I have an interview with an equity research shop in NYC next week, research analyst position. Forgot how stressful preparing for an interview was!
They are value investors. Any specific questions you think would be poignant to ask value investors?
Thanks.
Maybe, who is your favorite investor and why, since this field seems to idolize people more than others.
How do you distinguise a real value grab vs. a value trap…
ask for a stock tip
When I interview candidates, I want people to ask me questions about my firm’s investment process. For your sake and also for the employer’s, you need to get a sense as to whether you align in terms of investment style. There are many types of “value investors” and you need to figure out what type the fund is, and also figure out what type *you* are.
What makes a stock a value?
Why do stocks become mispriced? Give some examples.
What are some common mistakes investors make and how would you try to avoid those?
What is your edge in the investment process, i.e., what are you good at?
What are you not good at?
How does the stock market “work” in a general sense?
Why should I hire you?
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In reality though you will probably be asked a lot of banal questions about DCF models and valuation multiples. I’m sure there are lots of sources about common technical questions elsewhere. I think the most important for you is to read as much as possible about the firm and gear all of your questions toward what they are doing. As numi said, there are a lot of types of value investors. If we’re being honest, even GARP investors are “value investors” in a sense.
half of these sound deceptively easy but are sooooooo hard to answer well.
just about every single answer to “edge” as a junior guy sounds stupid and naive
I thought the inquiry in this thread was, " Any specific questions you think would be poignant to ask value investors?" as opposed to the converse?
This was a question that I’d thought of asking, although it could equally be asked by either party in the interview of the other. Always a good topic of conversation, especially since few people really have an answer.
Another question I’d investigate is what school of value investing do they subscribe to. What do “bad value investors” do that this shop doesn’t (and perhaps sees as their competitive advantage or unique view).
Very good advice. You might want a short idea too, just in case.
Yes it looks like it was and I misread that. My read was what types of interview questions would be asked to a value investor from other value investors looking for a job. His is a tougher question because he should already know most of the answers before walking into the room if he wants to maximize his chances of landing the job. It depends on the specifics of the type of value investing and firm. I am not the right person to give advice here since I think poorly of many value investors.
Yes these are actually really hard questions.
I think an edge can be anything you do really well – are you really good at accounting? That’s an edge. Do you interview people very well? That’s an edge. Are you excellent at reading footnotes and can provide some examples? Edge.
I should write a list sometime, but there are about 5-8 key skills an investor should have depending on how broadly you want to define some of the buckets. Most people try to make a living with 1-3. If you have all or most of them you are far better off. Any one of us starting out probably has just a few (if any), and the rest have to be developed over time.
The key to getting a job is matching up what you offer (with proof of concept they can believe, not just random claims) with what they need specifically. I know a few hundred investors and from what I have seen so far, I am one of the best I’ve ever met at extracting information from people over the phone and in person. I’m competent at finance, modeling, accounting, valuation, etc. but that is not where I make my bread and butter. I am also exceptionally good at identifying potential energy at or near its tipping point.
I’ve been wanting to start a thread on what “edges” are. I agree that a lot of answers to “what is our edge” sound really stupid and naive. “Well, we take a *careful* look at the fundamententals (unlike our competition), and our team of 5 people has a cumulative millenium of experience.”
Edit: started said thread over here: http://www.analystforum.com/forums/investments/91326212
Congrats on getting the interview! Good luck to you.
Thanks for the advice homies. I am too old. This will probably end badly.
i only have 1 company modeled out and I have it currently fairly valued. I feel like unless I fully model a company out I would just be talking out of my butt with regard to pitching the stock.
gonna try to make that a strength - I won’t make a call until I truly know about a company. Won’t try and BS you.
i’m screwed aren’t I…
Well at least you’re confident, you’ve got that going for you.
Always remember, no matter what anyone says, modeling is highly overrated. If you can’t make a compelling case as to why a stock is misvalued by sketching it out in under 2 minutes on a piece of scratch paper, you’re not going to make a compelling case in 2 hours or 2 days in a model.
I model almost nothing unless it is unit economics or a quick sensitivity model.
Thanks gents. What do you think about salary they’d be paying?
It’s a low level research position, for someone they want to train in their style. I do however have 5 years experience in the investment field and a CFA. Does that even matter? I think it would mean something.
The office is outside NYC, in the suburbs, so I’d move out there. No city costs.
I think it may matter at the margins but probably less than you think. Being a good investor is about having great business judgment and understanding market psychology, which you don’t learn in ancillary finance fields or through the CFA. The fact that you have relevant experience means that at least you’re not raw and have some fundamental skills, but that’s probably “priced in” to their decision to look at you in the first place.
Suburban office – if I had to guess, maybe $75-85K base and $10-15K bonus first year. Beyond that it really depends on your performance and contribution to the P&L.
Lots of good insight here. Best of luck on your interview!
Salary is actually the least important issue here… at least from my perspective. The biggest disservice you can do to yourself is stay at a place where you’re not learning/growing. This will hurt your career (and your ego) much more than whatever starting salary could possibly do.
ie: I’d take a 60k offer at a shop under a great manager over a 120k offer at a place where i won’t progress.
But also make sure you can live reasonably well on it haha.