Struggling to Find Good Stock Calls? 10 Tips to Find More Time
“I have trouble coming up with good stock calls,” is one of the most common concerns I hear when starting a new one-on-one coaching assignment with an analyst.
There are dozens of skills required for great stock picking, but only one that burdens almost all analysts, regardless of experience level or geographic location: time management. To some, the concept of “time management” isn’t worthy of being “learned” because they assume it’s just a matter of using common sense…and that’s probably why time management is too often overlooked as a source of individual career advancement. If my hypothesis is right, we should coin a new buzzword to make this critically-important skill sound sexier; perhaps one of these:
- “Efficiency Re-engineering”
- “Prioritization Intensification”
- “Accelerated Productivity”
You’re sure to get points for buzzword bingo (or a similar game with a slightly different name) by using any of these new terms. Regardless of what you want to call it, I’ve seen analysts go from bottom quartile to top, simply because they focus more on how they use their time. I’ve assembled a list below that should be relatively simple to put into practice and can potentially add 10%-25% more time to your week… the equivalent of getting a part-time assistant (who wouldn’t want that).
For many analysts, the concept of “time management” is just following common sense, but it’s much more complex
Top 10 Tips to Gain More Time for Equity Research Analysts
- Play Offense (rather than defense): Maximize “offense”-focused activities where proprietary insights are most likely to be found. Examples include:
- Make outgoing phone calls to information sources who offer insights that improve forecast of critical factors
- Participate in private or small group meetings with industry expert(s) or company management
- Attend an industry conference where few financial analysts are in attendance
- Avoid Playing Defense: Stop or minimize “defensive”-focused activities such as those that may provide background but not alpha-generating insights. These include:
- Listening to quarterly earnings conference calls (reading the transcript can be done in half the time as listening to the call)
- Reading entire regulatory filings (use services that highlight the information that has changed from the prior filing)
- Attending investor conferences where most of the presentations are company management restating publicly-known information
- Going on site tours, especially when no senior management is present (if the tour doesn’t cover a potential critical factor, spend time elsewhere)
- 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. Sounds like common sense, but this can only be achieved by proactively turning off as much of the 80% unproductive information flow (ask yourself, what can you turn off today?)
- Utilize a note-taking system that can be quickly searched and cross referenced (Microsoft OneNote and Evernote are the two best)
- Increase your reading speed – take a speed reading class
- Learn Excel short-cuts for the 30 things you do most
- Implement prioritization skills taught in time management classes. AnalystSolutions has a popular workshop Maximize Your Time for Alpha Generation designed for equity research analysts, but if you want to learn non-role specific time management skills, GTD and FranklinCovey have two of the best
- Automate routine, low-value activities such as updating stock prices for a comp table (what do you do at least once a week that could be automated?)
- Buy-side Specific:
- Don’t give your email address to anyone who can overburden you with unhelpful information
- Relentlessly unsubscribe from information services and analysts’ distribution lists if they don’t add value
- Continually remind sell-side salespeople of your specific needs and how they can add value, until that’s how they serve you
- Avoid attempting to read every sell-side report on every company. 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 sell-side.
- Utilize sell-side or third-party financial models when it doesn’t compromise accuracy or insights, such as creating the model architecture, building historical data or updating quarterly data
- Sell-side Specific:
- Return all non-time-sensitive phone 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 if you have one
- Learn how to say “no” diplomatically (e.g., telling a salesperson you’re not doing lunch with a small client)
The key to making all of these recommendations stick is reinforcing great behavior, which can be done by holding a weekly meeting with yourself. Yes, this might sound odd, but it’s one of the key principles found in all three of the time management programs mentioned above. If you review this list every week at the same time, it’s more likely to become a permanent part of your routine. Think of it as your opportunity to be your own personal trainer.
We explore the topic of time management for the equity research analyst in-depth in our workshop: Maximize Your Time for Alpha Generation, which is available on-demand.
This Best Practices Bulletin™ targets the following activity within our GAMMA PI™ framework:
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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