good questions to ask a CFO?

so i have a chance to actually have a sit down with a cfo of a pretty respected boutique. what would you guys recommend i ask or what kind of questions would you ask that would differ from the standard questions you ask a Ibanker? I really want to get something out of this and impress but am not sure how to go about it. the standard informational questions i will ask but i feel like i could take advantage of this. any advice?

 

Ask if they have those really fun eating contests you hear so much about, because you think they sound like a barrel of joy.

In all seriousness, this isn't that tough. Read up on the market, what is happening economically and politically. There are tons of things to ask and not sound dumb.

 

Capital allocation questions. "How would you allocate a dollar between growth capex, buy backs and acquisitions? What kinds of IRR's/ROIC's do you target?" Tells you 80% of what you need to know about them IMO. If they start talking about growth for growth's sake or say things like "I always feel buying stock in XYZ is the best investment I can make," you can more or less write them off.

 
Best Response

From an equity research perspective? The number one question should be the one that investors care about the most, so it's going to be a topic that is specific to the company and industry at the time. For example, if you're asking a question to management of an energy company, you should be asking how their outlook has changed over the last several months due to the drop in oil prices. If they recently made a major acquisition, maybe you ask them what their surprises have been so far, and how the integration is going. If it's a consumer-related company, it might be something around recent trends over their last reported quarter, or how they view the upcoming year playing out for the industry.

I don't think you should be asking questions about capital allocation. It could potentially be important for the stock, but it's more often it's going to be one of those "check off the list" types of questions, and not the best one to ask. Better to ask a higher level question, especially if you're talking to the CEO. A question around competition would be good as well.

 

At the end of the interview, ask, "What's the one question I should have asked you but didn't?" They love that question and will usually share an interesting nugget of information you'd never get otherwise.

"The stock market is filled with individuals who know the price of everything, but the value of nothing." - Phillip Fisher
 

Hey you should always go and talk to other people and let them know what your interests are; you never know-this guy might actually know other people within the industry. Worst case scenario, he doesn't know anybody, but so what? At least you got to know someone who you wouldn't have known otherwise and maybe at some point in the future he could refer to you some kind of a new opportunity. Never shy away from meeting new people.

 

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