“Helps get to the points of what you would care about if you ran the company. ” – Bob
“Two ways to fix a company, fix margins or fix turns” – Bob
“What are are you investing in? What are the returns on those investments” – Bob
“Figure out what’s going on today, so can anticipate the future” – Bob
Equity research analysts typically cover a specific sector or industry and analyze publicly traded companies within that sector to provide investment recommendations to their clients. To think like a CEO, equity research analysts need to adopt a strategic, big-picture mindset that takes into account the overall goals and objectives of the companies they cover. Here are a few examples of how an equity research analyst can think like a CEO:
- Focus on the competitive landscape: A CEO needs to be aware of the competitive landscape and how their company fits within it. Similarly, equity research analysts need to analyze the competitive dynamics of the industry and how the companies they cover compare to their peers. This involves examining factors such as market share, pricing, product differentiation, and barriers to entry.
- Consider long-term trends: CEOs need to take a long-term view of their business and the industry in which they operate. Equity research analysts need to do the same and consider long-term trends that may impact the companies they cover. For example, an equity research analyst covering the energy sector may need to consider the shift towards renewable energy and how it will impact the profitability of traditional energy companies.
- Understand the company’s strategy: A CEO needs to have a clear understanding of their company’s strategy and how it will create value for shareholders. Equity research analysts need to do the same and analyze the strategies of the companies they cover. This involves understanding the company’s competitive positioning, growth prospects, capital allocation strategy, and potential risks and challenges.