Equity Research- analyse a stock
Had an interview for an entry equity research position at a sell side firm.
the interview went well and they gave me an exercise to do which was to come up with 1-2 pages of information on the key drivers of a stock.
my instructions were... “No modelling….just drivers around the stock…where you believe you would dig and perhaps how you would dig to tell people something they didn’t know.”
I don’t have much knowledge of public markets so I’m not quite sure where to start and what metrics to use?
What is the best way to find unique insights, how should I format my findings and what is the best way to impress them?
To be frank - the whole goal of this is not to find unique insights. It's whether you can independently figure out how to get a handle on a new company, industry and develop a process for analyzing it. Basically - when you get hired, they will say 'you now cover this industry, and these companies' - and you need to go figure it out.
My advice? Start the most logical place - Investor relations section of their website. Download 10-k, 10-Q, etc. Read through them all. Get the last earnings call - listen to it. Get a transcript if you can't listen to it. Whatever you need to do.
Then get an industry primer or something - google is your friend. That will help give you context on them. If you have a brokerage account - go read some research reports that are on there and available to you.
You may also consider what other areas, of things, outside the box - based on the company/industry - you could look at and throw them in.
Don't over think this - get started, start googling information and go from there.
SWOT or PEST analysis isn't the answer, but its the center of your "big board." If you truly want to be in ER, you'll be like Charlie from Always Sunny connecting random dots trying to get to the intrinsic value of a stock.
I agree with @addinator in that company filings are the best place to start. You might find yourself thinking, "this company should invest resources in this part of their business" but their 10-k shows they are pivoting a different direction. Also listen (scan the transcript to save time) to last quarter and last year's earnings call. The analysts on those calls have 1 question to ask and you can be assured that it will be a relevant and intriguing question. These are things you should also consider.
Understand what kind of research the firm puts out and try to cater your response to what the directors and clients are used to reading. You may have a sound approach to value, but if its foreign to the hiring manager, you're up shit creek.
Always have a conclusion.