The role of equity research analyst has changed dramatically over the past few decades, as Joseph Bellace can attest. “If you go back to when I started in the business, bank trust departments managed the majority of money and generated the majority of the commissions,” he says. “Today the majority of commissions are generated by high frequency traders, and they don’t even look at fundamentals. There has been a tremendous transition in who is managing the money.”
Bellace knows a thing or two about transitions. After graduating from Bucknell University with bachelor’s degrees in economics and mechanical engineering, he accepted a position in RCA Corp.’s defense communications division, then in data communications marketing at AT&T Corp. Several years later he decided that he would rather pursue a career that allowed him to use his background in economics in a more creative and challenging environment.
He enrolled in the Wharton School of the University of Pennsylvania to earn an MBA, then set out for Wall Street to cover the telecommunications industry from a different vantage point — that of the sell-side analyst. Bellace worked at several smaller firms before joining Merrill Lynch, Pierce, Fenner & Smith in 1983. Two years later he debuted on the All-America Research Team as the second-place analyst in Telecommunications Equipment; from 1985 through 1998, the year before he left the firm (whose name by then had changed to Merrill Lynch), he appeared in the rankings 19 times, including 11 first-place finishes.
Telecommunications, like equity research, was undergoing its own transformation in those years, and the changes were reflected in the survey structure. “When I started there was one sector and one analyst — me,” he recalls. “When I finished there were three: Telecommunications Equipment, Wireless Equipment and Data Networking.” (Bellace ranked in all three, plus Wireline Equipment — where he was No. 1 in 1996 and 1997; that sector was subsequently merged with Data Networking.) By that time he was covering 27 companies and overseeing a staff of five — with whom he readily shares the credit for his success: “One person alone never could have accomplished this. It was, as my wife puts it, a terrific team,” he says.
After he left Merrill, Bellace worked as an independent consultant covering the telecommunications equipment sector for Jefferies & Co. and now serves as an adviser to the equity research department of Oakland, California–based investment bank Internet Securities. He continues to meet with some of his former Merrill colleagues several times a year to catch up and discuss the stock market.
