Tips on how to get into Equity Research
Getting a job in equity research can be extremely competitive. Global investment banks and boutique firms only have so many Analysts and Associates, with a limited number of new people they hire each year. In a competitive marketplace, this guide on how to get into equity research will share some ideas that will help you improve your odds of being hired.
#1 Perform your own research and analysis
The best way to get into something is to just start doing it. There is virtually no cost (other than your time) to start looking for investment ideas and performing your own valuation modeling of companies. To get the ball rolling, follow these steps:
- Think of an industry or sector that you’re interested in (genuinely)
- Get a list of companies in the sector from Google finance or Yahoo finance
- Filter the companies down by setting criteria such as geographic location, size, the line of business, valuation, etc.
- Download the three financial statements for 3-5 of the companies from EDGAR or the appropriate filing system
- Put all the numbers into Excel, link the 3 statements, and start performing analysis
- Analyze the historical results and build a forecast based on what you think the company is capable of in the future
- Perform a discounted cash flow DCF analysis to value each company
#2 Get your research published on Seeking Alpha
Luckily (or not) we live in a time where it’s easy to get your content published publicly. Seeking Alpha is a crowdsourced equity research platform where anyone, regardless of their background or experience, can publish research as long as it meets their quality requirements.
In order to get your research published on Seeking Alpha follow these steps:
- Develop a thesis about one of the stocks you researched in Step 1 above (i.e., stock is undervalued or overvalued due to x, y, and z)
- Write a thorough report (1,000 to 2,000 words long)
- Include lots of charts, graphs, and outputs from your financial model
- Use lots of headings and create a well-structured article
- Generate a bold title for the article the includes your “call” on the stock (i.e., Short: Online Company Inc Overvalued by 40-50%, Target Price is $X.XX per share)
- If your article is not approved, take the feedback provided and keep working on your research and analysis until the report is approved
#3 Share your published article with equity research analysts
Once your equity research report is published, you now have a great reason to start contacting Analysts and Associates at companies that cover the stock (or the sector) that you wrote about. You can also use it in your application form to job postings.
You can do this by following these steps:
- Find job postings at global banks or boutiques that have analysts in the sector you researched (try looking at efinancialcareers.com for postings)
- In your cover letter (or cover email) include a hyperlink to the Seeking Alpha article you had published, explain your thesis, and why you appear to be correct or incorrect as time has passed since you originally wrote the piece
- Showcase your financial modeling and valuation skills by including the financial model you built to support your research
- Remember to take a very humble approach and explain that you did this exercise for educational purposes and have learned a lot in the process
#4 Follow up and keep networking
Networking is by far the best way to get hired (in any industry) and a major component of how to get into equity research. Networking requires a lot of persistence. If you meet resistance as you send out your emails, be sure to ask if they know anyone else who has a strong opinion on the stock you researched.
By always asking each person you talk to for a referral, you can have a continual pipeline of new people to connect with.
At the end of the day, it’s a numbers game, and the more people you connect with and share your research with, the better your odds are of getting hired.
Read CFI’s three-part series on how to network effectively!
Thank you for reading the CFI guide on how to get into equity research. If you follow the above steps, you will learn a lot about what it’s like to be an analyst, and hopefully, improve your chances of getting hired a super competitive market.
To keep learning and advancing your career, these additional resources will be a big help: