Equity Research Interview questions
On short notice I have an interview with an analyst and an associate on thursday for an associate position.
Can anyone give me a heads up on what will likely be asked? Will this be a fit interview or more technical based questions and if anyone can give an example as to what level of depth the technical questions will go into if so?
This is my first time applying for an equity research role so i am unfamiliar with the process.
Equity Research Types of Interview Questions
As with any other interview for firms you can expect to prepare a variety of questions ranging from behavioral to see how well you fit within the firm's culture, to technical question to gauge how experienced and connected you are with the markets. The best way to prepare for these is to learn common questions and to practice them as much as you can!
Fit and Behavioral Questions for ER Interview
These are probably the most standard interview questions to find out more of who you are and your work ethic. Some questions may include:
- Tell me more about yourself/resume
- Why this firm/equity research/position
- Explain a time where you had trouble, showed leadership, etc
User @esbanker", a private equity analyst, makes a great point regarding fit questions:
some key words that should guide your examples for fit questions in ER: analytical, detail oriented, excellent writing skills, strong verbal communication, at ease with financial modelling. some people tend to think that Equity Research Analysts are mainly 'bookish', but i'd argue that teamwork still plays an important role, especially during earnings season. arguably the most important fit question is why do you want to do equity research as opposed to something more "prestigious" (IB) or "exciting" (S&T).
Technical Questions for ER Interviews
There are countless different questions that could be asked for the technical aspect, but they all focus more on actual investing and how one would approach investing a specific company. While this is not an extensive list by any means, here are some of these questions you can expect to see:
- What do you think about X company?
- What is beta?
- Major valuation methodologies
- EBIT vs EDBITDA
- Market questions
- Pitch me a stock
Stock Pitch for ER Interviews
The stock pitch is arguably the most important aspect of an equity research interview. It's a good rule of thumb to keep roughly 2-4 stocks that you present a quality pitch for. You should be able to list a few of the valuations to back up your pitch as well as connecting your pitch to current market trends.
User @esbanker", a private equity analyst, again provides a sample stock pitch and it's a solid format to base your pitch off of:
Well, I've recently been following Copa Airlines, a Panamanian airline company, currently trading at $xx per share. Recently, the airline industry has been underperforming the markets for several reasons: compressed margins from the volatility in oil this year, increased competition from low-cost carriers, and overleverage by most airlines (think American or Air Canada).
While many airline companies are in desperate need of restructuring, Copa airlines has seen their revenues - now at $1.4 billion - grow at a robust 10% compounded over the last 5 years. Copa boasts EBITDA of approx. $350 MM, Net Income of around $240MM which translates to roughly 18%. Margins have remained stable over the last few years and are significantly greater than other airlines.
After running a basic DCF (5 year projections), Copa has an implied price per share of $xxx. In terms of comps, Copa is trading at an EV/EBITDAR of 7.7x which is slightly less than the industry median of 10.3 x, and a PE ratio of 12.9 x relative to an industry median of 14.1 x.
Copa has recently acquired Aero Colombia to gain significant exposure to the growing Colombian market (~xx% of market share), as well as provide quicker access to Brazilian airports. Air traffic in Panama is also expected to grow by xx% by 2014 due to infrastructure development and increased trade from the Panama canal expansion. Given Copa's strategic positioning in Latin America, its strong operating and financial performance of late, and its relatively cheap share price, I would strongly recommend to buy Copa Airlines.
(note, some of the numbers are out of date - this is from an early 2011 model)
If you have any other suggestions and recommendations for acing your equity research interview please comment below!
Check out another great discussion on equity research interviews.
