pulling my hair.

I would try for Sell side first. It's actually quite simple, on buy side there are less deals and it's more of an evaluation process then actually analysis Unless it's a HF, even so, there are lots of HFs that only evaluate ideas from from Sell side , which leaves you at a low wage with limited expirence.

All I'm saying is that buy side unless we are talking about a mega-fund like Blackstone will not spend the time training you, instead they are going to use a grad as cheap labour. If you work hard and get into the right team, thats not a problem; you can grow, build contacts and make millions. However, if you are still cheap labour after 3 years, like most people that go straight into buyside, doing entry-lvl tasks then you could find yourself looking for employment with no brand name and an average skill set at best.

Your safety net is always your network, but to some extent, at the early stages of your career brand names can make your life alot easier and open the doors to keep you on track.

What do you guys think of other non-major-financial-hub cities around the world? Article below elaborates the megafunds procedures on recruitment.

I am sure the megafunds in IM are also the same. What type of buyside firm are you talking about here? Could any1 clarify exactly what buyside is? And also why it's so favorable among a lot of you guys? Is it purely a money-thing? Money is one factor. Another is being on the buy-side you act as principal, not just as advisor. It's a mix of i-banking, consulting, and operations helping the company grow, strategic decision-making, etc. They come to you, less structure, more freedom to make better decisions unobstructed by Bullshit and conflicts of interest.

The buyside is simply the fund management side of wall st - in our case, we're usually referring to PE funds specifically. The money CAN be better on the buyside, but that's not the main reason. Some of the sweetest jobs in finance are being a top PM within a large IM company. Everything is taken care of for you and you don't have the day to day stress of deals.

I get it now. I'm still trying to learn and take in as much as possible. For eg a banker goes to a company or government and creates securities to raise financing for that entity. In terms of lifestyle it is generally agreed that people on the sell-side work more hours although that is not always the case.

Buy-siders also can make much more money if they are stars. Because of this it is extremely, gut-wrenchingly stressful. Having risk in the market is different then anything else on wall st. You may leave at 5pm or before that but it is no less stressful then banking Are these reasons for success due to the nature of the person or are they skills that they've been able to learn or pick up?

An unwaivering confidence in all aspects of the job and an ability to respond in a fitting manner to any unforseen obstacle? I believe the one trait that is common amongst all great traders is absolute, iron-clad discpline When risk is in the market and prices are moving many cannot act correctly and undesirable traits of their personality like impulsiveness, greed, or fear take over and their best laid plans are tossed out the window.

Obviously other traits like intelligence and commitment are necessary but some very smart people just can't trade Likewise, many people who i would not consider the smartest in the World are great, consistently profitable traders. I would say these are all traits that can be learned if a person has the right level of commitment. I can say that charisma has zero to do with it, except that people with a good sense of humor tend to be able handle the stress better maybe a little bit at least.

I love u ivy leaguers! I noticed that you haven't put this info in your profile so you don't have to answer if you don't want to However I need someone with experience to tell me how feasible would it be to move straight from my degree to an MBa and then into an associate position at a BB firm Bearing in mind that i will have approximately 4 years work experience at Dow Jones.

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