I Don’t Have Time for Your Agenda

Are equity research analysts intelligent and hardworking? Absolutely. Then why do so many struggle to find the unique insights required for generating alpha? My thesis: they let too much of their time get consumed by other people’s agendas (OPAs).

Early in my career I struggled to add value even though I was working from 7 am to 7 pm 5-6 days a week. Then it occurred to me that my days were getting filled with OPAs, such as unsolicited calls and meetings scheduled by others that were covering topics not critical in helping me develop differentiated insights.

When I began mentoring analysts, I would sometimes get the question “How much time should I spend on…”  In response, I put together the following tables to help place parameters around the time equity research analysts should be spending on typical activities that involve interaction with others. As a reminder, before speaking to any of the individuals below, ensure you stay focused on just the critical factors (which we discussed in a prior Best Practices Bulletin™). By sticking to these guidelines, buy-side and sell-side analysts have more time for generating unique insights about the critical factors most likely to move their stocks.

Follow these guidelines to free up 10%-40% of your current schedule

For Buy-Side Analyst and Sell-Side Analyst Roles

Just because a company is holding a conference call or meeting, doesn’t mean you should participate. In fact, you probably shouldn’t unless you believe there will be discussion to clarify your view about the critical factors for your stock or sector. (During a typical full-day analyst meeting, I found less than 30 minutes helped my forecasting efforts.) Remember you can review a quarterly call transcript in 10-15 minutes vs. spending an hour on the conference call. (If you do need to listen to the replay, put it at 2x the normal speed so you’re done in half the time.)

Tips specific for the buy-side analyst:

I was recently coaching a buy-side analyst with 15 years of experience who was having a problem finding enough time to discover new insights about the companies he was covering. Among his activities, he was meeting with 4-6 sell-side analysts a week in his office. As one potential time saver, I told him for future meetings, email the sell-side analyst in advance, noting that his only interest pertained to the specific critical factors in his email and to kindly keep the discussion focused on that content. After implementing this strategy he was amazed, because his meetings with sell-side analysts were now filled with a much deeper discussion about HIS AGENDA, and many of the meetings were ending in 30 minutes because once his agenda was achieved, he didn’t need to waste time listing to the sell-side analyst’s agenda.

For the Buy-Side Analyst Role

Tips specific for the sell-side analyst:

If you’re a sell-side equity research analyst, I fully understand buy-side client requests are OPAs critical to a successful franchise. Even so, I find the best analysts proactively manage this so they can get the most number of client interactions during their “client-facing” time. (Don’t fall into the adage of “any time with a client is time well spent” because the marginal benefit drops off significantly after 15-30 minutes.)

In addition, your salespeople should be a critical element of your marketing effort, but understand their incentive structure at many firms will motivate them to offer your time to clients like an all-you-can-eat buffet, which may not yield more profit for your team or your firm. Try to verify the time spent with clients will be profitable to your firm before picking up the phone or conducting a one-on-one meeting.

For the Sell-Side Analyst Role

This Best Practices Bulletin™ targets activity #6, “Productivity” within our GAMMA PI™ framework, because by following these practices, analysts find they have 10%-40% more time to generate informed insights that lead to alpha.

Send feedback if this Best Practices Bulletin™ helps you or can be improved. If you’re interested in exploring this topic further, AnalystSolutions provides equity research training with a specialized workshop to help analysts manage their time and be more productive, Maximize Your Time for Alpha Generation.

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©AnalystSolutions LLP All rights reserved. James J. Valentine, CFA is author of Best Practices for Equity Research Analysts, founder of AnalystSolutions and was a top-ranked equity research analyst for ten consecutive years