Sell Side Buy Side Up Side Down Side Learning to Speak Investment Management Joan Williams March 6, 2002

Sell Side Buy Side PART ONE

Industry Organization Sell SideBuy Side analyst

Industry Organization Sell SideBuy Side analyst Company Industry Economy Recommendations & Analysis Sell Side Company Technical Analysis & Investment Decision ==

The World of the Sell-Side Analyst

Sell Side: Major Players Investment Banks –CSFB, Morgan Stanley, Merril Lynch, JP Morgan, Bank of America, Deutsche Banc, Bear Stearns, CIBC –Company and Industry Reports Regional / Industry –Ex. – Simmons in Energy

Sell Side: Goals Produce and sell research “Call It” Reputation / Credibility –Go-to analyst –Expert status / air-time Funny Titles

Sell Side: Research Interfacing with Company Management –Conference Calls –Company –Conferences (ex.- Extreme Networks) –Robertson Stephens Technology Conference -- San Francisco, CA Wednesday, February 27, 2002 Time: 3:00 p.m. PT (6:00 p.m. ET) Presenter: Gordon Stitt, Chief Executive Officer –Merrill Lynch Global Communications Conference -- New York, NY Wednesday, March 13, 2002 Time: 12:00 p.m. PT (3:00 p.m. ET) Presenter: Gordon Stitt, Chief Executive Officer Economic and Industry Data Credit Ratings

Sell Side: Reports Company / Industry (Sector, SubSector, Commodity)/ Economy / Theory Report team Earnings models Supporting analysis Expectations –EPS and CFPS (First Call / consensus) Investment Recommendation

Sell Side: Clients Internal and External Buy Side –Investment Management Intermediaries –Investment banking analysts Chinese wall / conflict of interest Bias –“Buy doesn’t mean buy” –Dropping coverage

The World of the Buy-Side Analyst

Buy Side: Major Players Investment banks –Institutional and Private Wealth Mutual Funds Portfolio Managers –Institutional and Private Wealth

Buy-side: Sell-side relationships Buy-side pays for sell-side relationship Go-to people –Often share models or background information Daily conference calls Road shows (usually following report) Often internal (I-banks)

Buy-Side: Research Build own earnings models Utilize Conference Calls –Daily sell-side calls –Company earnings Company guidance –Conf. Calls and Road Shows Real-time market trends Technical analysis (shhhh….)

Buy Side: Flow of information Flow up to PM’s and Fund Managers –Sometimes same people Assigned to S&P sector and strategy group Internal meetings and reports

Buy Side: Brokers and traders Access and timing Two-way information flow

Buy Side: Performance Measures Fund & Portfolio marketing results Benchmarking

Up Side PART TWO Down Side