Has anyone had an interview for a RA job lately? If so, what Modeling questions/tests did you get? Thanks Bros and Bro-ettes.
Been through a handful of interviews over the last year and a half, and only 1 had ask me to do some modelling on the spot. However, most did ask me to either show them a writing sample, or write them something based on earnings release. Do you have an interview coming up?
Yeah, I just want to make sure I am not blindsided by a modeling concept that I am not familiar with. Thanks for the input. What kind of modeling did they ask you to do?
Yeah, I just want to make sure I am not blindsided by a modeling concept that I am not familiar with. Thanks for the input. What kind of modeling did they ask you to do?
Had an interview a bit ago for a firm that did ESOP valuations for privately held companies in the region (chicago). Anyways, I was asked to do some pro forma financial statements and create a DCF model and determine the equity stake in the fictitious company on a per share basis. Not overly difficult, but can be a bit unnerving when you are being timed/watched.
I think the “modeling” thing has been pushed a little too far on this site. 1. Most shops HAVE models in place and the analyst creates them, not the RA. 2. If you are good as a research associate: meaning you can maintain and update an existing model, then you MIGHT get a shot at creating a model for a firm that your shop is initiating coverage on. 3. Modeling skills do not [and never will] replace fundamental industry or investment knowledge. Do you honestly think Munger, Buffet, Dreman, Marsico or Lynch ever sat in their cubicles going “Gosh, I wonder how a macro could speed things up for me”. I mean obviously you cannot be an Excel or Bloomberg rookie but let’s keep this whole thing about modeling in context: a model shouldn’t take more than a couple of hours to create. Willy
WillyR Wrote: ------------------------------------------------------- > 1. Most shops HAVE models in place and the analyst > creates them, not the RA. senior analyst doesnt touch the models at any large shop. its all done by the associates. in sell-side the models are already there… but they’ve been built by past associates. if there is a new initiation, the associates build the models. > 2. If you are good as a research associate: > meaning you can maintain and update an existing > model, then you MIGHT get a shot at creating a > model for a firm that your shop is initiating > coverage on. see above. > 3. Modeling skills do not replace fundamental > industry or investment knowledge. Do you honestly > think Munger, Buffet, Dreman, Marsico or Lynch > ever sat in their cubicles going “Gosh, I wonder > how a macro could speed things up for me”. as an associate modeling is the fundamental skill you are supposed to have. it’s precisely because you are not expected to have the investment acumen of a buffet(t) that knowing modeling is so important. it’s the way a junior person (associate) adds value. > I mean obviously you cannot be an Excel or > Bloomberg rookie but let’s keep this whole thing > about modeling in context: a model shouldn’t take > more than a couple of hours to create. > > Willy a couple of hours? in some cases yes… if you’re building mickey mouse models. though i do agree that modeling is overrated on these boards. but its because recruiters and interviewers put such an undue emphasis on it during the job search process that lack of modeling seems so often to be the gating factor for people seeking to transition into ER.
you should be able to build a simple operating model for companies in the sector whose team you’re interviewing for. unless you are being hired out of undergrad, you should be prepared to answer basic modeling questions or be able to build a simple operating model from scratch using 10-K’s in an hour or two. many teams have tests set up for this stuff that you’d take in your second or third round of interviews. i also agree with stylemog in that most models are built and maintained by research associates at large shops. no idea what it is like at small shops, but i don’t see how you should be offered a job in research if you can’t put together a basic model. it’s true that equity research does put a lot of value on industry knowledge, but for someone who’s so knowledgeable about the industry they’ve been in for a while, they should have enough foresight to understand what the equity research business is like. and if you walk into an interview without knowing basic aspects of the team’s coverage or how to build a model, then you don’t understand the RA role and in my view you are automatically out of the running.
by the way, CoffeeCup, my comments were intended to be general (as opposed to being directed specifically to you, but feel free to take whatever you think is useful)
Stylemog I know of shops where the Senior Analyst absolutely does touch the model because the junior one gets assigned to hole punching 101. I’m not sure we are on the same page. I was making predominantely ER Associate comments and I stand by them. If you cannot build a basic earnings projection model from the company’s 10-K/Qs inside of about three four hours then what are you doing in the office? LBOs…different story. I mean modeling is a pretty broad term. Some people would consider a DCF analysis as a model. I do not. But IB Analysts associates may be not. Willy
actually, a basic LBO analysis can be put together in 2-3 hours as well if you know what you are doing. if you’re given a basic set of assumptions, an SEC filling, and a few key parameters as to how the transaction is financed and the different financial instruments involved in executing the deal, you should definitely be able to do this, especially if you’re interviewing for a private equity position. in most cases, we’re talking about a 250-row spreadsheet or a couple tabs for sources/uses of cash, pro forma financial statements, debt paydown schedule and interest rate calculations, this should not take more than 2-3 hours.
