LO research interviews (out of UG)
Can anyone shed some light on technical questions asked during interviews at AM shops? Differences between these technicals and IBD technicals? M&I is what I know and I have internship experiences in finance, just not in the HF/ER fields
I have a couple of interviews soon and I’m expect I’ll need a stock pitch (good value stock). I know how to make a successful stock pitch but really unsure of where to start in terms of a good value stock.
Have a couple of interviews in the field coming up and appreciate any help
Based on the most helpful WSO content, interviews for Asset Management (AM) positions, particularly at long-only (LO) shops, can indeed differ from Investment Banking Division (IBD) technicals. Here are some insights:
AM Technicals: These often focus on your understanding of the markets, portfolio theory, and stock analysis. You might be asked about different valuation methods, such as discounted cash flow (DCF) analysis or comparable company analysis, but with a stronger emphasis on how these methods apply to long-term investing.
Differences from IBD Technicals: While IBD technicals might delve into deal structures, leveraged buyouts (LBOs), and merger and acquisition (M&A) scenarios, AM technicals are more likely to test your knowledge on investment theses, risk management, and the rationale behind portfolio construction.
Stock Pitch: For a value stock pitch, you'll want to identify a company that is undervalued by the market. Look for solid fundamentals, such as strong cash flow, low debt, and a sustainable competitive advantage, but with a stock price that doesn't fully reflect these attributes. The pitch should articulate why the market has undervalued the stock and how you expect this discrepancy to correct over time.
Starting Points: To find a good value stock, you could start by screening for stocks with low price-to-earnings (P/E) ratios, high dividend yields, or trading below their book value. From there, deep dive into the financials, management quality, industry position, and any catalysts that might drive a revaluation of the stock.
Remember, in your interviews, it's not just about the stock you choose but how well you can defend your thesis. Be prepared to discuss the risks and what could go wrong with your investment hypothesis. Good luck with your upcoming interviews!
Sources: Technology IB Coverage Group - Exits, Interview Preparation, etc., https://www.wallstreetoasis.com/forum/investment-banking/non-target-to-bb-ib-sa?customgpt=1, M&A Interview Questions - Beginner to Advanced Questions, Notes for Technical Interview Questions, Notes for Technical Interview Questions
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