10 time management tips for equity research analysts

By | August 5, 2013

Everything analysts do during the day should contribute towards the primary objective of identifying mispriced securities, or in the case of sell-side analysts, helping clients identify mispriced securities. If the activity doesn’t meet this objective, you should stop doing it. For the buy-side, stop taking calls and reading e-mails from those who don’t help the stock picking process. For the sell-side, don’t focus on minutia such as attending a plant tour in the middle of nowhere for a company that isn’t likely to perform substantially different than the rest of the sector.

Here is some valuable advice that will dramatically increase your productivity as an analyst:

1) Maximize offensively-focused activities where proprietary insights are most likely to be found. Examples include:
– Making outgoing phone calls to information sources who offer insights that improve forecast of critical factors
– Participating in private or small group meetings with industry expert(s) or company management
– Attending an industry conference where few financial analysts are in attendance

2) Minimize defensively-focused activities such as those that may provide background but not alpha-generating insights. Examples include:
– Quarterly earnings conference calls (reading the transcript can be done in half the time as listening to the call)
– Reading regulatory filings (use services that highlight the information that has changed from the prior filing)
– Sell-side-sponsored investor conferences (only attend if one-on-ones are available)
– Site tour, especially when no senior management are present (if the tour doesn’t cover a potential critical factor, spend time elsewhere)

3) Apply the 80/20 rule
– As a general rule, 80% of alpha-generating insights come from 20% (or less), of the available information flow – focus on the sources that traditionally yield insights
– Proactively turn off as much of the 80% unproductive information flow in order to reduce the noise

4) Plan travel intelligently:
– Once the companies are understood, attend only the portion(s) of events that are likely to help identify or understand the critical factors
– Leverage time on a trip by accomplishing more than one goal (meet with more than one company or information source when on the road)
– Leverage technology and plan ahead to use time out of the office wisely; commuting and travel time can comprise 20% of the work week. Do more than just read the financial press

5) During offensively-focused research time, send all calls to voicemail, shut the door, or if in a common area put on headphones (or a headset) to make it clear to others that you don’t want to be disturbed

6) Screen all in-bound phone calls, only taking calls from those who have a proven track record of adding insight or are responding to your questions (they will leave a voicemail if it’s important). Also, turn off pop-up e-mail and instant message alerts

7) Unless in a trading environment, look at your stock screen only a few preplanned times per day (e.g., upon arrival in the morning, at the open, lunch, and near the close)

8) If a regular daily task is required to conduct research or communicate, but is of low value, consider delegating, automating, or outsourcing

9) Periodically self-reflect to avoid burnout. Steps for avoiding burnout:
– Strive to have balance between professional and personal life
– Set a realistic timetable for achieving career goals
– Make time for self-reflection and getting input from close friends. Ask:
Am I scheduling and enjoying activities outside of work?
Am I regularly in conflict between professional and personal goals?
Am I becoming annoyed with my job?
Do I genuinely celebrate personal and professional victories?

10) Don’t spend time speaking to the press unless:
– The journalist provides insights
– Your ego badly needs gratification
– It will improve your year-end review (which in most cases, it won’t)

Buy-side only bonus:
a) Avoid attempting to read every sell-side report on every company and instead find the two to three analysts in each sector who are the best fit (Bloomberg, StarMine, and FactSet have features to identify sell-side analysts who are the best at forecasting earnings and stock picking). Only watch for ratings changes or other big think pieces from the rest of the sellside.

b) Unsubscribe from information services and analysts’ distribution lists if they don’t add value.

c) Routinely remind sell-side salespeople of needs and how they can add value.

d) Utilize sell-side or third-party financial models when it doesn’t compromise accuracy or insights, such as (see Exhibit 17.2 of Best Practices for Equity Research Analysts for details):
– Creating the model architecture in terms of what’s important
– Building historical data
– Updating quarterly data

Sell-side only bonus:
a) Return all non-time-sensitive calls at one block of time during the day (e.g., from 2 to 4 p.m.), delegating some of the less important calls to a junior member of the team.

b) Learn how to say “no” diplomatically (e.g., telling a salesperson you’re not doing lunch with a small client).

General time management rules:
a) Value your time
– There is no such thing as free time; all time has value
– If you’re having trouble managing your time, keep a log for a while and evaluate it

b) Use shortcuts
– Increase your reading speed
– Underline and/or highlight key concepts
– Develop a note-taking system that can be quickly searched and cross referenced

c) Plan your week in advance (it will never play out exactly as planned, but having no plan puts your valuable time at risk of being wasted.)

d) Implement the prioritization skills taught in time management classes. (GTD
and FranklinCovey are two of the better ones offered)
– Concentrate on one thing at a time
– Become a better listener

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