Let me be the first to say well done sir, exemplary post.
Thanks! Hope it helps some other folks out. I’ll be interested to hear if anyone else: A) Pursues this tactic B) Has any success with it.
C) network with alumni. supersad, you put a crazy amount of effort into this but congrats.
Supersadface- Massive thanks for the email and all your efforts. I got in touch with an industry contact that works in a hedge fund in china and asked if he would be willing to send me some reports, he replied saying that he would have a look for some that were in English but that It was really important that I kept them to myself. He later sent me a whole bunch of “morning reports” or “morning expresso” as one calls them, from CS DB MS JPM GS and a couple others. Only problem is the stock analysis per stock is 1 page at most. Now I don’t want to be ungrateful, especially as he is searching for some work experience for me, but would it be rude of me to ask for a less generalized report? Or perhaps I could just compile a sample stock analysis similar to these morning style reports? What are you’re thoughts on this?
mjbizzle87 Wrote: ------------------------------------------------------- > > He later sent me a whole bunch of “morning > reports” or “morning expresso” as one calls them, > from CS DB MS JPM GS and a couple others. Only > problem is the stock analysis per stock is 1 page > at most. Now I don’t want to be ungrateful, > especially as he is searching for some work > experience for me, but would it be rude of me to > ask for a less generalized report? Or perhaps I > could just compile a sample stock analysis similar > to these morning style reports? Sounds like what he sent you are sell-side reports - a lot of those are going to be reports where the assumption is that you already know the company and where they’ve been. Most sell side reports typically aren’t long - a page or two sounds right. There’s nothing wrong with them, they’re just targeted to people who want to know what’s going on with the stock since last quarter or last yr. I wouldn’t ask for a “less generalized report” - what you really mean is a buy-side paper, which, as I said, is going to be extremely hard to come by. If this guy didn’t hit the nail on the head the first time you asked, unless you’re on EXTREMELY good terms with him, I wouldn’t ask again. As far as compiling stock analysis similar to those morning style reports…good luck. Most of those are extremely model-driven, meaning that behind what gets published, there is a huge spreadsheet factoring in lots of different variables. They’re also almost always composed by someone who has been following the stock for quite some time and already has the “critical mass” of info on the company that you almost certainly lack. Since you don’t have that training/capability, I recommend trying to focus on a more qualitative based report. Here’s the way I imagine the scenarios playing out: AFTER YOU TURN IN YOUR ATTEMPT AT A SELL-SIDE REPORT: Potential Boss: Well, I’m impressed you gave it a shot. I see here that TargetCo. had a big sale of inventory into a joint venture a year ago. Did you properly adjust your model for this sale? You: Uhhh…I think so? Yes. Yes, I did. P.B.: OK, tell me how you did that. You: [blank stare] P.B.: OK, here’s an easier one: did you know that TargetCo. sold a big chunk of inventory into a joint venture a year ago? You: I was working on the spreadsheet… THIS SCENARIO SUCKS. AVOID IT BY DOING A REPORT YOU ARE THEORETICALLY CAPABLE OF DOING. LET’S TRY THIS AGAIN. After you turn in an exhaustively researched, but mainly qualitatively focused research report… Potential Boss: Well, I’m impressed you gave it a shot. I see here that TargetCo. had a big sale of inventory into a joint venture a year ago… You: Yes. I wondered about that - if they could sell that inventory through their normal distribution channels, why didn’t they? It jumped out at me as a red flag. Potential Boss: CONGRATS. I LIKE YOUR WORK, AND YOU WORE SNAZZY SUSPENDERS TO THE INTERVIEW. YOU’RE HIRED. OK, my two versions are a little extreme - your suspenders probably aren’t that snazzy. But my point is this: If you attempt to model a ton of stuff that you have ZERO TRAINING in doing, you stand an excellent chance of -coming to bad conclusions -fluking your way to good conclusions and then not being able to explain them -showing how crappily you present excel data -totally missing major critical issues because you were caught up in modeling data If you attempt to do a qualitative report where you just research the company as best you can, read the financials and try to come to some good general conclusions, you stand a strong chance of: -Being informed about what the hell’s gone on with the company in the past five years, instead of getting excel tunnel vision -Presenting a paper that is readable, even if your conclusions aren’t perfect -Noting accounting transactions that strike you as a little odd or noteworthy - even if you can’t model how they’ll hit earnings down to the penny For these reasons, I suggest you don’t try to do research that requires you to tons of modeling and then basing your report around the conclusions from that. You’re more likely to harm yourself then help.
