 Hello and welcome back to the podcast and going to take everyone on a slightly different direction in this episode. It's going to be a little bit more centered around careers, but specifically careers in equity research. And this came about because in a couple of episodes ago, Piers and I were talking about NVIDIA's earnings and we started talking about sell side research and we talked a little bit about NVIDIA's valuation. So we're not here today to go through valuation models or anything like that. What we are here to do today is to explore a little bit more about the role of an equity research analyst. So I was thinking about, well, who's best to do this? And it's certainly not Piers and I. So I've got Sylvia on the call with me. But perhaps Sylvia, you could just introduce yourself and tell us a little bit about your background. Yeah, absolutely. Thank you so much, Anta. And hi everybody. I'm super happy to be here and share my experience in equity research. So for those that do not know me, I am Sylvia. I work here at Amplify on the corporate sale side and on the development and delivery of our simulations, especially on the corporate finance side. And I have a financial background and I used to work in equity research at one of the top tier one banks in the US. So yeah, really excited talking about this with the students. I hope this will be like super insightful as I think it is a division that is not yet so well known. It is not like so famous as like sales and trading M&A. So yeah, really happy to talk about it. Yeah. And what's really exciting is as we build out the team, we're also building out the suite of simulation experiences. I know you've been working super hard to bring to life this role and practice as well. But perhaps we can start then with, I guess from the top, when you think about an investment bank is a huge organization. And I was just talking to some interns actually today and we were talking about JP Morgan as an example. And we were going through their earnings report and it's delivered to where it's by division. And it's like, wow, this is actually such a gigantic organization and the different areas that you can work in very unique in that way. So within an investment bank as a whole, where does equity research sit in that ecosystem? Yeah, that's very interesting because actually there are different types of research so you can find research both on the buy side on the sell side. Personally, I used to work in the global investment research division which can be found on the sell side of investment banks. So just like IBD and global markets. And then again, like as part of global investment research, you can find the different types of teams. So we don't have just equity research, but there is also like macro research, strategy research, thematic research as well. And yeah, and then in terms of team themselves inside of equity research, you won't focus on the specific side of the division. Teams are usually divided in terms of region. So you will have the US office that will cover US companies while, for example, an EMEA office that will cover instead the companies from Europe, Middle East and Africa. And then again, you have like sector focus inside of the specific teams. So you can work, for example, for an oil and gas team or for a software team or for capital goods, for example. Without knowing exact numbers, I mean, how many analysts would you have on a high volume stock like Apple, for example? Yeah, that's interesting because it really depends. Like I think there is a kind of difference between like US and EMEA in a sense. And it also depends like how many companies you're covering. But I would say that in general, inside of a middle sized team, you can have like five people, more or less. And it really depends because like sometimes we have like all the people looking like all the stocks all together. Sometimes we have like some specific people looking at just certain companies in a certain subsector. So for example, usually capital goods teams are very huge because they cover a lot of companies. And so there you can have even like seven, eight people per team while other are just like super tiny. So you have like two free people. And I know in the past we've had, I think there was a person who did some sort of medical science and actually went into banking. So they were coming from a background of actual, let's say medicine. So is there people as well in teams which aren't from a kind of sector experts that fit within that same team who are more finance orientated people? Yeah, absolutely. It is not at all just a division for finance people in a sense. For example, I used to have a friend who was working with me in equity research and she was on the pharmaceuticals teams because she had like a PhD in pharma. And so they exactly wanted her because of that because she was like such a master in the subject that she could provide like a lot of knowledge and help like and contribute to the team a lot. Okay, so let's go into just conscious of the audience. Not everyone might know what is equity research. I mean, what are we talking when we say that job title? Like fundamentally, what is that equity research? Yeah, super fair question. As I said in the beginning, it is not so famous sometimes. So yeah, super happy to say like the basic that what you need to know for like if you were interested to work in equity research. So the basic of the job, I would say it is to conduct comprehensive research and value companies so that you can come up with your own investment idea as an analyst and give this recommendation to investors so they can eventually make better informed investing decisions. This is just