Equity Research Directions

Hello everyone. While I’ve been spending a good amount of my free time outside of classes on L1 studying, I’m hoping to get started on understanding the markets better by starting to look into specific industries/companies and constructing my own opinions. My decision to pursue a career in finance was late relative to my peers, but I was fortunate enough to find a role in equity research this summer at a small shop. I’d like to hit the ground running and meanwhile make sure I’m doing all I can to secure an internship next summer.

My thought process is that I should focus on no more than a dozen stocks in one to two industries that interest me, and follow them closely in the next few months while reading industry-related research/reports from consulting and financial services firms. I must admit I have no idea what “follow them closely” entails, and don’t even know where to begin. So far, I’ve done as much as keeping an eye on the economy and markets sections of the major publishers.

Looking forward to your input. I’ve learned a lot from this community.

You read the past several 10ks and the past few years presentations, transcripts, and press releases. Then you read everything else that comes out about the company that can impact your assessment of the probability of future outcomes at the company. You talk to people in the industry to get their knowledge and expertise, as well as understanding where the industry is and where it is going. What you’ve described so far is not nearly enough. I’d say it’s 10 percent of what you should be doing

You should join whatever investment or finance club your school offers. If none, consider starting one. I know this sort of activity is kind of douchey sometimes, and I never did it. However, the networking and groupthink benefits to train yourself to impersonate a finance muppet are valuable. No matter what you do as a student, your skills will be insubstantial compared to people who have worked in the industry for years. However, you need to appear like you fit into the role.

1 learn to model.

2 very good with excel

3 very good understanding of accounting

4 very good understanding of sec filings - its contents, language, order of contents etc

As you can see, #1*,3,4 is accounting…accounting, GAAP is key…If you can do the above, I am confident you will find a research internship.

*I’d say 80% of #1 is accounting - modeling is about pro forma, reconciling 3 financial statements, understanding 10k, etc. The other 20% is doing some present values or calculating the discount rate.

^ Nailed it. Thanks for sharing that.

Thanks for the responses everyone. Regarding finance/investment clubs, I’m unfortunately a little too late to the game for that–most require multiple rounds of applications/interviews early in the year–though I’ll try to seek out what’s available. But there’s more than enough to work with here!