So who will sit next to Bill Gates at Microsoft’s financial analyst meeting this year?
Rick Sherlund has magically ended up in the coveted seat forever, probably since Goldman Sachs took Microsoft public in 1986.
The top-ranked Microsoft analyst left the firm Friday to work for a hedge fund, as previously announced. Barron’s has some details about Christopher Sailer, who is taking Sherlund’s place.
Sherlund is now a director at Galleon Group, a $6 billion fund started by Sri Lankan immigrant Raj Rajaratnam.
Galleon is heavily into tech stocks and places a big emphasis on research, according to this profile, which sheds some light on why it would appeal to a former Goldman research manager:
Galleon views Wall Street analysts as its competition, and its goal is to arbitrage research and consensus thinking with its positions. So if a brokerage firm analyst feels that the personal computer industry will grow at 10 percent and Galleon’s research indicates it will grow at 15 percent or 3 percent, Galleon will arbitrage the difference in the two perspectives.
Rajaratnam observes that typical sell-side analysts spend one-third of their time chasing initial public offerings, secondary offerings, banking business, and mergers and arbitrage; another one-third of their time making institutional visits; and only one-third of their time doing research. He feels this gives his analysts an edge since they spend 100 percent of their time on research. They are not encouraged to write 30 to 40 pages of pretty reports, but rather one page that lists the issues.