Equity Research Interview

I got an interview with a regional investment bank in equity research. I applied to the job online but subsequently found out my buddies dad runs the equity research at this firm. Don’t know if that if how I got the interview but it certainly didnt hurt. So anyway, I am out of school two years working in wealth management since graduation and passed Level I in June. This is my first E Research interview so I am not sure what to expect. The first interview is a phone interview with an HR generalist which I assume is probably a screen to be sure I am not an idiot before they fly me in for a real interview. Do you think this is a safe assumption? Also what type of questions should I be prepared for and what types of things should I review from my CFA materials? Thanks

know 1. why you want to do sell side rsch (as opposed to buy side) 2. 2-3 stock pitches 3. industry and sector preferences 4. 5-6 GOOD questions: never ask something that is plastered on thier website 5. have a basic model ready (unlikely, but they “may” ask you to send a sample after the screen) also, if you get dinged, forward me the DOR’s email so I can pitch him. got it? good.

Very helpful thanks daj. Am I likely to get any financial statement questions? If so what types of questions are common?

MT327 Wrote: ------------------------------------------------------- > Very helpful thanks daj. Am I likely to get any > financial statement questions? If so what types > of questions are common? know of course not. things are put in a context of an investment pitch or idea or theme… for ex: if you pitch GE (please dont), they may ask what is driving sales, what is the best way to think about stock in terms of valuation, what price you buy/sell/add, etc. i follow a “big quatro” rule 1. what does company do (3 sentences, no more, keep it simple) 2. why buy the stock (3-4 investment “theses”)…RECALL THAT A CATALYST IS NOT A POSTIVE…worst pitches are “they have a good management team” - that is a positive. but it is not a catalyst that will get the St to re-like the stock…good mgmt team is often baked into shares as is. Catalyst = new product with better margins coming out 1H09, sell side has the potential market size and margin profile wrong, etc – upside to estimates will pound consensus… 3. what is it worth (the most important question in the business, in my opinion). dont say you have a 30 target unless you know how you got there. sounds obvious, but i have heard dudes say, ummm, 30 target b/c merrill lynch said so. 4. what are key risks (3 should suffice) of course, this only scratches the surface, but if you can nail these 4 COGENTLY, you should be allright… so be ready. keep asking questions here on this forum if you want, i am curious to see what others say, and I will be here all day doing level 2 studying with my broken arms and red bull. .

Already starting Level 2 studying huh? Making me feel like a lazy slouch. Great advice again thanks a lot. I am going to spend tomorrow putting together some pitches on investment ideas. Would you mind if I run them by you via email tomorrow to get your input? What is a good way to approach the sell vs buy side question. Truth is I want to use this as a stepping stone to eventually land a buyside gig but I figure that is not a good answer in an interview. Perhaps I could spin it by saying that I think sell side will better match my skill set as it is a good marriage of my finance background and the writing skills I developed as a English minor in school. This seems to be a pretty weak answer as well though.

MT, Although I’m only 23 and landed a gig at a hedge fund straight out of college, I can tell you that starting out on the sell-side is actually a positive. The sell-side allows you to focus on a select set of companies. You will become an expert at truly understanding how a business grows and generates cash flow. One of the problems with joining the buyside without any sellside experience is that you’re often thrown into a universe of hundreds of stocks that must be analyzed quickly. Without any prior sellside experience, you’ll likely succumb to faulty valuation methods, such as screening stocks via useless metrics like P/E. By having sell-side experience, though, you will be able to efficiently analyze companies by focusing on what truly is important. The truth, then, is that you actually want to be on the sell-side prior to joining the buy-side since it allows you to be a much better analyst in the long run.

MT327 Wrote: ------------------------------------------------------- > Already starting Level 2 studying huh? Making me > feel like a lazy slouch. > > Great advice again thanks a lot. I am going to > spend tomorrow putting together some pitches on > investment ideas. Would you mind if I run them by > you via email tomorrow to get your input? you can run them here, you will get more feeedback than just my trivial opinions : ) - > > What is a good way to approach the sell vs buy > side question. Truth is I want to use this as a > stepping stone to eventually land a buyside gig > but I figure that is not a good answer in an > interview. Perhaps I could spin it by saying that > I think sell side will better match my skill set > as it is a good marriage of my finance background > and the writing skills I developed as a English > minor in school. This seems to be a pretty weak > answer as well though. hah, i am looking for sell side as we speak and my response is not too far off from yours. def do not mention the buy side, b/c most people on the sell side right now want to make that lateral hire leap to BS, so you want to sound different i think you got the right idea: SSide wil help me leverage your wtg background and love for finance. etc…just dont mention that you want to get out after a yr or 2, b/c right turnover on the SS is ridiculous and they probably want to make a stable hire. after your interview, i’d like to hear how it went and what they asked cheers

Most likely to come up during an interview: a: pitching a stock b: writing a first call note on an earnings release I encountered these a lot when interviewing and we do the same when we interview candidates. Best of luck.

