Mark Pacitti worked as a quant at both Citadel and Goldman Sachs, but is now getting away from spreadsheets and stats. Instead, he's looking to hire equity researchers for his new independent research firm Woozle, but he wants them to get out into the field and talk to people.
"Our research is in the field, on the ground and away from excel models or computer screens. We are in the field speaking directly to key stakeholders so we are looking for candidates who are out going, enthusiastic, are able to persevere, have doggedness, are comfortable with cold calling, engaging, able to strike up conversations with strangers, perceptive, and able to think on their feet," he says.
Pacitti has spent the last three years working in global quantitative strategies at hedge fund Citadel and before this worked at Goldman Sachs for nearly three years. As MiFID II looms, an increasing number of research professionals have started their own boutiques to capitalise on the potential demand for more in-depth insights as the 'unbundling' of research from other trading cost is likely to make the buy-side more discerning about what they consume.
He believes that MiFID II will ultimately lead to less research being produced and that some sell-side institutions with weaker offerings will end up exposed. "Sell-side research firms now having to offer a menu of explicit prices for research is likely to make buy-side firms more closely examine the value these reports are adding to their investment process," he says. "I think some of the weaker research houses that don’t offer global breadth or an in-depth specialism will be forced to consolidate, reshape, or leave the industry."
Predictably, Pacitti believes that niche players will benefit. For Woozle, he says the aim is the get away from the pure 'theory' around equity research and the reliance on big data and algorithms, and actually get out into the field and speak to people. It gathers "real-time intelligence" from employees, customers, suppliers and competitors of particular companies. For example, it recently interviewed 1,500 store managers across Europe across 50 consumer companies for one of its products.
"Almost all investment and equity research textbooks and courses focus on theoretical and mathematical formulas to predict returns," he says. "This misses a huge alpha opportunity by not addressing primary research and field work which can often uncover interesting insights into company operations and performance."
Pacitti says that it's looking to hire junior equity researchers who have studied any degree subject, as long as they can demonstrate and interest in "equity research or stock-picking".
Despite the tendency of large banks to focus on top universities and academics, Pacitti believes that more is needed.
"Do not be expectant, do not assume the right background, university or test scores is a guaranteed entry," he says. "Be unique, show the personality traits which appeal to that type of fund. Enthusiasm, perseverance, creativity, things that cannot be taught or learned are the key differentiating factors to any candidate as almost all applications will have strong academic and professional experience."