like the core of the job, I would say. So how much of the job is split between talking to a client, for example, because I remember regulation changed a number of years ago, I guess it was wrapped in and method. And it used to be that sell side research was quite freely available. I remember I used to see it all second third hand because it would just circulate. Whereas nowadays is a lot more underlocking key. So is there part of the team that's divided into more client facing to express the findings of the research or is that more of a sales team doing that? Because I know you used to be able to pay to speak to some of the equity research analysts directly and it was quite expensive. So is there like a numbers team? There's like a specialist like your pharmaceutical PhD person. And then there's the more sales oriented client facing people or are they separate? Yeah, I would say that in general, it really depends mostly on like seniority instead of the team. So for example, if you are a junior analyst, you will spend much more time working on the model. So like a lot of time spends on spreadsheets, welding companies projecting their revenues and costs and everything. And otherwise, the most senior people in the team. So for example, especially the lead analysts in the team are the people who will like talk more to investors all the time. But I would say in general, it really depends on the team you are in, but in certain teams, especially also the leads analysts give you a lot of exposure. And so, so as a junior analyst, you can start having your own conversations with the clients. And in terms of the split between like sales and equity research, maybe out of people do not know that, but like equity research interacts all the time with like sales people in the central division. So for example, every morning, one of the key tasks for junior equity research analysts would be to like compile a list of news that they can then send to their own team as well as the sales and trading team. Because you always want to like keep the sales people updating all the recent news and how your view as an analyst would change based on these news. And so like then there will be like the sales people to get to the clients or the actual equity research analyst to get to the clients or sometimes you have both on the selling call. I'm just trying to think then about the kind of what does the day look like for someone in this role and you know you think about more traditional banking and it's kind of deal driven and so deal comes in and everyone, you know, goes to work until the deal is complete. So with this where it's more market facing, and there's breaking news like a CEO could step down, or invidious earnings are so wild at the moment. So just taking something like earnings, given we've just seen them. Like, what does that then look like is that like everyone's there and it's long hours because you're trying to remodel recalculate. Is that assumption correct or what does that look like in real life. Yeah, correct, definitely. Yeah. So I said before that like sometimes you can have like some specific analysts that are looking at a specific firm for example but usually on earnings day it is like all the team just like going all together in order to look at results because I will say that in general you're speaking about like how a general day is in equity research so I would say it goes a bit in waves. So you have like the earnings periods, they are like super busy, and then you have the period between one earnings season and the next one, in which it is a lot more about maybe updating the fields or doing like some more sector specific analysis some research analysis, but yeah going back to earnings days, I would say, these are like the most key like specific moments for equity research analysts they are very important, and starting from the basics what are earnings seasons so it is the time when public trading companies release their financial reports. And so analysts would like to see these reports and they go into them like number by number to see like how the actual numbers published are different from their own expectations. So a lot of early starts are involved when it is earnings season so not out for like people that are not early birds, you will have to sacrifice some hours of sleep in the morning. But then yeah basically they start with like the reports that gets published by the company. And the analyst will do like a lot of preparation work in advance in order to be able to compile a short note in the morning, because the analyst was this note to go out and been published on the portal as soon as possible after there's also published to be like the first analyst publishing the number, and to get like all the investor attention. Then at this point indeed like the telephone will start ringing because all the investors will like to know more about like what the analyst think about these results like what are the implications what has happened, why they are so different from for example. And so yeah it is a bit of like intense kind of morning, but then I would say it usually slows down a bit. Then it depends from stock to stock like for some of them you can get like a lot of investors continually asking for calls calls going like for days. For otherwise like they're just a bit more quiet maybe they're not just like reading the notes asking a few questions so it's a bit more quiet but what does that client interaction look like, would you go to them, and it's a physical thing or is this just a phone call or a Zoom meeting, what is it? For other regards earnings it is usually just a phone call, because like all of the clients will just try to