See I guess it depends on which course/program you’ve studied. I’ve seen LBO models that make the head spin, M&A deals that are fairly straightforward 1-pagers and ER stuff that’s just a couple of sheets deep. I guess its all relative and depends on the application: Mobil Exxon taking out Chevron would be a great more labour intensive relative to Frank Arabia Live at Home Inc., divesting itself from Frank Arabia I want to be an I-Banker Ltd., Willy
i’m saying that you won’t get anything in a PE interview that should take you longer than a few hours to do as the very concept of an LBO model is actually quite straightforward. of course you can fill it up with as many details as you want, but the whole point of a test is to understand whether you get the big picture and you can see how the different parts of the model relate to each other. it doesn’t depend on what course or program you’ve studied, most of the time a PE firm will give you a model and some filings, sit you down in a room, and expect you to crank one out in short order. it doesn’t matter how you format it as long as you get the answer right and your assumptions are explainable.
Agree with Stylemog. Associates build the models, and the ones that are already there were built by previous associates. In fact, we pretty much do most of the note writing as well.
when is the interview coffeecup? good luck!
The RA interviews I’ve had have always had me provide writing samples and usually build some models (usually I could take them home). Bernstein wound up being the most rigorous of all the processes. They wanted writing samples, you had to listen to an earnings call and answer some questions about it, they asked a bunch of case study type questions (how many burgers does mcdonalds sell for instance), as well as some standard FSA questions. This was over the course of maybe 5 visits, where I met with HR first, then the Associate, then Sr. Analyst covering 3 sectors, then Dir. of Research and Chief Talent Officer. A real pain in the ass for a firm that doesn’t pay market rates and has a lousy culture IMHO. But back to the point: I’ve never worked in ER, but I do know how to get hired (lol…I keep thinking I might want to do it but haven’t found the right fit, despite being offered a few positions). The one thing I like about ER is that they do seem to put a lot of emphasis on intelligence and knowing the industry can really differentiate you. One of the jobs I wound up losing out on was due to the fact that they hired someone from the sector. If you can speak intelligently about the companies that you’ll be covering this will help immensely. Read the analysts prior research reports and see what they think about the companies and how they think about them. What is important for each company going forward? What kinds of assumptions is the analyst making? What’s the general industry outlook? Find some points of commanality so you can tell the analyst how smart they are, but also get some questions about how why they have come to certain conclusions. Try to understand their reasoning and be able to discuss your reasoning process. Essentially if I were to mention one point it is this: If you can convey that you are a rigorous thinker and can prove that you want to learn that industry you should have a good shot. Also, most important - Listen to Numi and the others above.
they want all of this for someone at the junior level?
Yes.
Frank, in my experience - Yes, the good firms will grill you hard in the beginning. Keep in mind this is for Equity Research, 70 hour a week, NYC, 100K+ comp. They don’t want someone getting a job there who will turn out to be a dud in 3 months. However, I also got an offer once after 1 phone interview, 2 visits to the office (each about 45 min), and writing one sample research report (only 3 pages). That’s the least I’ve had to do. My most brutal interview was actually in the first consulting firm I worked for. They had me in for 6 hours straight of group case interviews where all the MD’s watched our decision making process and how well we (about 8 potential candidates) interacted in the process. Then we had to present our findings to the MD’s as if they were our clients. That was tough, but I wound up getting the job - they also took someone from Dartmouth, Cornell, RPI, and Swarthmore. Princeton and Harvard didn’t make the cut! LOL
dirty Z, how did you go about preparing yourself for this? From what it sounds like, you basically have to be CFA knowledgeable and have investment experience before they hire you. i got miles to go…i’m looking for a position that allows me to learn the intricacies of modelling and company evaluation. I thought that was called “junior analyst”.