Network (In)to The Sell-side

So, you decided to gun for sell-side equity research. And every job post you have come across reads like this: “We are looking to hire someone with 2-3 years of equity research experience covering my sector who can model and write.

I know what you are wondering: how do I get work experience in the profession that I am trying to break into? Well, I am here to help. In this article, I lay out how to develop job leads and how to best market yourself. The article remains applicable for target school candidates who have the luxury of on-campus recruiting.

Where are the job openings?

I have put together a list of firms that provide equity research to institutional clients. These could be your next employer.

Developing job leads is a two-pronged approach: 1) leverage job boards 2) network with current associates

Job boards:

  • LinkedIn: Set up job alerts with keyword such as “Equity Research” (below). LinkedIn won’t always show relevant openings, but you can uncover postings by cross-checking against the firm’s website to ensure it’s an active search.
  • Set up job alerts on firm’s career website and on financial / general job boards such as eFinancialCareer.
  • Check Wall Street analysts’ LinkedIn / Twitter, sometimes they just publish a “I am hiring associate” status.

Network with current associates:

Networking is not only a must to establish a top of mind status when a job opens up, but also the best way to learn about a senior analyst’s work style, ability to mentor, and the team’s culture. In preparation for networking, you will need three things: an intro message, a stock write-up and a financial model.

Your intro message should convey:

  • Why are you reaching out (if there is a current opening: “I am interested in working on your team.”; If not: “I am interested in learning about a career in equity research.”)
  • Why do you want a career in equity research
  • Attach your stock write-up and financial model in Excel format to prove you are developing the necessary skills
  • Ask to set up a call or an in-person coffee chat

Keep it concise and to the point, regardless of whether you cold-email, LinkedIn, or DM over Twitter. It’s a number’s game, be persistent.

What are the hiring team’s concerns?

For those who responded to your intro message, they are giving you either a formal interview or an informational interview. Make the most of it. The hiring team wants to assess the following questions:

  • Can you model and write? Do you have the technical skills?
  • Do I like you? Am I comfortable putting you in front of clients or executives?
  • Are you committed to the profession?
  • Why you (over other candidates)?

Your marketing should address all of these points:

  • Modeling / writing / technical skills:

    • Self-teach financial modeling. Model out the three statements with unit economics build out (eg. for a widget company, price and quantity). Include a multiple-based and a DCF valuation.
    • Best way to demonstrate technical skills is a stock write-up. Have at least one great stock write-up and know the company very well. Leverage resources on how to write a good stock pitch. Write a concise, well-formatted report with a buy/sell decision and a target price.
  • Do I like you?

    • Fit is paramount in this small team-based profession. Try to find commonalities between you and the team members by doing diligence and highlighting the similarities during the interaction (eg. same alma mater, same hobbies, read the same book recently, etc.)
    • Read Dale Carnegie and Robert Cialdini and practice their techniques if you are self-conscious that you are not personable enough for this client-facing profession.
  • Are you committed to the profession?

    • Even the lifers know sell-side is not for everyone, but you need to convince the interviewer that you are not a flight risk.
    • Every candidate approaches this question differently. The key is to highlight that you value how sell-side differs from other tracks - eg. exposure to diversity of investment styles (vs buy-side), continuity of coverage (vs. investment banking, which is transaction-based), etc.
  • Why you?

  • Highlight something unique about you, which could be:
    • Real industry experience (worked in life science sales, an oil and gas engineer, developed an iPhone app, etc.)
    • Special skills: Programming - VBA/SQL; Data analytics - Tableau/Looker/Qlik/Alteryx; Foreign language skills, etc.
  • Never assume you are less competitive than others with more relevant experiences. You never know the trait that tips the scale to your favor.

Tips

  • Put together the best work product when you reach out. Remember you have nothing to lose – the worst is you don’t hear back.
  • Be particularly diligent during the beginning of each calendar year, as associates jump ship after bonus and jobs open up.
  • Pitch a stock outside your interviewer’s covered industry (ie. if you are interviewing with media analyst, pitch a tech stock that is more remote from the media value chain, or even easier, pitch a non-tech stock.)
  • If you have to pitch a stock that is within the analyst’s space, go with the “house view” – pitch buy if the analyst has a buy rating and vice versa.

    • Some recommend going against “house view” if you can defend your thesis well, but I believe that’s a tougher fight when it’s probably your first-ever stock pitch. Do you really want to debate against someone who closely follows the name and debates with hundreds of professional investors every day?
  • Prepare more stock pitches if you want to broaden your opportunity set (eg. If you have a stock idea in semiconductor and in health care, you can go for two broad sectors, tech and health care)
  • Know the big trends in the industry you are interviewing for
  • Google for equity research reports. That’s an easy way to figure out 1) your contact’s email address 2) the email format for a particular research firm. (You are out of luck if the firm uses middle names in the email addresses.)
    • Some long-form reports contain the entire research department roster, with their email addresses.
  • Bring color printouts of your stock write-up and Excel model to in-person interviews. Not a must but it makes you look professional and prepared.

  • For the relationships you have built, it’s one thing to acquire them (initial reach out), it’s another to retain them. If they forget about you, you will not be top of mind when there is an opening. So stay top of mind by being of value:
    • Examples include:
      • Big news on names in the sector: send the news, summarize it and tell them what you think to demonstrate you have views, which is the point of the profession.
      • Similarly, for podcasts you listened to, big drawdown, or names you are working on that is not covered by the team, send over your views to facilitate a discussion.
    • I think 3 months is good frequency to re-engage to catch a coffee or over a phone call
  • Minimize the amount of communications with your connections during earnings season.

If you are interested in learning more about sell-side equity research, I have two other great articles for you:

Don't know where to start to research and value a company? Have trouble generating stock ideas and differentiating on stock pitch? I can help you. Let's meet! 

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