like book a little slot in your calendar and just be able to talk to you as soon as possible. So it is not like a type of meeting for which they would like to wait, maybe then you will set up a meeting with them you will just go and meet in person but in the specific moment it is all about like, I want the news as soon as possible I want to know what the analyst thinks and to understand like if I have to buy the stock if I have to sell or if I have to just like still still hold my shares. Yeah. So outside of kind of valuation methods, let's say in terms of looking at this from a numbers perspective, how much of the calculation is more soft where analysts are going to companies and understanding from management, the kind of soft guidance that they're issuing to influence, you know people always talk about Apple, for example, and it's kind of by the rumors sell the fact and if they've got bad earnings coming down the pipe, they tend to be more frequently talking to analysts to appropriately manage expectations so that they can manage the subsequent stock reaction so how much time is spent as an equity research analyst doing that type of activity where you're speaking to companies management teams. Yeah, it is actually a fact because like as an equity research analyst, I would say there are some specific points in time in which you're really interested to speak to the management team, the investor relations teams of the companies you're covering. So first of all, just after results are published, even before like investors starts calling you you want to have like that specific little slot like maybe just like 10 minutes in order to get go there and get like some more insights from the company to understand more what's behind the actual numbers, even before the actual conference call takes place during the day. And then there is another specific moment that is then just a few weeks before the results are published before the close period or silence period. So all this like pre close call. And the purpose of this is just like talking to the company just a few weeks after the most recent earnings to understand like what has changed in the meantime, like what are their new views and they will not tell you like the actual numbers but you can get a bit of a guidance from the company to understand like what the numbers will look like so that as an analyst at that point you can update your numbers and publish like a fresh model just before earnings come out. So you're aware of what other banks are putting out as price target estimates and how much is how much is that kind of spoken about and are you conscious of where you sit in the spectrum of kind of bullish to bearish because from a trading being on that end I was always seeing quite a lot of consistency. So Morgan Stanley US chief equity strategy is just a huge bear and everything is bearish and everything is curated around a theory that would say the glass is half empty not half full. So how how aware are you with what other banks are doing. Yeah exactly it is interesting because from the one hand that you as a research for Bank A for example you're not allowed to look at notes from Bank B. So sometimes actually you may get like investors like just directly sending to you like a report and you are like no I cannot read this and usually it is just blocked by compliance because you're not supposed to read notes from other analysts but at the same time using like any type of like software usually it is like Reuters or Bloomberg you can see like the view from other analysts in order to understand like where they are placed. And it is very interesting because as you're saying like usually you have like a bit of consistency, but sometimes there are like some outliers analysts that maybe are just like super bullish on a stock, or for example I used to know like one of the lead analysts in one of the teams for I was working for and she has been like the first one going like sell on one stock that all investors like all the analysts were bullish about. And so it is like a very risky move in a sense, but at the same time she was actually right so it paid off a lot like she became like the analysts who understood like what was going on at the time. Yeah, wow so that's I'm sure she's in demand but okay so coming back to the more broader context of the investment bank as an organization, so the equity research division. You kind of said that they will have some client facing exposure but what is the interaction with in what is more probably people's minds by BD so investment banking division or sales and trading on the global market side. What does that look like. Yeah, that's very interesting so as I quickly mentioned before there is like continuous active communication and engagement between like equity research and sales people. As you want to like keep them updating all the time on all the news that might affect like individual stocks or like all the sector in general so that then they can go and talk to their clients and maybe like set up a call with the research analyst. But on the other hand like a lot of people do not know this but there is a sort of Chinese wall between IBD and equity research in order to block the exchange of information between these two divisions as there are like a lot of non public information involved. So it is important that basically like every time an entity from one division and from another one have to talk have to like set up a meeting there should be like a chaperone in between, so that he can like oversee and check that like everything is happening in a correct and legal way, you can say. Perhaps I can ask a little bit of a probing question and this is thinking