sell_side.ppt

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sell_side.ppt

  1. 1. Sell Side Buy Side Learning to Speak Investment Management Joan Williams March 6, 2002 Up Side Down Side
  2. 2. Sell Side Buy Side PART ONE
  3. 3. Industry Organization Sell Side Buy Side analyst analyst
  4. 4. Industry Organization Sell Side Buy Side analyst analyst Company Industry Economy Recommendations & Analysis Sell Side Company Technical Analysis & Investment Decision = =
  5. 5. The World of the Sell-Side Analyst
  6. 6. Sell Side: Major Players <ul><li>Investment Banks </li></ul><ul><ul><li>CSFB, Morgan Stanley, Merril Lynch, JP Morgan, Bank of America, Deutsche Banc, Bear Stearns, CIBC </li></ul></ul><ul><ul><li>Company and Industry Reports </li></ul></ul><ul><li>Regional / Industry </li></ul><ul><ul><li>Ex. – Simmons in Energy </li></ul></ul>
  7. 7. Sell Side: Goals <ul><li>Produce and sell research </li></ul><ul><li>“Call It” </li></ul><ul><li>Reputation / Credibility </li></ul><ul><ul><li>Go-to analyst </li></ul></ul><ul><ul><li>Expert status / air-time </li></ul></ul><ul><li>Funny Titles </li></ul>
  8. 8. Sell Side: Research <ul><li>Interfacing with Company Management </li></ul><ul><ul><li>Conference Calls </li></ul></ul><ul><ul><li>Company </li></ul></ul><ul><ul><li>Conferences (ex.- Extreme Networks) </li></ul></ul><ul><ul><li>Robertson Stephens Technology Conference -- San Francisco, CA Wednesday, February 27, 2002 Time: 3:00 p.m. PT (6:00 p.m. ET) Presenter: Gordon Stitt, Chief Executive Officer </li></ul></ul><ul><ul><li>Merrill Lynch Global Communications Conference -- New York, NY Wednesday, March 13, 2002 Time: 12:00 p.m. PT (3:00 p.m. ET) Presenter: Gordon Stitt, Chief Executive Officer </li></ul></ul><ul><li>Economic and Industry Data </li></ul><ul><li>Credit Ratings </li></ul>
  9. 9. Sell Side: Reports <ul><li>Company / Industry (Sector, SubSector, Commodity)/ Economy / Theory </li></ul><ul><li>Report team </li></ul><ul><li>Earnings models </li></ul><ul><li>Supporting analysis </li></ul><ul><li>Expectations </li></ul><ul><ul><li>EPS and CFPS (First Call / consensus) </li></ul></ul><ul><li>Investment Recommendation </li></ul>
  10. 10. Sell Side: Clients <ul><li>Internal and External Buy Side </li></ul><ul><ul><li>Investment Management </li></ul></ul><ul><li>Intermediaries </li></ul><ul><ul><li>Investment banking analysts </li></ul></ul><ul><li>Chinese wall / conflict of interest </li></ul><ul><li>Bias </li></ul><ul><ul><li>“Buy doesn’t mean buy” </li></ul></ul><ul><ul><li>Dropping coverage </li></ul></ul>
  11. 11. The World of the Buy-Side Analyst
  12. 12. Buy Side: Major Players <ul><li>Investment banks </li></ul><ul><ul><li>Institutional and Private Wealth </li></ul></ul><ul><li>Mutual Funds </li></ul><ul><li>Portfolio Managers </li></ul><ul><ul><li>Institutional and Private Wealth </li></ul></ul>
  13. 13. Buy-side: Sell-side relationships <ul><li>Buy-side pays for sell-side relationship </li></ul><ul><li>Go-to people </li></ul><ul><ul><li>Often share models or background information </li></ul></ul><ul><li>Daily conference calls </li></ul><ul><li>Road shows (usually following report) </li></ul><ul><li>Often internal (I-banks) </li></ul>
  14. 14. Buy-Side: Research <ul><li>Build own earnings models </li></ul><ul><li>Utilize Conference Calls </li></ul><ul><ul><li>Daily sell-side calls </li></ul></ul><ul><ul><li>Company earnings </li></ul></ul><ul><li>Company guidance </li></ul><ul><ul><li>Conf. Calls and Road Shows </li></ul></ul><ul><li>Real-time market trends </li></ul><ul><li>Technical analysis ( shhhh….) </li></ul>
  15. 15. Buy Side: Flow of information <ul><li>Flow up to PM’s and Fund Managers </li></ul><ul><ul><li>Sometimes same people </li></ul></ul><ul><li>Assigned to S&P sector and strategy group </li></ul><ul><li>Internal meetings and reports </li></ul>
  16. 16. Buy Side: Brokers and traders <ul><li>Access and timing </li></ul><ul><li>Two-way information flow </li></ul>
  17. 17. Buy Side: Performance Measures <ul><li>Fund & Portfolio marketing results </li></ul><ul><li>Benchmarking </li></ul>
  18. 18. Up Side PART TWO Down Side

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