I know the community of quantnet usually focuses on MFE an other quant related topics but I was just curious as to if there were any good of fashion macro to micro equity researchers on the site? I wanted to try and get some insight to how they do their research and to some of the things they pay attention to when looking at companies and country economies. Also what advice would they give someone looking to start a career in that area?
Any Equity Researchers on QuantNet
- Thread starter Neuron
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In brief:
Income statement
Balance Sheet
Cash Flow Statement
Dividend Discount Model
Discounted Cash Flow Model
EBITDA, NOPLAT, EPS
WACC, TCF, APV, FTE - take your pick
Rinse. Repeat.
Run some ratios.
Compare to comps.
Pick up a copy of McKinsey's Valuation: Measuring and Managing the Value of Companies
or
Damodaran on Valuation: Security Analysis for Investment and Corporate Finance
Alternatively, you can brew some tea leaves or buy a magic 8-ball.
Don't get an MBA - you'll be overqualified for most if not all entry level positions.
Take accounting and valuation classes. Consider the CFA.
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amanda.jayne
Modeling/financial ratio analysis is actually a relatively small part of ER. Even making the reports takes up more time. The majority of the time is good old fashion due-diligence which involves a lot of meeting/calling company representatives.
Modeling/financial ratio analysis is actually a relatively small part of ER. Even making the reports takes up more time. The majority of the time is good old fashion due-diligence which involves a lot of meeting/calling company representatives.
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I spent 5+ years doing this for a living.
The OP asked for a starting point. What you describe is what the analyst does, not the first year associate in most cases (associates are junior to analysts in ER).
Anything beyond what I wrote above (data mining, finding that grey line between material and non-public and legally sound information and writing reports that 'sell') is where ER becomes an art over a science. The OP won't find their answers here.
The books I listed are the standard texts used in b-school. Knowing these methods cold will prepare you for an ER interview - the technical parts anyhow.
Thanks for the reply and I liked the fact you recommended books without being asked. I will look into them both.
What do you mean by writing sample? A small equity report?
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Precisely, you'll most likely have a case-study for your interview. If you want to learn more I highly reccomend wallstreetoasis.com.
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What I've seen most often is given an earnings transcript you are asked to write a short recap note.
If you are already reading research reports regularly, it is hardly rocket science. Once you've secured an interview, it is helpful to read the analyst's notes if you can get ahold of them. I've also seen timed excel tests to make sure you can use common functionality in an efficient manner - these tend to involve replicating a hard copy report data/charts, for instance. They also tend to ask you to pitch a stock, talk about the broad market and an industry.
I have never heard of case studies being routinely given.
If you are already reading research reports regularly, it is hardly rocket science. Once you've secured an interview, it is helpful to read the analyst's notes if you can get ahold of them. I've also seen timed excel tests to make sure you can use common functionality in an efficient manner - these tend to involve replicating a hard copy report data/charts, for instance. They also tend to ask you to pitch a stock, talk about the broad market and an industry.
I have never heard of case studies being routinely given.
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