of the BBC series industry. And there's a scene there where you've got the traders and the research are in a room and it's like the morning call. And there's a bit of friction there between the traders and the types of characters. This is a drama dramatization right so it's everything's blown out of proportion, but is there a bit of a. What's that relationship like I was going to say friction but is there a because I imagine if I was a sales trader. Something big happens. I'm not the one who's going to run the numbers I'm too busy on the phone trying to handle the client, but I need as quickly as possible. Unique Intel so that I can then facilitate a trade, perhaps with this client before then the other bank the other trade in the street, does it. So is there is what does that relationship look like in reality. Yeah it is totally true actually as you say like this probably is like a bit more dramatized but it is like every morning you have like the morning call and you have there like people from research and people from trading. And so all the time you will have like people from the search pitching the stocks pitching their own new idea for example but just like super briefly because we know like traders won't like the information in order to go and act on that. It is just what has to happen. And so usually you have just like this little like pitch or like presentations by equity research and then we have the traders who asked like some specific questions to just like try a bit maybe challenging a bit also the view to understand like if it has like solid basis. And then at that point I can just like take the decision on how to act on the stock. Yeah go ahead. Yeah it is probably a bit dramatized but it is something that is actually happening like my daily basis. Yeah. So on the client client side. What do they actually receive in. I mean I've seen these reports but for everyone else what can you expect to see in this report like let's just pretend is a blank canvas and no one knows anything I mean is it 100 pages is it one page like and what is on it. Yeah absolutely that's super interesting because like yeah as you said like usually clients have the access to pay for this service and have the access to the portal of the investment bank where all the research pieces are published. And it's interesting because you can have like a range of very different types of notes or reports that are published. So you can have for example earnings commentaries that are those we were mentioning before we're talking about the earnings period and we'll just be like super short just providing like the view of the analysts before the results were published so their original estimates the actual numbers and the performance against those numbers and maybe like their view on like which will be the investor sentiment after the conference call. And on the other hand you can have like estimates updates notes they're usually a bit longer and will also provide like the new numbers computed by the company. Sometimes these two can go together. It really depends on like timing let's say and when you want to publish and every time you publish a estimates update you will provide more information about like how your assumptions have changed why they have changed and what you expect for the future why your views change for example if you have like some change in your investments idea. And every time you publish a piece like this it is also compulsory to also publish the refreshed model so that investor while they go on the portal not only gets the note itself but also like the updated numbers in the actual Excel sheets basically. Okay. And yeah and then I would say you have a sectoral notes that maybe you publish like more in the between like one in English season and another that can be like specific on a subsector or all the sector in general and they are usually talking about hot teams and specific like topics such as artificial intelligence example just to give one example and then we have like Initial reports that are just like all another thing we can say. So, coming back to people thinking about this as a potential role for them in future. So with everything you've described I think I can probably read between the lines but for you what are the skills that we're talking about that would be well aligned suited to be successful as an equity research analyst. Yeah, no it's totally true like because we've talked about very different things because it is a job in which you can never get bored like there are a lot of different things to do all the time. And so yeah it is just like super far to wonder like yeah but what should I be able to master like what should be like my key skills. So I would say that just started from the beginning like one important things that I want to say is that everything I'm going to mention are things that you can learn like some things might be a more bit more related to like your character your nature but there are no things that you cannot learn with just like a bit of practice and there are like a lot of resources out there so for example if you want to level up your Excel skills. There are a lot of resources it is all about just like practicing practicing practicing so that you can level up and just like be super like good at that. But yeah, in general just starting from the very basic this will sound like super just like obvious but you have to have like a very good understanding of finance economics and accounting. And especially you should be able to analyze a company's financial statements, because a lot of the job as we said is about just like being on Excel. Understand the numbers published by company and make your own