Thanks for the input guys. Hobes when you say writing a first call note, I assume that that means sending me home and writing one to send back to them? If I had time to go back and review my notes on two of sections of Level I, where should I spend my time? Or should I focus more on putting together stock picks? I was talking to a friend who had an interview recently and he was trying to think of questions that tripped him up. One was how would you forecast a companies earnings if you dont have past financial statements or company guidance?

Also does anyone know where I can get a good overview of the Equity Research Industry and how it works? I have a pretty good understanding on the role it plays in the market and how they are compensated but I think it would be helpful to review more in depth.

MT327 Wrote: ------------------------------------------------------- > Thanks for the input guys. > > Hobes when you say writing a first call note, I > assume that that means sending me home and writing > one to send back to them? > ON THE SPOT > If I had time to go back and review my notes on > two of sections of Level I, where should I spend > my time? Or should I focus more on putting > together stock picks? STOCK PICKS > > I was talking to a friend who had an interview > recently and he was trying to think of questions > that tripped him up. One was how would you > forecast a companies earnings if you dont have > past financial statements or company guidance? COMPS

MT327 Wrote: ------------------------------------------------------- > Also does anyone know where I can get a good > overview of the Equity Research Industry and how > it works? I have a pretty good understanding on > the role it plays in the market and how they are > compensated but I think it would be helpful to > review more in depth. vault.com or call an alum that works in biz

> > > > I was talking to a friend who had an interview > > recently and he was trying to think of > questions > > that tripped him up. One was how would you > > forecast a companies earnings if you dont have > > past financial statements or company guidance? > > > COMPS So you find comps then if you want to forecast earnings growth link them to macroeconomic trends such as industry growth or GDP?

MT327 Wrote: ------------------------------------------------------- > > > > > > > COMPS > > > So you find comps then if you want to forecast > earnings growth link them to macroeconomic trends > such as industry growth or GDP? could work. if i had to model proctor and gamle EPS and sales growth, i would asume little op leverage and growth close to GDP another reason i said comps, and this is totally retarded, but lets say i have the stock price of 1-2 competitots, as well as THEIR latest eps i can back into the PE for those rivals. then i can take stock price of my company, assume similar PE, then back into EPS for this particular co. assume a certain grwoth rate, and you have your EPS forecast. very dicey, but the question is weird. i think the macro sentiment might be what they want. if they ask you to forecast EPS for a 2yeare biotech, you screwed

MT, Do you think you’re ready to become an equity analyst (serious question)?

EMHdenied Wrote: ------------------------------------------------------- > MT, > > Do you think you’re ready to become an equity > analyst (serious question)? I realize that my experience is lacking but this is an entry-level jr associate position at a regional bank (not northeast). I also realize a lot of my questions have been relatively elementary but I am not asking them because I have no clue as to what the answers are; it’s more to confirm the answers that I am constructing in my head. This is my first job interview since graduation and I am a few months removed from my CFA studies so I need to polish a few things. There is no doubt in my mind that given the opportunity I will excel.

MT327 Wrote: ------------------------------------------------------- > EMHdenied Wrote: > -------------------------------------------------- > ----- > > MT, > > > > Do you think you’re ready to become an equity > > analyst (serious question)? > > > I realize that my experience is lacking but this > is an entry-level jr associate position at a > regional bank (not northeast). I also realize a > lot of my questions have been relatively > elementary but I am not asking them because I have > no clue as to what the answers are; it’s more to > confirm the answers that I am constructing in my > head. This is my first job interview since > graduation and I am a few months removed from my > CFA studies so I need to polish a few things. > > There is no doubt in my mind that given the > opportunity I will excel. Ah, I thought you were going for an Analyst position for some reason. I have a friend who graduated from a liberal arts school, without knowing what a balance sheet was, land a similar position out of school. With a ton of hard work and determination, he’s now making the big bucks. Best of luck to you.

Thanks again for the help guys. I got invited to round two which will be another phone interview on Monday. First round was all behavioral questions as expected. Just want to see if anyone else out there, that may have missed this thread, has some more input on what to prepare for on Monday. Thanks in advance.

Had the interview today. Got invited in for final round. Flying me in tomorrow. Thanks again everyone!!

nice!!! did you use anything the gang posted here? It is ok if you did or did not. glad it worked out.