Equity Research Questions
Hi guys, right now I work for a small PE as a analyst intern. However I am in a newly-opened office and there're just me and a VP, who doesn't show up very often, therefore tasks are coming to me through emails.
All my tasks are coming through two sources. 1) the MD throws out some questions based on his understanding of the industry and asks if someone could verify his points, or he simply just asks someone to research for the industry, and if no senior analyst was available, then it's my job. 2) the VP gives similar tasks, but she just asks about basic stuff like yields and entry barriers.
So here're my problem.
1) Although I wrote a few industry summaries and answers to my bosses questions, my works are more like "paraphrasing" all those 10-ks and prospectus. As I learn from the forum, a good analyst should be able to figure out what would happen in the future, so I think I am really doing badly at my job. How could I improve? How should I build my knowledge about an industry from scratch?
2) Sometimes the information that my bosses want me to find is simply not on the internet, but they always say "do a web search" or "please keep the research confidencial". Everytime I was like, what am I going to do???
I should add that the PE is focusing on Asia market, mainly on China & Hong Kong. The information of companies on their website and annual reports are minimal, and I don't even bother to check the related government's page.
3) Any help to read 10-ks and Due Diligent reports more efficent? I know I don't have to read the whole thing, so I basiclly selected a few sections to read, but still, the amount of word is killing me. I really love reading these, but after a while the words are like worms moving on the screen......
Is there any working models for me to better judge (or speed up the process) whether a company is good or bad?
4) I got a chance to go to a local distribution center. The VP says I have to look very closely to the details without further instructions. I think I am going to watch the morale of the workers, the cleanness of the center (the toilet for sure). And I generated a estimation of traffice flow in that distribution center, I just need to ask the manager about their selling price. Any other suggestions?
Thanks for any help. I know it's a long post, sorry if it bored you.
1) Read not just about the
1) Read not just about the industry but about some of the large companies within that industry. For example telecoms. You could search Google, WSJ, FT, Bloomberg, Reuters etc. for news on the telecoms industry, and then look for news on some of the big global (or whatever location you're looking at) players i.e. AT&T, Vodafone, Deutsche Telekom etc. to see what they are doing and what they are focussing on.
Also try and find some key new technology which is being developed and which you think could have a big impact in the future. To use my telecoms example you could talk about smartphone adoption rates in developing markets, expanding 4G coverage, latest trends towards how phones are used, how you think revenues will be generated (i.e. will it be data, telephone calls, messages etc.)
2) Usually you can find most things or at least a reference to things if you search for every conceivable permutation of how the question could be phrased. I understand it's tough without having a dedicated team you can just call up to find data for you, but even they get their information from somewhere. There are often industry specific websites which provide information and reports on everything within the sector. This is probably the hardest one to do as you are right, sometimes the data is simply not there or you cannot access it. One thing I would suggest is look for investor columns on the given companies or sectors. These should not be taken as investment advice, but can sometimes contain nuggets of information (be sure to source check though! Contact the authors if necessary!).
3) Print them out. Stuff is 100x harder to read on screen than it is on paper I find. Also if you print stuff out you can highlight it and feel more important with a big stack of papers. I would read the Annual Reports (not just 10-Ks) for the management statement so you get a feel for where the company is going. Obviously go through the financials and any accompanying footnotes with a fine tooth comb. Always assume that there is something bad to find and make it your mission to find it.
4) Speak to the floor managers to see what their opinion is on the process. The senior management will always say stuff is fine, its the low-middle employees who really know what's going on. Checking for cleanliness is a good idea. Also observe the canteen during lunch if possible to see if the workers are happy as happy workers are usually better ones. Before you go, write down a list of the various points you want to investigate, dont just go in thinking "right, better find some stuff out!".
Hope this helped a bit.
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It's been very helpful of
It's been very helpful of you! Thanks! I'll definitely take your advices. I already start to feel guilty to print tons of pages from company's printer. :P
Think I'll just calm myself down first. The thought of securing the job combines with me being unproductive is killing me. Guess that's what probation feels like.
Paper costs about 1 cent a
Paper costs about 1 cent a page. Don't feel bad in the slightest. A full annual report probably only costs about $1.50-$2 to print on a proper laserjet. Plus, the smell of freshly printed warm annual reports is a necessity for productivity.
See my other WSO blog posts>
Haha I agree. Anyway, thank
Haha I agree. Anyway, thank you for the input.