Guest article: How I Became a Great ER Analyst And You Can Too

Canary Wharfian

Marks of a Good Equity Research Analyst

Alpha | noun | \ˈal-fə\ | the difference between an investment’s actual return and its benchmark return.

I was fortunate to immediately work in the buy-side when I landed a job in equity research for a fund after finishing my undergraduate degree in economics. Having no investment banking experience, my initial months in my new role was somewhat stressful and confusing. Unlike other roles where a structured training program is in place to shape you up for your new job, Equity Research has little of that. The industry still relies on mentorship from more senior analysts to nurture future talent. As a result, novice analysts feeling confused and helpless are rife in the industry.

There is no solid prescription for analysts in being able to successfully generate actionable and profitable insights. That is why having a track record matters in the profession and consequently, people with little or no track record finds it very difficult to land ER roles.

That is why an analyst is set apart from the rest on his ability to concretize something that is abstract in nature. In the absence of a strong educational pedigree, orient your mindset that your ability to spot investment opportunities and put it in an understandable narrative will make you land the role. ER work is a lifestyle and consequently, your success in the role will depend on certain soft and hard skills that are also applicable in life as a whole.

Good Time Management

The challenge with today’s financial markets is not the scarcity but the abundance of information. More than half of my time in ER was spent reading, attending conferences, conference calls, talking with company management, and talking with portfolio managers within the firm. I call these first set of activities matter loading. The reading and interactions should allow the analyst to answer three basic things:

  1. What does the company do and how does it make money?
  2. What is priced in and what is not?
  3. What new information could make my investment hypothesis right or wrong?
Grouping the information I get into these three question buckets allows me to make good use of my matter loading time. I find any information that does not directly answer these three questions as nice to know and subsequently treated with least importance. Time is of the essence in this profession and the sooner I get to the bottom of things about the narrative and the company’s drivers, the more potential the pitch could be.

The other half of my time is spent writing the actual report and financial modelling. I intentionally leave financial modelling towards the latter half of my routine. The reason is that I put importance in making the story explain the numbers. Although there would be instances where I approach my answer in number two by reverse-engineering the model to tell me what are the market’s expectations given its stock price, more often than not modelling and subsequently research writing is left later on in my investment process.

Seek Mentorship

Successful personalities usually model themselves to someone they put in high regard. More than that, mentorship offers a multitude of benefits. I was very fortunate to have a mentor within my former firm where not only did he constantly review the quality of my work but also lent an ear on my concerns with work and life as a whole.

If you are interested in seeking mentorship, try to look for portfolio managers whose strategy you feel is in sync with your own. Send them a copy of your work. Seek their feedback. Instead of asking for a job outright, why not make your value proposition known? What better way to do that than to make your work open for their review.

Expand Your Mental Mosaic

There is a reason why a lot of investment bankers and management consultants end up in ER roles. The plethora of their analytical tools, from frameworks to financial models, allows them to see information in multiple dimensions. IB and management consulting experience is not a sufficient condition to land ER roles.

Read everything. Read not only the business broadsheets but anything you fancy. Although I read business publications (Bloomberg, FT, WSJ, Barron’s, etc.) on a regular basis I also complement my reading list with doses of foreign affairs publications (The Diplomat, Foreign Affairs, etc.) and literature. Which area you usually feel not comfortable conversing on would usually be the area you are trying to learn next. Most importantly, as you digest information, try to consciously develop an opinion on how it would affect companies, sectors, industries, and countries as a whole. In this process, you are training your mind to spot patterns and develop opinions.


Good analysts are constantly engaged in introspection. From being able to identify which strategy works best for them (value versus growth) to being aware of their strengths and weaknesses, a contemplative analyst is an analyst that avoids the pitfalls of the profession. Since markets are emotional in nature given the human participation it enjoys, a contemplative analyst is conscious to recognize his own emotions and how it can affect his perspective on his target or the market.

Communicate Effectively

Analysts are well respected by their peers if they are able to get the investment narrative right and simple. Often times, this involves an ability to story-tell. Do not be surprised to see a lot of research notes darted with poetic excerpts or Shakespearean sonnets; good analysts will use a variety of mediums, prose included, to drive the point to their clients.

Join your local Toastmasters Club. Start writing a blog. Effective communication is not an art but a skill acquired through practice and constant improvement. Improving in this area helps you become confident on interviews too.

Landing the Roles

Since writing abilities is highly regarded in equity research analyst roles, take extra effort to polish covering letters as they exhibit your ability to sell and convey ideas effectively. Almost everyone dedicated to the craft will become proficient in corporate finance and valuation in due time. What skill is lacking in the industry is the ability to write clearly and effectively. Backgrounds in law, journalism, politics, and philosophy are assets in roles like Equity Research.

Both research directors of investment banks and fund investment managers would not refuse a free stock pitch. A well-written one sent to them might just earn you your ticket in the industry. Be prepared to have two to three stock pitches, ideally a mix of long and short ideas, for interviews and cold emails. Be ready to explain your call both in detail and in brief once invited for a phone or actual interview.

My Reading List

There are books in the market that has helped me tremendously in honing my craft. Anyone interested in the field and is about to write his first research note should pick-up James Valentine’s “Best Practices for Equity Research Analysts” and Michael Shearn’s “The Investment Checklist: The Art of In-Depth Research”.

On how to write clearly and effectively, William Strunk and E.B. White’s “The Elements of Style” should help you navigate the nuances of composition. On how to organize your thoughts and express it clarity and creativity, I highly recommend reading Barbara Minto’s “The Pyramid Principle”.