April 2022 Q&A Highlights

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I do a monthly Q&A on Instagram (typically the last week of the month as of the current schedule) where I answer audience's questions about career, investing, and other topics. 

Sell-side Research

Q: What bullet points should be included in a sell-side equity research resume for buy-side interviews?

A: Focus on quantifiable accomplishments, not your job description. 

Highlight instances where you convinced your analyst to change your mind that resulted alpha generation for clients. Also highlight instances where you independently completed large-scale analysis or reports. 

Q: Thoughts on what skills "Closet Buy-siders" while still on the sell-side?

A: Discover your own investment style. Look at as many names as you can. Learn from the greats in your style by consuming investor letters, Twitter, Substack, etc. 

Q: When should you tell your senior you are thinking about leaving (if they are supportive)?

A: As early as possible, for transition purposes. There is a labor shortage right now, it's the only considerable thing you can do.

I have gotten pushbacks about the risk of telling your senior, it's the risk you will have to tell because you cannot untell something. So only do it if you are certain about an offer and if you are confident that your analyst will not pull things that are detrimental to your career (it's very rare but it happens.) 

Q: Do you think a sustained equity drawdown will increase perceived value of (sell-side) research?

A: Well, the quality of research, at least at most shops, hasn't gone up because of the drawdown. So, no. 

Q: Tips for success as a specialty sales person?

A: Know your industry. Be first. Think about 1,000 ways to add value. 

Q: Post-MBA SS ER interview coming up. Tips?

A: The usual: why now, why equity research, why this sector, why not buy-side? 

Then have a good stock pitch and defend your thesis well. Avoid pitching stocks in the sector you are interviewing for. 

Investing / Buy-side Research

Q: What are some underrated business advantages? For example, integrated distribution / sales partnerships. 

A: If well executed, the optionality of a network effect-based business is the most powerful and underestimated advantage. More broadly, any business characteristics that create powerful switch cost or barrier to entry are good to have. 

Q: How important is it to be contrarian to do well in general markets? Has that helped you? 

A: Investing is always about being contrarian, regardless of whether you believe in variant view or time arbitrage.

It's about what you are contrarian on: if you play multiple expansions, something that needs to happen that the market is not expecting and you need to be right.

If you play for durable earnings growth (like I do), you are contrarian on the duration of that sustainable growth, which could be underestimated by the market. 

Q: How to recruit / prepare for longer time horizon investing out of an event / quarter driven fund? 

A: Still comes down to the quality of the stock idea and a compelling story of why the switch. Need to alleviate the hiring firm's concern if you have been trading quarters for a long time. 

Q: Tips on succeeding in a buyside role (hedge fund or long only) post sell-side? 

A: Work hard. Learn how to present info that speaks to your PM. Be organized.

Q: Ever worry that performance is all factor exposure vs. stock picking?

A: If you define performance on quarterly or yearly basis, yes you can argue that. Otherwise, buying good businesses that can compound more than the market, will outperform if you are right about the business quality. 

Q: Why is it difficult to move from MM HF (multi-manager hedge fund like Citadel or Millennium) to anywhere in public investing? Best exit ops for MM HF? 

A: Just the concern about fitting trading quarter style into another framework. It's a very specific way of making money. Usually exit ops are moving to another pod shop (another name for MM HF) until they are no longer employable and they leave the industry. Some of them do make into long-term funds like a single-manager hedge fund or a long only mutual fund company. 

Investment Banking

Q: Recent graduate couldn't do internship due to varsity sports requirements. Chances and advice of getting into IB? 

A: Lots of coffee chats - if you recruited for internships and know some bankers at different shops, that's your direct contact. 

Try regionals and boutiques. 

Get a job close to the transactions - like Transaction Advisory or even Equity Research

If you are non-finance major, consider a one-year master for another shot or work for a few years, crush it at work and get another definite shot during MBA. 

General Career / Life

Q: When to take risk in career?

A: When you have no spouse, children and debt. When you are younger. 

Q: Exit ops for RIA investment research roles at firms like LPL Financial?

A: Can try starting on the ground level in sell-side equity research. Build models and pitches to network your way in. Or, do mutual fund sales, manager research for sub-advised mutual funds. 

If you are ready for the transformation of becoming a professional equity research analyst, I invite you to sign up for a free call with me. Let's connect!

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