Buy Side Basics
The classic hedge fund fee structure, consisting of a 2% management fee plus 20% of profits.
'2 and 20'
Sell Side firms generate revenue through these, earned off transactions or spreads.
Fees
(Advisory, Underwriting, Financing, etc.)
Unlike the Buy Side Analyst, this role 'lives in the present moment of the market' and is not focused on the long-term thesis.
Trader
This FactSet tool pulls live financial data directly into models, saving the Buy Side Equity Analyst hours of manual work.
Excel Add-In
In simple terms, the Buy Side supplies this, while the Sell Side supplies investment opportunities and market services.
Capital
This is the primary way Buy Side firms make money, charged as a percentage of AUM.
Management Fee
These are examples of Sell Side businesses.
Name one!
Investment Banks, Sales & Trading, Equity Research, Wealth Management, Brokerage
These are the three valuation methodologies listed as skills for both the Sell Side Equity Analyst and Investment Banking Analyst.
DCF, Comps, LBO
This FactSet product provides access to 60,000+ global M&A transactions and is recommended for Investment Banking Analysts.
FactSet Mergers
This Sell Side role brings companies to market by helping them issue securities or complete corporate transactions.
Investment Bankers
Buy Side firms pool money from these three types of investors.
Name at least one!
Pension Funds, Endowments, and High-Net-Worth Individuals (HWNIs)
This is the Investment Banking Analyst's primary objective.
This is a key trait of a Trader — they actually thrive in it.
Pressure / Chaotic Environments
The Portfolio Manager uses this FactSet tool to model the impact of a specific trade BEFORE making the final decision.
Portfolio Construction Batcher
After the Portfolio Manager makes a decision, a bad execution by this person directly eats into fund performance.
Trader
This person on the Buy Side makes the final call on whether to invest — never the analyst.
The Investment Banking Associate reviews analyst work, checking these four things specifically.
Name one!
Calculations, Assumptions, Valuation Outputs, Formatting
The Buy Side Equity Analyst must be able to do this with large amounts of information, and do it quickly.
Synthesize Information
This FactSet product is recommended for Investment Banking Associates to ensure pitch book quality and that charts are synchronized with Excel models.
FactSet Office Integration
Two roles that mostly never see each other on the buy side because of the intermediary portfolio manager.
Equity Analyst and Trader
This is the Buy Side Equity Analyst's primary objective.
Generate investment ideas
This is the reason there is a limited relationship between Investment Banking and Equity Research Analysts.
Conflict of Interest
The Portfolio Manager must have this rare combination — being strong and confident while also having this quality.
The Trader uses this FactSet tool to measure execution quality and continuously improve performance.
The interaction between Buy Side and Sell Side influences this, and creates new information that feeds into future research and decisions.
Market Price