What are we supposed to know ...other than recent trends and deals in the industry?
Also, how are we supposed to find out what multiples are used in industry-specific company valuations?
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You ask questions like these as far as multiples analysis goes.
You are spot on with what you need to know. Recent trends and deals in the industry are good. Legislation and its potential effects on the industry.
I actually got that question in an interview, and the two follow-ups were: "Why are you interested in it?" and "So, if you were going to value [company in that industry], how do you think you would go about doing that?"
And of course, always have some industry trends and events in your head for reference. Good luck!
How many industries/sectors are enough?
have one industry, one company in that industry, one deal in that industry (make it simple and related that company), and know something about basic about finance in that industry
for example - tech / healthcare companies probably dont have any debt while a big power/utility company probably has a lot of debt
and if you are interviewing for a firm that focuses on a specific industry, make it whatever that industry is
Yes you are getting really good advice regarding your question.
To add on to that, if you are interviewing for a specific group, bring up a deal that they may have worked on. Obviously, don't go too much into detail, but if you can make them talk about what they did that YOU read about from an outside source, it makes them feel good about themselves and reflects well on you.
Sorry I didn't proofread, just have a feeling thats a huge run-on sentence. You get the point.
Choosing an industry to follow... (Originally Posted: 03/01/2013)
I would imagine a decent way to prepare for getting into equity research is to start following a specific industry in detail.
How general/specific should I be putting my focus into? and also, what are the so-called "safe options" that most people will follow?
obviously its best if the industry that you follow is in line with the industry group in which your interview is lined up with, but you won't be able to know that beforehand.
what industries do you guys focus on?? and how did you go about choosing it? just out of interest? or because you felt that it is a more useful industry to follow?
My interests lie on following entertainment industry (online gambling), aerospace, airlines, telecommunications,mobile phones etc.
are these too specific? should I be broadening my views into a wider sector rather than a sub industry?
Most people in ER don't choose their coverage. Generally, you just take a job that's available, or you have a background pertinent to a certain coverage.
Your best bet is to research a company that you are personally interested in, probably in one of the spaces you just stated, and write a report on it. Pick a small-mid cap, something that isn't well covered, an ideally something you understand well already and on which you may even have an edge. Model it, do an overview of the industry/competitors, an analysis of the business and its structure, etc. Most importantly, rate the stock and give it a price target. You can then use this for any ER interview.
given my location is the UK, would it be foolish for me to choose a US company to analyze? or would this not be much of an issue in an interview?
When I networked with a VP at my old BB he recommended this. Obviously when you go for the interview they'll have you pitch to a sr. analyst and rip you apart. But regardless it's good to understand the key industry drivers (some are interchangable between coverage).
I'd suggest not doing retail (the sq footage calculations for your DCF are insane). Also, when you get a chance to audition have a 1-2 page SWAT analysis prepared to highlight your analysis and writing skills, along with your end top/bottom line growth numbers.
Pick something that isn't overly insane. I.E. pharm, a large # of research analysts are ex phd's that worked for massive pharm companies. Do your research, many groups are similar to this.
just to elaborate on my last point. e.g. if I am interviewing at an asset management firm that focuses on investments in the UK. the interviewer will ask me to pitch a stock.
and if I start talking about a mid-size public firm in the US.
would that seem wrong?
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