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Comments (164)
In my experience with ER interviews, here are the things that matter: 1. Your stock pitch(es). You are likely going to be asked to pitch a stock in every round. This allows the interviewers to separate out the fakes from the kids that know their shit. If you are truly interested in the markets, you will be able to put together a concise and interesting pitch. Prepare more than one pitch because you may be asked to pitch more than one in the same interview. Also have a small short idea ready in case you are asked. 2. Intelligence/finance skills/experience. Can you talk intelligently about the markets? What is currently going on in the world? How will a rates raise effect certain companies? Technical questions: What happens to the financial statements when ABC company issues debt? How do all the financial statements flow together? Walk me through a DCF? Name a few valuation methods and their Pros and Cons? Some companies ask brain-busters as well so be prepared for those. Don't freak out, take a deep breath, and walk through your logic out loud. Most of the time, there is no right answer. 3. Your knowledge of the industry. Questions you may be asked to test how much research you've done: Do you know what sell-side research is? Do you have an idea what your Senior Analyst will be doing? Hint: It's likely not modeling companies, he will be doing marketing trips, trying to win clients, and then probably focusing on the high-level drivers of the industry, forming macro themes, and helping to write notes. Do you know what you will be doing on a day-to-day basis? Why do you want to be a sell-side analyst? Why not buy-side, isn't that better? Can you handle working 12+ hour days? What do you think is the biggest challenge for our Equity Research platform right now? 4. Airport test. In other words "could your interviewer get stuck in an airport with you for hours and not want to blow their brains out?" You could be a straight A student from Harvard with previous internships in ER, but if you are a miserable person to be around and have no social skills, you probably won't get picked. In this role you'll be on the phone with sales/trading, clients, and will be stuck in your office for 12+ hours a day with your coworkers. They want to hire someone who will have a positive attitude that is fun to be around.
Thanks very much! This is a great help! I have a strong accounting background so not overly worried on the financial analysis side of things. The industry I would be covering if I got the role I know nothing about however, should I try to cram some research on this with the possibility of looking stupid should the analyst grill me or should I be honest and admit I don't know a lot? I like the airport test aspect, this is a great observation that is sometimes overlooked!
If you know what team you would be placed on, I would recommend looking into it and studying up. However, don't make the tragic mistake of acting like you know a lot about the industry if they ask. Say that you have a baseline level of knowledge, but you are really interesting in learning more about XXX because of YYY and how you think that ZZZ is an interesting trend lately
That's great! Also when it comes to pitching a stock do you think it's weak to pitch the company you are working for if you believe they are a buy? Nervous as to what to expect but hopeful that it will go ok.
Eh, I probably wouldn't do it. You obviously know a lot about the company because you work there and probably have access to information that a regular investor wouldn't. I'd choose a company to pitch that you don't work for. Also, don't make it Facebook, Google, Apple, or Twitter. Kids applying for internships or entry-level always revert to those when they are unprepared to pitch a stock in an interview and every analyst has an established opinion/decent knowledge of the company. Pitch something preferably smaller and you have differentiated viewpoint on.
Love this post! Thanks for the question Dannyg56 and thanks for the answers @mrskilling
Love this post! Thanks for the question Dannyg56 and thanks for the answers @mrskilling
Equity Research interview - French investment house (Originally Posted: 10/18/2011)
Hey guys,
On Friday I have an interview with a French investment house for an equity analyst role so I was wondering if you guys have any advice for me on how to prepare. I am very happy with my motivational/behavioural questions but I was wondering how I should go about preparing for the technical/market awareness ones?
Many thanks!
JohnnyFF
Have a stock pitch ready, both for a buy and a sell. Have a consistant methodology on why the one is a buy and the other is a sell.
thanks mate! do you know where I could get some recently released research notes? would help me building an argument.
cheers,
JohnnyFF
Have your Equity val stuff down to a pat...also be aware of any tricky questions that they can curve ball at you..
Example.
Company pay $1 bn for project. Current EBIT(1-taxes)= $10 mm, Cost of capital is 10%, Market Value of Project is $50 mn.
What should you do with this project and why? Buy, sell, or hold.
i am still revising my Equity val stuff so I am probably completely off...but here's what I think:
if the NPV of the project is 50 mn then the yield on it is 5% which doesn't even cover the cost of capital. nor does the EBIT (1-taxes) cover it....hence SELL
but as I said I am probably off.
cheers,
JohnnyFF
the problem never said anything about NPV..simply market value
Most eq val questions can be answered with "depends"...in this particular instance it depends if you can make more than 20% ROC on other other projects...simply put, your project has a market value of 50 and a cash flow of 10 (in perpetuity). so technically speaking your project is earning you 20% on the market value of your capital. If you were to sell this project, and undertake one that made less than 20% ROC, then you would have lost money.
While you have obviously lost a ton of money originally on this since it cost you 1 bn but now its worth only a fraction of that value, you should still look at projects comparatively.
