5 months to prepare for M&A...


I'll be starting as a first year analyst at an elite boutique in London this coming summer. I will be working as a generalist, mainly focusing on M&A but will also gain exposure to restructuring.

I have a considerable amount of free time between now and then (I'm no longer at University so don't have the stresses of exams to worry about), and am keen to prepare myself as best as possible.

I don't need advice on how to prepare myself non-professionally (i.e. I will have plenty of fun and enjoy my time over the coming months), but I think I'd be silly not to use some of this time to gain some more career momentum (or at least to think about it...)

DOJ Unsure About AB InBev Takeover Of Group Modelo

I'm sure that there are many beer connoisseurs here on WallStreetOasis, and I don't claim to be one of them -- after all, there is a reason that PBR is my avatar. But, being that I'm interested in F&B, I bring to you today a story of two large companies, vying for eternal partnership, and a big bad DOJ who isn't quite sure about the merger.

Anheuser-Busch InBev sought to acquire Group Modelo to the tune of $20.1BN...what happens is certainly TBD.

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Are you a value investor? Take the Apple test

The bottom has clearly fallen out for Apple's stock price. After last week's earnings report, the stock that had already dropped 30% from its high of $705 set in September to $500/share, dropped another 15% to finish at $440/share. The company that could do no wrong a few months ago now is viewed as incapable of doing anything right. Has the stock fallen too much or is this just the beginning of a longer term drop in value? Is it time to buy, time to sell or time to sit on your hands?

Looking at the landscape, I would categorize Apple investors and potential investors into three groups right now, based on their views of its value and the current price.

Preparing for the HF informational interview

Moderator Note (Andy): Best of WSO - this post originally went up December 2009 and we thought it deserved to go back on the homepage for those who may have never seen it.

I got a PM asking how to prepare for an informational interview with a HF manager. Since I don't post often, I'm going to post the bulk of my (stream of consciousness) reply here. This may give you an idea of the "it" factor fund mangers are looking for. Just keep in mind these suggestions are for fundamental value investing fund, and can apply to both undergrads and MBAs (with the bar being higher for MBA candidates). The advice obviously differs with the strategy. The key is to try to replicate the things you would do at a fund on your own.

AAA Corps and the Flow of Risk-Off Trading

The other day, I had the opportunity to attend a presentation by an analyst who's focus is in Rates Trading. During the presentation, he talked about the future outlook of US Tsys and what that said about the US Government's future relating to its credit rating and debt/gdp ratio.

The most disturbing and eye opining chart was an overlap with the US Tsy yields and the AVERAGE AAA Corp yields, with the X-axis extending 30 years. Naturally, the AAA yields were a little higher than the Tsys...until year 25, where they intersected. Thus, year 30 showed that the AAA yields were lower than those of US Tsys (suggesting AAA Corps carry less risk in the long run).

How to Prepare for SA

So seeing the "Silly Shit Interns Do" on the front page today got me thinking. It comes at a really appropriate time for me, as I just finished doing OCR at my school and am probably going to accept an offer within the week at a MM firm in NY. My main feeling right now is a mixture of excitement/relief that I'm going to be employed, but obviously I want to make sure I'm prepared when I start work this summer.

So: What should I do before/during my internship to make sure I perform well and get a full-time offer at the end of the summer?

GDX Vs Gold Discussion

I've been having the discussion on the title lately with a client, coworkers, and last night, with Certified Users in the WSO chat.

The discussion stems from the fact that since about June 2008, the return of GDX vs Gold Spot has deviated significantly.

For those of you who don't know, GDX is the Market Vectors Gold Miners ETF. (You can find the Factsheet of the ETF Here) From the Factsheet:

What Does a Hedge Fund Do? (part 2)

See part 1 here

From quora.com, op asked this question:

I don't understand what hedge funds do (their impact on the market and what managers do in the company). Could someone give a layman's explanation?

Bob Rice, Managing Partner, Tangent Capital, had the second most most voted answer:

Ok, a plain English overview of hedge funds and how they impact the market:.

First, what are they? Hedge funds are collective investment pools run by an investment manager-- but with radically fewer restrictions and less regulatory oversight than, say, a traditional mutual fund. There are over a dozen major strategies/styles, but all hedge funds share two traits: they invest in relatively liquid securities (unlike private equity or venture funds, for example), and they practice very active risk management, deploying assets in a way designed to protect the overall fund against big losses... the "hedge" that provides the name.  Of course, all investment managers try to avoid losing money through diversfication and wise security selection, but hedge funds go farther, often allocating some portion of their assets to "insurance" positions that will pay off if the fund's main bets are wrong. (That is a big reason why "average" hedge fund returns often lag the stock market when it's on a tear, but almost always outperform it during down periods.)

I got fired today

I got fired like 2.5 hours ago. I hated the job, but it still stings. It wasn't performance based and they said when I left (as when I was hired) that I was the smartest analyst they had. It was that I pushed too hard for advancements in their risk analytics, or for the layman, I told them what they were doing was stupid/antiquated.

Let Dale Carnegie's book "How to win friends and influence people" be read by everyone. People naturally don't take criticism well, regardless of how reasoned it is, and they will harbor animosity. It sucks, but lesson learned.

All Weather - Ray Dalio's Approach to the Ultimate Investment Case Study

Morning Monkeys,

Many seasoned veterans of WSO will recognize a common thread posted by many prospective monkeys, "Help Me Solve This Case Study," where a prospective candidate will outline a given case study and their attempts for a solution. As many of us know, these case studies can give a potential employer insight into the thought process of the candidate but, the reality is, no candidate has ever been given a real life investment problem that a firm needs solved. Thankfully, Bridgewater Associates has recently released a report on the construction of their All Weather strategy, giving us an insight into the thought process of an industry titan, Ray Dalio, when solving a real life investment problem.

Hilarious Santelli Rant

This is gold. Ever since becoming a bit of a Tea Party celebrity in 2009, Rick Santelli has delivered the goods and this clip is no different. Despite his theatrics, he brings up a great point about how little sense it makes for the Fed to maintain "crisis mode" when the market is hitting new highs and the fact that there really is no way to put the toothpaste back in the tube (worth watching just for that, lol). I'm interested to hear what ripple effects you guys think the Fed's eventual exit from the market will cause. Soft landing, or crash and burn?

Stress / pressure at hedge funds

One of the things I hate most about banking is the high pressure / stress that gets put on the analysts from the rest of the team. I honestly think I could deal much better with external stress (ie: from markets), but I have a suspicion that hedge funds may even be more stressful than banking since a series of bad ideas would easily get you laid off. Can anyone working in the industry comment on their typical levels of stress and perhaps compare it to banking?

Thank you.