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Marketing to Investment Research Leaders in Investment Banking

Understanding Their Role

All large Investment Banking firms include Research Departments. These research professionals analyze and document pertinent information regarding public companies, specific industries, and regional economies.1 Research Departments are typically (but not always) housed within the Trading Division of an Investment Bank. The recipients of the output of the Research Department can generally be divided into two categories: “Buy-Side” research and “Sell-Side” research.2

 

Research for the firm’s investing clients is called “Sell-Side” research. This highly analytical work involves the production of detailed financial models to help forecast future earnings of a company, as well as the future value of its assets. Many investors rely on this data to determine whether to buy or sell a security or other asset. 3 Research that is completed for internal employees of the bank is called “Buy-Side” research. This information is most frequently used by bank’s asset managers (who manage money for investing clients).4

 

The daily activities of a researcher are focused on the following areas:5 6

 

  • Data collection and interpretation
  • Financial modeling, forecasting and valuation
  • Risk Measurement to understand volatility, scenarios and opportunities to mitigate risk
  • Equity Research focusing on the strengths and weaknesses of specific stocks (e.g. General Motors, IBM…)
  • Credit Research looking at a company’s debt, specifically whether or not the company’s future cash flow will be sufficient to service its pending obligations
  • Commodities Research analyzing the supply and demand for raw materials and certain agricultural products (e.g. copper, coffee…,) and creating future price products for these items
  • Economic Research creates ongoing forecasts for interest rates, foreign currency exchange rates, and economic growth rates for companies

 

Analyst research reports are typically published on a quarterly basis. Additional research is also published if there are important events announced by a company through a press release, or if the analyst has conducted proprietary research on a specific topic.7 Investors have access to these reports in both written and electronic form. In addition, some of the firm’s most important clients are given direct access to the analysts to discuss their models and assumptions on an ongoing basis.8

 

In summary, Research Departments provide detailed economic and financial reports to both employees of the firm and clients to help them make better-informed investment decisions.

 

“We’re in the risk business, we’re helping our clients manage risk – pooling risk, offsetting risk – and we’ll continue to do that.”

- Douglas Flint, Chairman, HSBC Holdings Plc.9

1Stowell, David. Investment Banks, Hedge Funds, and Private Equity. 2nd ed. Chapter 6. 225 Wyman Street, Waltham, MA 02451, USA The Boulevard, Langford Lane, Kidlington, Oxford, OX5 1 GB, UK: Academic Press, 2012.

2 Ibid

3 Ibid

4 Ibid

5 Ibid

6 Sarker, Indy. “Co-Published Chapter: Investment Research: The Hunt for a Sustainable Business Model.” Asian Investor , 2013, 1. EBSCOhost(89930888).

7 Stowell, David. Investment Banks, Hedge Funds, and Private Equity.

8 Ibid

9 “Interview with Douglas Flint. Chairman HSBC Holdings Plc.” PwC. 2014. Accessed 10/27/15, available at: www.pwc.com/gx/en/ceo-agenda/ceo-survey/2014/interviews/douglas-flint.html

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Investment Banks use research departments to build a deep understanding of securities and the overall economic environment. Researchers are divided into “Buy-Side” and “Sell-Side” depending whether they support the bank’s external customers or internal employees.
fusion point research Marketing Research Reports
Investment Banks use research departments to build a deep understanding of securities and the overall economic environment. Researchers are divided into “Buy-Side” and “Sell-Side” depending whether they support the bank’s external customers or internal employees.
  • Data collection and interpretation
  • Financial modeling, forecasting and valuation
  • Risk Measurement to understand volatility, scenarios and opportunities to mitigate risk
  • Equity Research focusing on the strengths and weaknesses of specific stocks (e.g. General Motors, IBM…)
  • Credit Research looking at a company’s debt, specifically whether or not the company’s future cash flow will be sufficient to service its pending obligations
  • Commodities Research analyzing the supply and demand for raw materials and certain agricultural products (e.g. copper, coffee…,) and creating future price products for these items
  • Economic Research creates ongoing forecasts for interest rates, foreign currency exchange rates, and economic growth rates for companies