Confessions of a Wall Street Analyst Read Online Free PDF

staffed up with analysts, traders, and bankers to cover it. And while telecommunications wasn’t new, the number of publicly traded telecom stocks was about to triple. In 1984, what was just one company—AT&T, or “Ma Bell”—became eight when the Bell system was broken up in an antitrust settlement with the U.S. Department of Justice. It was a decision that would usher in a new world of competition, major technological advancements, and billions and billions of dollars in new investment.
    There were now eleven major telecom companies—AT&T, the seven Baby Bells, GTE, Sprint, and MCI. Former AT&T shareholders were given shares in each of the Baby Bells and, of course, in the new AT&T, which now provided long distance service and manufactured telecom equipment. These companies, now publicly traded, were suddenly vulnerable to the vicissitudes of the stock market, and Wall Street desperately needed people who could help investors figure it all out. So in the early 1980s the Street went on a hiring binge, recruiting practically everyone it could find with experience in both financial analysis and the telecom sector.
    These analysts were a small but elite group of people who researched companies’ publicly traded stocks and made recommendations to investors on whether or not to buy them. They studied companies in their area of expertise by doing everything from analyzing the financial trends in an industryto interviewing the top executives to gauging the impact of upcoming regulatory changes.
    There were two kinds of analysts, each with different responsibilities. The first group, some 500 strong in total by the late 1980s, worked for investment banks like Morgan Stanley or Goldman Sachs. They published their research in reports that were then “sold” to outside investors from large pension funds, mutual funds, and other large institutions, which is why they were known as “sell-side” analysts. In practice, these reports were not really sold; they were given to the institutional investors in exchange for the fund managers buying or selling stocks through the firms with the most helpful research. At some banks, brokers in the “retail” arm of the business would also provide this research to individual investors. The sell-sider had to walk an odd sort of tightrope, providing research that was supposed to be completely independent of any banking business his employer might do with the companies the analysts covered.
    The second group of analysts, a much larger but not as well-compensated group, worked directly for the large institutional investors that bought the sell-siders’ research. Their job was to recommend which stocks their employers should own in their portfolios. They were known as “buy-side” analysts because their firm would “buy” the “sell-siders’” research. Although these analysts made their own investment decisions, buy-siders certainly read sell-side research, and sell-siders catered to them as their clients. Buy-siders didn’t publish their own research, however, and had no responsibility to investors outside their own firms. The only master they served was the large pension-, mutual-, or hedge-fund manager that employed them.
    My new investor-relations job at MCI, if I took it, would be to pitch MCI to both of these newly minted groups of research analysts. That meant explaining MCI’s strategy, providing financial information, interpreting regulatory decisions, and doing whatever was necessary to help these influential people make their investment decisions. Hopefully, of course, their opinions would be favorable toward MCI and their firms would buy MCI’s stock, which would make my bosses happy and anyone who owned MCI shares richer.
    My first reaction was that it was basically a public relations job, and PR was definitely not my forte. But MCI’s CFO, Bill Conway, whom I liked a lot, kept after me, and I finally decided that it would be good for me to try it. After all, the job