The multiple investor

Using me as a unpaid intern was partly related to this tension. My official task was to conduct financial analysis of small listed companies that were not covered by Brokers SA analysts. These companies were chosen by Brokers Inc.’s salespeople based on their curiosity or the explicit requests of some of their clients. Due to regulations, my analysis could not be presented to clients directly and was given only to the salespeople themselves. When my analyses began to look professional enough, André asked that they be sent to some salespeople based in Paris. Then, referring to the fact that I was an anthropologist and visibly omitting the fact that I had graduated from one of these French elitist institutions, something André had taken into account when assessing my resume, he declared, in the big open room and in the presence of all the other employees, that he was going to “show these assholes in Paris that with an intern that I don’t even pay, I can do better than them with their analysts who graduated from the grandes écoles.”

At Brokers Inc., income depended officially on the personalized relation of each salesperson with the fund managers assigned to him. Financial analysts did not establish or maintain this relation and were thus considered more easily replaceable than a salesperson. Their role in the production of valuation sold by the company was therefore considered less important. This tension was particularly strong for the three analysts who worked at Brokers Inc.: a thirty-year-old senior analyst, a twenty-sixyear old junior analyst, and a twenty-one-year-old intern. They worked on a team with a trader and two salespeople who sold information about companies listed in the United States to fund managers based in Europe. At the time of my observations, the only income produced by this team of six people came from fees paid by fund managers who were clients of Hervé, the head of the team and the senior salesperson, who was around forty years old. To a large extent, these fund managers were people with whom he had established long-term relations in his previous position as a salesperson at a large French bank and who had followed him when he had joined Brokers Inc. four years before my observations. The second salesperson, Julien, twenty-eight years old, was starting in the profession and had just begun to solicit clients who did not pay him any fee yet.

The other thought leadership employees of Brokers Inc. acknowledged this situation more or less explicitly, although in interviews, the team’s analysts did not describe it in the same terms. They decried their weakness by flipping the arguments put forward by salespeople like André and Juliette. These salespeople tried to distance themselves from Broker SA’s analysts, who were recognized as much more necessary than those of Brokers Inc., by insisting that standardized financial analysis was inadequate to meet the requirements of individual customers. According to the analysts at Brokers Inc., fundamental valuation and in-depth knowledge of companies were indeed sidelined in these exchanges. But this was because fund managers worked with a horizon that was too short-term and did not take the time to consider all the calculations and hypotheses about the future that were necessary to evaluate a company. Repeating the idea that financial analysts were those who best knew the companies they evaluated, these employees attempted to claim a fundamental position in the process of valuation that was denied by their colleagues—something that was visible not only in everyday comments but also in the distribution of salaries and bonuses. Nicolas, the senior analyst on the team, had passed the level 1 exam of the chartered financial analyst (CFA) program, and at the time of my observations, he was preparing to take the level 2 exam. The CFA has three levels: the first is the most accessible, and analysts who reach levels 2 and 3 are less common. Often employees try to obtain this certification to strengthen their resume, and this was Nicolas’s goal, one that he and his colleagues considered typical. In an interview with me, he explained that he intended to enhance his resume in order to find a job in another brokerage or in an investment management company where he would be “taken seriously.”

Employees articulated the tensions among them concerning the importance of their various professions in the search for the true value of companies by asserting their individual capacity to develop a personal opinion that referred to the cognitive, moral, and political meanings of the figure of the investor. These tensions also concerned the methods that were most associated with each profession. The way salespeople and analysts at Brokers Inc. viewed the discounted cash flow (DCF) method of valuation provides a good example of this.

However, its application implies personal interpretations about the future that can vary widely from one person to another and that can thus result in theoretical prices that can be very different from each other and from the listed price at any given moment. Because this method implies studying the listed company’s accounts and conducting several calculations to test different hypothesis about the future, it is associated with the kind of work produced by financial analysts. The reasoning organized in the DCF method was usually an important part of the analysts’ reports. Yet, salespeople at Brokers Inc. generally said that the DCF was not a useful tool for selling financial analysis because it could not be synthesized in a few lines. Indeed, in order to justify the theoretical price, it would be necessary to explain all the hypotheses about the future made to carry out the calculations. Frédéric criticized what he considered the overextended character of the DCF explanation: “I will never say to a client, ‘I think that it is necessary to buy because the analyst tells me that his DCF shows that the theoretical price of the company is this much.’ ” But, more fundamentally, these salespeople emphasized that modifying hypotheses about the future would lead to big changes in the results of a DCF analysis, so that it was too “easy” to obtain any kind of result. In the words of Frédéric, this meant that the theoretical price could not have “a truly scientific character.”

The conflict described previously among fund managers, salespeople, and analysts concerned mainly fundamental and relative valuations, oriented at discovering the true value of the company. In contrast, Brokers Inc. traders were in part outside this problematization. Their expertise on the value of listed companies concerned mainly short-term price movements, variations that occurred usually within the same day. This expertise was supposed to allow them to find the best price for purchase or sale but also to respond to other kinds of requests made by clients, which, as traders remarked, could be very different. According to the contracts signed with their clients, some fund managers had to report that transactions were done at a price that supposedly reflected price changes during the whole day. Thus, fund managers could request, for example, that traders fragment a single transaction into equally weighted transactions carried out at different moments in the day. For instance, for an order to sell 1 million worth of shares of Dupré, the trader would sell ten tranches worth 100,000 each at regular intervals during the day. Other fund managers could request that the transaction take place at a specific time of the day or that it be capped—i.e., that the shares not be bought (or sold) at a price higher (or lower) than some limit indicated in advance. This request presupposed that the trader could predict future price changes during the day in order to do the transaction at the best price but within the limits demanded by the client.