标题: Equity/Credit security analysis - (from hopeful L III passer [打印本页] 作者: Wasteoftime 时间: 2013-8-16 14:26 标题: Equity/Credit security analysis - (from hopeful L III passer
Gents,
I think I have had it at my current job. As in, I don’t think its what I want to do with my life (manager selection for major asset management firm). I’ve been doing this more or less for almost 5 years now and have found it to be totally unrewarding.
After interviewing hundreds of fundamental equity/credit managers, I am convinced I could do at least a passable job as an equity/credit analyst. Its not rocket science, just deep research and heavy excel modeling (I am an excel master).
Two questions - 1 - what do you think is a good sector to get my feet wet? I was thinking consumer discretionary. Maybe mid and large cap. 2 - is there anywhere I can get my hands on a generic sell side model? Thanks for any advice. Thinking I passed level III on the first try in June. Here’s hoping.作者: AnalystForum 时间: 2013-8-16 14:27
Nothing in financial services is rocket science. It is not even skill. It is mostly luck. (source: Kahneman). So yes, you can do just as well as anyone holding such a position. Probably more than just passable under the right circumstances.
As for a sell-side model, my duty to my employer wont allow me to share any but they vary greatly in terms of inputs. Can you get access to Factset? Many analysts post them online.
There are many Associate positions avaialble but this is the real grunt work. You do all the modeling, draft all the notes, get paid peanuts but you get the experience and if you have a good attitude, can eventually move up to where your name is on a report or leverage the role to get a #2 spot at another firm.
I think SMID consumer is good because in certain verticals you can model in some inteersting stuff. Like retail. Large cap is pretty well covered and industrials are not interesting. Healthcare would be very value add but need specialized knowledge of drugs, patent cliffs, etc.作者: cfa10yrplan 时间: 2013-8-16 14:29
ok flamers, get your torches ready.
Look, for 5 years, you have been picking asset managers and allocating funds here and there. The skill set for deep fundamental research, sector/industry experience, and modeling is a very different skill set. I think you are very much underestimating the dramatic change from what you have been doing.
your best bet is to be accepted as an equity associate somewhere, and put in several years. and then maybe you can move up.
now to answer your questions, people generally don’t give out models randomly, a ton of work is put into building a good model. Why don’t you try asking one of your asset managers you have money with to send you one?
consumer names are easy because everyone is a shopper, and therefore there are a ton of people who cover these sectors. just like how large cap names have 30 research analysts covering it already, there’s little differentiation/fresh-ideas left. just something to consider.作者: cv4cfa 时间: 2013-8-16 14:30
Agree. Sellside associate for a couple years, then move laterally or to buyside. Like you said, it isn’t rocket science, but it is a science that you need to learn and do to build that foundation. It’s also more of an art, and that comes with experience. Doing the work is one thing, but having the experience, gut instinct and feel for what makes securities move, how trading can give insight, what cycles look like, and identifying the true catalysts are all things that research analysts have to use together with the finance skills.
The most important thing for an analyst in my opinion is the mentor figure that you work under. S/he will shape your career, thinking, and breadth immensely. You should be interviewing the senior analyst carefully as well.作者: joehogue 时间: 2013-8-16 14:31
Obviously it’s a different skill set. That’s why I know I have to start near/at the bottom. I’m not an idiot itera, I know alot goes into this and you can’t just walk into a fund and say, “ok, chill, I got the entire consumer universe covered for us, boys.”
I know people don’t give out models randomly. Asked a couple managers here and there - they showed me them in person but wouldn’t send them. I don’t blame them.
And yes, I know consumer names are well covered. You have to start somewhere though, and I don’t have specialized tech/healthcare knowledge. Seems like the most basic sector to start.作者: cfa10yrplan 时间: 2013-8-16 14:32
Industrials is a good sector to start and finish. Manufacturing (potentially a whole field of study around this) is even broader and pervasive than consumer. Modeling is relatively straight forward in terms of revenue and cost drivers.Exposes you to business cycles, international arena, and supply chain (commodities, materials, chemicals), and a variety of end markets.作者: Swanand 时间: 2013-8-16 14:33
No need to get snippy.
You say in your 1st post you are “convinced” you can do it, without ever having done it and with no related experience. That doesn’t come off in a good way.
I gave you suggestions, answered your 2 questions.作者: KungFuPanda 时间: 2013-8-16 14:35
I thought itera’s responses were reasonable and accurate. Far easier to switch from direct investing to manager selection/fund of funds than vice versa. I also think that just because you don’t think what people do is “rocket science” doesn’t make it easy – as you noted, there’s a lot of luck involved, and oftentimes being a good investor has as much to do with the job as being a good psychologist and manager of time. I think people that think it’s fundamentally “easy” have never actually put money to work. There’s nothing more nerve-wracking than being tasked with making decisions involving millions of dollars of capital.
