James V. Covello T'00
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"A diverse general
management background is
extremely important
in investment research."
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Top Spot in a Tough Industry
When Jim Covello joined Goldman Sachs in 2000 as a research analyst fresh out
of Tuck, a revolution was turning the investment banking world upside down.
Headlines shouted news of "tainted" research reports and conflicts of interest
at Wall Street firms. Several of these firms ultimately made an historic, $1.4
billion settlement with government regulators.
Ironically, the worst of times for the analyst profession have been the best of
times for Covello, who became Goldman Sachs's lead analyst for semiconductor
capital equipment companies a little more than three years ago. And his
stock is clearly rising. A survey conducted by Institutional Investor delivered
an Oscar-like award: top sector analyst on the magazine's 2004 All-America
Research Team.
His insightful analysis of the sector's transformation from a growth industry
to a cyclical one initially met resistance from veteran analysts, the companies,
and even some clients. But so far his calls have been correct. "Clients don't
like it when you're negative, but everyone appreciates analysis that helps them
make investment decisions," says Covello. "Even those investors who initially
complain about negative calls eventually give analysts credit if they are right
on the stocks."
Covello says Tuck's emphasis on teamwork has served him well at Goldman.
His first job at Goldman was working for Joe Moore T'94, and more recently
he has applied models developed by Goldman's highly respected former chemicals-
industry analyst Avi Nash to his own sector. Covello also credits Tuck for
a solid education in business fundamentals. "A diverse general management
background is extremely important in investment research," he says. A former
government major at Georgetown, Covello praised Paul Argenti's communications
class at Tuck. "Much of my job involves writing for a diverse set of constituents
—from investors in the weeds to portfolio managers who only want
the big picture—and dealing with the media." In fact, when the harsh glare of
the media spotlight turned on Covello over the last several years, he says he was
pleased on one occasion to receive a reassuring email from Argenti supporting
his handling of the media.
Overall Covello says he loves his job because it offers so many options and
every day is different. "I can spend a day talking to companies or looking at
historical data or product cycles." But for all the changes on Wall Street, the
workload and pressures remain considerable. "The one thing I dislike is spending
time away from my family," says Covello, who is often away from home for
two weeks out of a month. "If I ever stop, it would be because of that."
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