Bonus time has just come round again on the trading floors of the Square
Mile....and I'm still recovering. You've no idea how disruptive the whole
process is for a typical investment analyst working in a fund management
company, such as myself.
During the first few weeks of each calendar year all my usual brokers are
completely distracted. All most of them care about is how much the cheque is
going to be. The ones who don't shine in any way worry that they might even
get the chop - nothing like a few sackings to swell the size of the
available bonus pool.
Now of course the money is safely in the bank and the usual jobs
merry-go-round has started. I expect quite a few changes this year as banks
like Bank of America (who you may recall took in quite a few pan-Europeans
teams from DLJ) continue to expand.
The person to feel sorry for is my loyal Sammy Salesman at Eurobank who,
having had a couple of highly ranked analytical teams in his back pocket for
a while, is now almost certain to be without either or both for several
months while they are on gardening leave and his head of research is
desperately trying to recruit some others.
Salesmen who can genuinely add value in the absence of research are few, and
I am afraid that Sammy isn't one of them. Still, he's a good little trooper
when I want something done and while I am sure that his bonus is never going
to be huge, at least he's unlikely to keep moving around every five minutes.
These analysts who move jobs don't just upset my telephone book and leave me
without coverage during critical times, they also get bid up for all the
wrong reasons, as far as I am concerned.
The huge guarantees held out to entice them away from their desk to one in
another bank are usually offered because they are expected to generate
profits from the corporate finance deals they bring in.
From my perspective, the fewer the corporate finance deals they work on, the
better. They'll have more time for me and will be unbiased in their
Some of the analysts who call me regularly are no doubt relying on using
their recent survey rankings to justify the size of their 2001 bonus. I see that CSFB
swept the board in the Institutional Investor survey whatever analysts
there are earning, they have probably added 100k to their expectations.
Of course at my firm we don't vote in all these surveys - can you imagine?
We'd spend the whole year filling in forms.
There are now no less than four surveys that matter (Greenwich, Reuters,
Extel & II) and if I had to vote in all of them I would never get the chance
to look at a stock let alone work out whether we should hold it.
What really irritates me is sellside analysts who ring up and actively
solicit my vote, when we have made it perfectly clear in every broker review
we do that we don't vote. What on earth happens to these broker reviews?
Don't they ever circulate or read them?
Perhaps I'm being unkind. After all, I'm just a humble buyside analyst - merely the client. Why should I want to stand between them and their latest Aston Martin or racehorse? In the meantime, roll on the second quarter and some mid-year stability. Like Christmas, bonuses only come once a year. Thank goodness.