I have been doing PE for 2.5 years and have done quite a bit of modeling (LBO, merger, operational, etc.). I am not particularly good at it nor do I enjoy it very much. Are there any finance related jobs that do not involve extensive modeling as I would prefer not to sit behnid a computer screen all day tabbing back and forth between my assumptions page and sensitivity tables tab?
I would assume that S&T and non quant HFs would involve significantly less modeling, no?
Might be time to ditch the desk and take over the family business...
Take over the family business. 2.5 years in the workforce is enough to say I've been there, seen it, and can move on.
I was thinking about it and was about to fire off a "well, after a little while it won't be a big deal as you'll get more snr etc." However, ultimately, you're pretty much always responsible for the #s which means you're going to be getting your hands dirty for a while. Case in point - me. Recently we got a waiver (im at a debt fund) to reset covs. So I had to build a hybrid quarterly and LTM model out of our model which is perhaps the simplest thing you've seen. Was just a pain in the ass and I had that same feeling of "wtf am I doing this kak for?!"
It's staring us in the face for a while. If you dread seeing someone bounding out of their office holding an IM then it's time to think about relocating. I know someone who works at a debt hedge fund. all models 1 page, simple operational assumptions, lets aim for that.
I'm a little bit of the opposite. I like doing the models but dread writing the investment memo's. I also don't particularly love reading legal documents. I should bring a stack of our credit agreements home to read in bed just in case I have trouble sleeping at night.
sell side trading--research builds your models for you
I don't find extensive modeling to be that terribly interesting either. Sometimes I feel that there's a level of diminishing returns in terms of detail.
I'd be interested in hearing more responses to junkbondswap's original question. I don't like straight qualitative work, but modeling is just boring to me
Let's be clear - there are ALWAYS diminishing returns when adding detail to a model. Your only hope is to minimize the losses.
I think that if you're pretty enough to do modelling, you should give it everything you've got :)
This is one of the most genuine posts I've ever seen on this site. It actually brought a smile to my face (no homo). To the OP's point, modeling isn't really that interesting or exciting. I often find that I am most excited by modeling simply because it's relatively more fun compared to, say, writing offering memorandums and the like.
I always find it funny when I hear college kids getting a hard-on about how much they love modeling or how badly they want to model. These kids need to have a fall-back attack and look at their lives. A VP once said to me, "Ya know, I hate the model. I hate it. It's a necessary evil, but I hate it. A good deal is going to get done regardless of the damn model." I couldn't agree more. And honestly, projections are often filled with such bullshit anyway. Also, too much detail can definitely give a false sense of accuracy.
Anyway, to the OP's point, I certainly hope non-quant (ie. value based) hedge funds have less intensive modeling, cause honestly it's just semi-boring. I'm hoping someone has some thoughts on that.
I agree. Most guys with a calculator can ballpark where an investment will come out before the model even spits out a value. I feel like the senior guys here have a very good idea of what their general opinion about an investment is before they've even seen the model. For us at least, the model isn't the switch between good deal or bad deal, where the value of the model comes in is being able to run several different scenerios then compare them relative to each other.
One of the biggest hurdles I faced when making the transistion from analyst in banking to associate in PE was not getting too obsorbed and attached to the numbers. One deal in particular sticks out to me in where the company had 13 years of good, organic growth and a decent business model with acquisition upside. It didn't take a brainiac to figure that even on a haircut trajectory it would spit out a nice, fat IRR or ROI. But I let the numbers of the deal cloud my judgement on the ancillary issues of the company (on top of that two BB banks were offering a healthy staple - a rarity these days). While I'm still not convinced it was a bad deal, I'll have to wait and see who ultimately buys the company and how it performs. As an analyst, it was easy to dive into the numbers and let your deal rationale rely on them.
I would much rather build models than have to check them over once they're built. I hate trying to understand and check other people's models. Especially if they are from a management team with no excel formatting knowledge. Nothing worse than opening a model full of hardcodes, external links, multi-colored cells and Times New Roman.
Must be a fund-by-fund formatting preference.
It's a bit sad, but I have to admit that seeing anything in Excel in an Arial font disgusts me. The Times New Roman crack, however, was funny since this is the "standard" modeling font used at my fund.
Really? Maybe I'd have to see TNR done well and give it another chance. Arial looks bad in a bigger font but take it down to 9, or 10 on 85% zoom, and it's a thing of beauty.
Yup. In banking it was Arial, now I'm forced to reformat my models into TNR.
EDIT: Arial in zoom looks like a girl's handwriting - bubbly, almost cartoonish. In small font, it's just simple and easy on the eyes - which is the main goal.
TNR, when zoomed out, resembles Arial anyways.
IMO, modeling significantly outweighs writing, reading credit agreements, managing datarooms, due diligence, pitch work, etc.
Although, I do agree with mlamb that excessive detail is counterproductive.
You get 80% of the benefit of modeling from 20% of the effort. Except (in banking anyway), you have to do the remaining 20% because the VP/MD said so.
This is why I try to keep my models as simple as possible unless someone asks for more. It's a great time-saving tactic.
Personally I would rather model than write memos. You might think I like writing because I have an i-banking blog, but writing memos in banking is completely different from something fun/creative like blog writing. It's mostly just copying information and synthesizing from other sources, which is why I find it dull.
If you don't like modeling, I would look at trading or maybe HFs... many HFs require only very minimal modeling and don't care as much about that remaining 20% effort to get everything perfect.
Agree with Gametheory.
The purpose of a model is simply to validate and test investment assumptions, not to derive them. No respectable LBO fund relies on a model to figure out whether they do or do not like a particular business.
The bank I summered at actually used Garamond font, which I found odd since it's the first time I had ever seen it.
Garamond is the prettiest font out there.
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