A Day in the Life of a Research Analyst

Research analysts have less predictable days than either a research salesperson or salestrader. Their workday is somewhat less tied down to the market's trading hours. They are the experts of an industry or group of companies. Any news that must be incorporated into their models can arrive at any hour of the day. When an analyst has any breaking news, they want to be on the 7:30 morning call. When they are scheduled, they can be found in the office at 6-6:30; preparing for the meeting. At the call, they will present their thesis and answer any questions from the sales force. After the call, they will call their most important buy side clients while the research salespeople are calling theirs. If a particular client is interested in their viewpoint, they will ask to speak to the analyst. A highly regarded and ranked analyst can move the stock price.

Other days, the analyst has plenty of duties to occupy their time. There are financial models to be updated, clients to be called, research and marketing to be done. Analysts have 2 different client universes: buy side and corporate clients. The buy side includes the investors of the securities covered by the analyst. Corporate clients are the companies covered with the analyst. They speak with corporates to keep abreast of any industry news. Analysts also speak with third party sources such as suppliers and customers of the company, journalists and other industry experts.

Analysts also go on marketing trips. They talk to buy side clients about their research ideas. They may visit 4 cities in 5 days and have 15 meetings during the trip. This is arranged by a special analyst marketing group that parallels what corporate access does for company management.

An analyst's performance is measured by how the perform on the:

• Broker vote
• Rating by Research Sales
• Institutional Investor (II) ranking
• Greenwich ranking

Institutional Investor is a famous publication that has "All-Star teams" for each industry. It lists the top 3 analysts annually and has an up-and-coming team for promising analysts. The article is printed in 1 of II's magazines. Greenwich Associates has an annually survey that focuses on the qualitative rankings of the sell side analyst. In this survey, questionnaires are sent to be filled out by the largest buy side firms. The answers are analyzed by Greenwich and results are sold to the sell side.

Sometimes, they are also rated on the trading commissions for the stocks that they cover. This can be unreliable if they cover thinly traded securities.

You may be asking, "What about the accuracy of their recommendations?" Let me reiterate. The buy side is not solely interested on whether a stock is a buy, hold or sell. They are interested in the analyst's thought process and story.