projections so this is really key. And then again, which is a bit linked to this definitely, you must be able to like proficiently work on Excel just like knowing all the shortcuts so that you can be like super efficient and use it for like modeling evaluation purposes, especially as as a general a lot of time is on spreadsheet spreadsheet spreadsheet so this is like a must. And then we mentioned in the beginning like on one hand you will spend a lot of time writing the reports but on the other hand also talking to clients, because it is a client facing role. And so you need to be like super effective at both verbal and written communication. And just as a final more general one I would conclude saying that as you have to provide investors with the recommendation you need to be able to take very balanced decision based on rigorous analysis and careful due diligence. And so attention to details is definitely key in this job is programming a necessary function for this is it just a nice to have rather than a necessity. I think it's interesting actually because, as you know, like I have one finance background, I study like my mastering finance and this has been pretty useful for me so I would not say that it is a must, but it's like a nice skill that you can have. And just to make a bit of a difference, usually macro teams use programming a lot more so a lot of the work is done like using Python, for example, but instead for what regards equity research it is not so used like on a day to day basis. On the other hand, there are a lot of jobs that you have to like in a bit of manual repetitive way. And so if you know programming you can just like be a source for the team like research for them so that you can use it in order to automate a lot of processes and just like save time. Yeah, I was just thinking of that of my naive understanding of financial modeling and how AI could dramatically speed up that process, particularly with what you are suggesting which is speed to outcome of your new view based on new information is critical in the selling of the report as a product, the trade as a transaction. So yeah, I'd be interested to see how that develops in time so I think it's something common we hear from a lot of the speakers across different sectors and industry at the moment is is not a bad thing to have some basic level skills final one then to wrap up. Very conscious of the fact that people are going back to university at the moment applications are opening every single day there seems to be a new new company. And so you were and have been successful in the application process before. Is there any kind of top level tips that you would share on that regard. Yeah, I would say in general. I don't think I have anything super specific to say about equity research but I can talk a bit more in general. So, for me, one of like the key things that I thought as make me successful in my application for this job is that I was truly interested in doing this. Like I know that like many students in application season are like applying for multiple roles, and this is like totally fine like you want to have a backup options in a sense. But then if you get like that specific role we are so interested about that you can just like make it seem like you really care about it and I'm not talking just about the interview but also when you're writing your cover letter for example, if you are from your cover letter that you are ill really interested in it and it is what you want to do in your life. And especially if you're also able to talk about you and your skills and what you have done all in the light of what you can provide to a team in that specific job that is the key according to me, because sometimes you're more focused on like yeah seeing the most like important things that I did in my life but if that is not important for the job that you're going to do or you don't make it a bit explicit that I think thanks to this, I will provide help and contribution in this way. It's just like you're missing out habits in a sense. So yeah, this would be like my top level tip. And then yeah, as I said, like, a lot is about using Excel modeling. So definitely, if you're not like supervision at Excel there are a lot of like website courses free courses online so go there and maybe like just level it up a bit so that you can just like be that's crazy when you're hitting the desk. Alright, I think that's a good place to wrap up. Sylvia, I'm going to share your LinkedIn profile with the release of this episode. Is that okay? Yeah, absolutely. Feel free to connect with me and just like shout me a message if you would like more advice is on active research or just like an application in general, I would more than happy to answer to you. Okay, great stuff. And yeah, this is a slightly different kind of episode I guess than what we'd normally do. This is quite role specific to kind of give some further insight into perhaps roles that aren't so clearly visible. Because there are so many and everyone is so different. There's definitely a role for you. You just have to know about it. And so hopefully this has helped bridge that gap a little bit. If you want to hear more episodes like this, then just connect with me on LinkedIn and drop me a message. And let me know what type of role you'd like to hear. I mean, I'd hope that our community is now broad enough. So whatever it is, I'll try my best to bring on other guests but Sylvia is obviously part of the permanent team. Absolutely. Great to have you with us and yeah, super excited for that new equity research simulation as well. So thank you Sylvia. Bye everybody. Thank you. Bye bye. I wish everyone a great weekend. Take care.