Also, that you’re confident that you can pick up modeling without having seen the workings of a sell-side model is a bit concerning, but let me try to shed some light on this. The key to being a good analyst is really understanding two things: how businesses work, and why a company is overvalued/undervalued. Only then can you come up with a variant view. I’ve worked on assignments where I don’t spend more than an hour building a back-of-the-envelope model, and other situations where I’ve had to develop a fully loaded LBO or M&A model. I feel a greater sense of analytical comfort sometimes building a full model (probably owing to my days on the sell-side and private equity), but adding more variables to an equation doesn’t always lead to better analysis. Sometimes the simplest stories are the most investible.
As for sectors to start, I suggest you begin with companies that you’re naturally interested in and that have business models where you can understand the unit economics. All too often, sell-side is focused on forecasting overall top-line growth instead of the basic building blocks of the business, so looking at the unit economics can often reveal the disconnect between where a stock is trading now and what it should be worth. This will be a lot easier to do if there’s a company where you’re naturally curious to know how they work. Investing isn’t for those with short attention spans and it’s hard to find good investment opportunities if you’re not interested in what the company fundamentally does.
Anyway, I suggest you read the articles referenced in my signature for some good starting points. I did two interview series with Mergers & Inquisitions – one on breaking into sell-side research and another on breaking into hedge funds – so you perhaps you’ll find something interesting there. I’m pretty sure you will.作者: genuinecfa 时间: 2013-8-16 14:36
much thanks numi. how is the weather down there?作者: brazilatz 时间: 2013-8-16 14:37
Pretty chilly, but nothing that some Arc’teryx or Mountain Hardwear gear can’t solve. Perfect day for skiing the Antarctic slopes and taking pictures of penguins.作者: mar350 时间: 2013-8-16 14:39
ah i thought flamers were for me. got it. yeah, you guys generally said the same thing.
going to be a long road, especially starting from scratch. Figure by the time the CFA results come out (hopefully) I’ll have some subsector ideas and CFA next to my name - then start looking. Who knows.作者: Houjichasan 时间: 2013-8-16 14:40
Numi agreed with you, but he also gave better and more actionable advice about what to work on if the OP really wants to go this route. That’s the reason you feel persecuted. You seem to enjoy delivering the bitter pill. Numi tries to soothe it, provide context, and make it go down easier, which is much more appreciated.
But don’t worry, there are people who are much worse on that score. I don’t sense that there’s a true posse that’s out to get you.作者: joehogue 时间: 2013-8-16 14:41
Pistolpt…just curious where you’re at making 100k doing manager selection? Consulting or FoF? Feel free to email jdaudi898@gmail.com.作者: OmarAdnan 时间: 2013-8-16 14:43
Just found out about the wallstreetprep financial modeling courses. Pricey but sounds perfect.作者: cityboy 时间: 2013-8-16 14:44
have you seen breaking into wall street? i’d recommend it especially if you’re looking for better pricing without sacrificing quality.作者: king_kong 时间: 2013-8-16 14:45
Have seen both. As well as comparisons between both (which are here on AF too). Not sure which way to go for now…作者: cfalevel2011 时间: 2013-8-16 14:46
Prof Damodaran’s website has ton of models for equity analysis. http://pages.stern.nyu.edu/~adamodar/ My also work involves interviewing managers and doing asset allocation with real money for high networth and institutions. If making a switch, I will not compromise on pay. I would just go for as many interviews as I get my hands on and let the PM’s decide. As someone suggested, if you have put your own money online and have built some models around, that will be a great start. Buying low and selling high, is how I have seen most money being made.
I feel that investment management industry, in terms of people/AUM ratio, in general is shrinking and generally not the best spot to be when your talent is not as much in demand.作者: anish 时间: 2013-8-16 14:48
obviously - I’m saying the basics aren’t as hard as everyone makes them out to be. You start at the basics of modeling out a company and doing as much research as you can. What I’m saying is I know I have the skills to do that.
The “art” piece, hopefully, comes with time, alot of time. If after a while it doesn’t and I am just horrific, then I could always go back to my current profession with alot more insight.
My point is, I want to at least give it a shot while I am still ‘relatively’ young. (early 30’s).
I’m not saying “I’ve listened to hedge fund managers, I bet I could do this, It can’t be that hard…”作者: hw0799 时间: 2013-8-16 14:49
For the incremental dollar going into equity, I hypothise that overtime, share of index based quant strategies will increase thus decreasing pool of available money for active investments. Decreased pool of money lead to decreased need of demand for those skills, making it harder for someone to stay in and outperform. Why chase a dying art?作者: infinitybenzo 时间: 2013-8-16 14:50
Finally got my hands on a legit sell-side model from a major bank for one of the companies I am researching.
May take a while to deconstruct it (the 6 tabs and 30 hidden ones)…..
