Equity research means company finance analysis, performance of coefficient analysis, financial modeling (forecasting of financial results) and conducting a scan of the surveyors and the intention to choose between buy / sell in relation to the investment. Research conducted by equity research analyst is documented in research reports.
Equity research analysts are people who deal with the study of shares, analyze groups of shares to provide sellers and traders, investors, recommendations and investment ideas on their basis. The way they communicate is their reports.
Function of equity research
Financial information is the most valuable resource for financial markets. That is why equity research plays an important role. Investors need specific information and data to know what to invest their money in. Information is helpful when they are faced with the decision to enter or leave a position. To participate in transactions, they need information to be able to price companies. All these questions are answered by capital tests carried out by branches in financial institutions:
- Equity Research provides full information between buyers and stock sellers.
- Thanks to equity research, you can solve the problem of not being able to analyze each stock at institutional and individual levels.
- The role of analyst equity research is based on continuous analysis of actions, tracking of messages, conversations with management or estimation of share prices.
- What is important, capital research contributes to the generation of profits by the buyers.
Sell Side Equity Research Analyst
Sell-Side equity research analyst is an analyst dealing in sales research. It is the person who creates the models, analyzes data from various sources, which include suppliers, competitors and clients. The analyst presents his analyzes in reports, which later are presented to the company and clients.
Buy Side Equity Research Analyst
Buy-Side equity research is an analyst in the field of buying. Their work is similar to the work of sales-side equity research, but in this case they try to recognize the best performers achieving the best results on the market. In contrast to sell-side equity research, they focus on more industries and companies at the moment. In this case, the research reports are reserved. They are also used as a supplement to public sales analysts' research.
Hierarchy in equity research
The classic hierarchy in equity research is as follows:
- Head of Equities
- Analysts (senior), which cover various sectors. Each of them operates around 10-15 companies in a particular sector. Each of the senior analysts may have a colleague who may also be supported by younger analysts.
Who uses equity research?
Equity research is directed to:
- Independent research companies: those who study capital but do not have a trade and sales department.
- Large research companies that deal with shares.
- Pension Funds, Hedge Funds, Mutual funds, Insurance Companies etc.
- Valentine J. (2011), page 4
- Dun. 2008, pages 1-4
- Dun.2008, pages 1-4
- Bajikar S. (2016). Equity Research for the Technology Investor: Value Investing in Technology Stocks, Bajikar Tech Investor, San Francisco, Chapter 4
- Dun. (2008). Equity Research And Valuation, Tata McGraw- Hill Education, pages 1-4
- Elcock G. D. (2010). How to Get an Equity Research Analyst Job: A Guide to Starting a Career in Asset Management, Ecademy Press, St Albans, page vi
- Valentine J. (2011). Best Practices for Equity Analysts: Essentials for Buy-Side and Sell-Side Analysts, McGraw Hill Professional, United States, page 4
Author: Magdalena Wójcik