supersadface Wrote: ------------------------------------------------------- > Q: How many pgs max/min? > A: Minimum 5 pgs probably, not including exhibits > (appendices / articles / tables / spreadsheets/ > pictures of yourself). Single spaced text, one > line between paragraphs and headings for ‘white > space’. Don’t overwhelm the reader with lots of > txt in huge blocks. > > Maximum: 10 pgs is pretty long; should be able to > cover a lot without going past that. Writing > style should be short. Full sentences -> not > required. Portfolio mgrs read 100’s of reports > yrly; dense and punchy writing more likely to get > read completely. > > Q: Where could I find the basic structure for a > reseach note? > A: Sell-side notes: Library or check w/ broker > website you use for personal trades. Download and > read LOTS of these, they are a good starting point > towards understanding how things are > written/presented. > > Buy-side notes: Much harder to find. Try a > friend in the business, ask for a really old > writeup on a trade they’ve completed yrs ago and > don’t mind showing you. Rarely (but sometimes) > you’ll find famous pieces of buy-side analysis > written up online or in magazines targeted to the > profession. > > Q: Would and online research provide enough > detailed information for my research? > A: No. First resource: annual/quarterly filings > of target company. Maybe a few competitors or > comparables. FIRST AND FOREMOST, try to make a > “cliffs notes” version of the annual report. Then > you can go to alternate sources: newspaper > articles, trade journals, academic white papers, > economic data, interviewing employees, sell-side > brokers who cover the stock, etc. If you were a > ‘real’ analyst, you’d probably do interviews with > mgmt, if your research got to that stage. You > don’t have to do that, but a trip or two to the > library - at a minimum –will be required. > > Q: What specifically do you mean by "explained the > mgmt”? > A: Some businesses are so damn good, you could put > a cheese sandwich in charge and get good results - > but for most, mgmt matters. You should know and > possibly include in your writeup: > -Who is on the board/mgmt? > -How much are they paid? Is this a lot or a > little vs. peer companies? > -compensation forms (options? cash? perks?) > -related party transactions? > > Q: What do you mean by “explained the drivers of > profitability/stock price?” > What are big factors that influence earnings or > future earnings, (which will drive the stock > price)? Try to think logically, even if you’re > not sure yet: > Starbucks: coffee prices, retail traffic, > same-store sales > McDonalds: same store sales, beef, dairy, veg > prices > Homebuilder: interest rates, availability of > credit, home supply, consumer > sentiment/unemployment/wage rate, etc. > > Porter’s five forces: definitely keep in mind and > work into your writeup if appropriate. > > So, if you’re not sure where to start: > > -Once a week, run screens on Bloomberg or discount > broker website. > -Trim variables to get 100 or so candidates > -Look at company websites and newspaper articles > to quickly decide whether or not you understand > them. Discard stocks that are too complex – no > shame in that. Narrow down list to one to three > names of companies that seem > interesting/understandable. > -For companies you decide on, download at least 5 > yrs - maybe 10 - worth of annuals. Read at least > the last two cover-to-cover, but print out the > financial pages (big three financial stmts) for > all five or ten yrs. > -Use financial stmts to understand how > ratios/profitability have shifted over time. If > you want to use all the fancy ratios the CFA > taught us (not in your report, but just for kicks > as you read), now’s the time. > -Start writing your “cliffs notes” annual report. > Start with the easy stuff that doesn’t require > judgement: what TargetCo. does, how they do it, > who’s in charge. Then dig into financial stuff > worth mentioning. > -Go back and add RELEVANT FINANCIAL METRICS and > RELEVANT EXHIBITS ONLY. Resist the urge to show > everything you’ve ever learned in your CFA > coursework, or every picture of the > CEO/factory/product you have ever found. > > Do this whole process like 20 times, taking it > seriously every time. On the 21st try, you may > have something not horrible that you can put your > name to and mail somewhere with a “PLEASE, DEAR > GOD, HIRE ME” note. Hey, it worked for me. > > Good luck. Thank you very much!
supersadface Wrote: ------------------------------------------------------- > Thanks! Hope it helps some other folks out. I’ll > be interested to hear if anyone else: > A) Pursues this tactic > B) Has any success with it. Supersadface you have inspired me, thank you!
that scenario happens to me… “i was working on the spreadsheet”
I wouldn’t mind knowing how everything concluded mjbizzle87. Did you manage to produce a research report in teh end and how did it go down with the Hedge Funds?