More investor impact from smaller sell-side teams

More than half-way through the annual discussions about pay and some heavier than usual redundancy rounds. Research and Sales management have a difficult time managing the impact on clients in normal circumstances. Limeglass is one tool that will help smaller teams get much more impact from research.

It is unusual for banks to put as many numbers in the press as they have this year: several firms have chosen to go public with headlines that bonuses are down 30-40% (which means a lot more for many senior producers) and a fair few have signalled big headcount cuts.

There are three audiences for these message of course: investors, staff (whose expectations are never that weak) and, for some banks, a vaguer PR audience to show banks are not completely out of tune with the public. Several research teams are noticing their economics linked to investment banking more clearly than for over a decade – all the banks reporting 4Q recovery in their markets businesses are using it for shareholders not employees. They all have cost cutting targets for 2023. This means smaller teams with more coverage per analyst.

The challenge for 2023 is going to be how to maintain impact from smaller teams. Investing clients don’t react well when sell-side teams shrink. And it is tough to differentiate contribution in macro led markets or sell a convincing narrative about individual ideas.

The Limeglass product that I have got to know over the last few months is designed to make research easier to sell: to make it more relevant in more conversations. The Limeglass add-on brings to the surface ideas that get lost in the flow of product, such as diverse research that touches a common theme, like changes in the curve, inflation peaking or the stress of higher debt on balance sheets. For example: a salesperson trying to help a hedge fund PM may find it hard to get enough ideas on the non-financials yet to benefit from a sharper yield curve. ‘Curve Trades’ is one of the many tags in the Limeglass taxonomy. A broker using this filter brings up ideas very quickly.

More impact to more clients from fewer on the sell-side. It also provides help to managers: it brings more interesting tools to measure impact and it creates a richer story about investor interest in individual ideas.

Terence Sinclair