[quote=Bernankey]simply put, your project has a market value of 50 and a cash flow of 10 (in perpetuity). so technically speaking your project is earning you 20% on the market value of your capital. quote]
Didn't get it...how u got the 20%...
fair enough...makes sense. I thought EBIT was for the company overall. keep throwing in them at me if you have any other ones.
comparatively speaking you are making 20% on your existing project based on its current value...10/50
why not the pv of perpetuity: 10mm/0.1=100mm, divided by 1bn? I'm kinda dumb, but is the mkt value (equity value) seperate from the future CFs generated by the project? ...
The purpose of the question is to basically ask yourself..can I get a better return on another project than the existing project..If I have a project that gives me 20% ROC, should I substitute it with a project that gives me 15% ROC?
The one billion is basically there to throw you off.
TIME SHAPE OF CASH FLOWS
Entry Level Equity Research Analyst - Interview Help (Originally Posted: 11/03/2015)
Walk you through your resume. I was asked how do you go about analyzing a company. I got asked where to find specific info in filings. 10k, 10q, 8k, proxies, etc. so know those. Why are u interested in ER. Tell your story and have points in it to where you gained interest. This should be all for the initial phone screening. Be friendly and excited for the opportunity and just overall a personable person and you should be fine. GL
A recruiter is going to ask very basic questions to determine if you're actually interested are at least minimally qualified. For example:
Without knowing more details it's hard to give more specific advice. A recruiter is only going to ask high level questions though, which in isolation will weed out >50% of candidates.
Recruiters dont ask much outside of general questions like above regardless of the industry. However, in addition I would prepare a stock pitch. If you dont use it for this interview, you will definitely have to use it for subsequent rounds.
How to prepare Equity Research Project Interview ? Seeking Advice (Originally Posted: 01/08/2013)
Hi,
I have an interview coming up next week with the big Asset Management firm. It's the ER Associate position and I don't have any experience in ER.
This is the second round and the interviewer told me that there would be a project interview.
I have no clue how to prepare this thing.
Please give me some advice!
and if you guys have, could you send me some equity research report sample?
Thanks,
Get your hands on it now. Think less, and work more. For an initial coverage, the format goes like this: 1) Highlights of your stock. Aka your conclusions. 2) Business overview (company's history, present, and futures). So basically this section is about what did the company do, how did they get to the present state, and where will they be in the future. 3) Macroeconomic analysis 4) Industry overview. What are the competitions in the industry, what are the trends, who are the topdogs etc. 5) Competition positioning. What makes the company on par or below par to the peers 6) Valuations. Depending on your industries, but mostly DCF and EV/EBITDA would be sufficient. 7) Financial Analysis. Dive into their 3 statements and observe for any trend, then justify them with possible reasons. 8) Catalyze (Investment Risk). Existing/possible factors that will boost/drag the stock's price
Thanks for the reply tonydaboiii,
I have got one quick question. do you know anything about financial modeling test on the spot?
IF yes, could you give me some examples?
Thank again.
No problem. But unfortunately, I don't know anything about the modelling test as I haven't landed any ER interviews yet. But what I heard from most other monkeys here, the test will mostly consist of a 3 statements model. I'll leave this question to somebody else.
Working on the statement project myself.. how do I exactly get the data for the new Q .. Newbie Jr here
Equity Research Phone Interview Questions (Originally Posted: 12/01/2015)
I just had a phone interview with a large buy-side shop for a research associate position. I was kind of stumped on two questions which seem easy but maybe I just had a brain cramp.
A company has a p/e ratio of 10x and a p/b ratio of 10x. What would you pay for this stock.
A company has $1 EPS, 5% growth, and a WACC of 10%. What would you pay for this stock.
1) Can't really say what you would pay for the stock with only this info, but they were looking for you to talk about how a company could have such a low P/E while simultaneously such a high P/B. One of the first scenarios that comes to mind is a company with low capital intensity business that is paying out a large portion of earnings in dividends. All of this assumes that these ratios are pretty stable. Go read Grosse's post in the Hedge Fund forum about ROIC when book value of equity is negative.
I'm assuming there are other explanations for this, maybe the company just took on a lot of debt and paid out a very large dividend pushing the book value of equity down and they're in the midst of a turn around so the stock is still cheap.
2) With this one they were probably just looking for EPS/(WACC-g)
these are missing info questions 1a. for the p/e you need earnings company earnings for its value, peer group median earnings for comparison purposes, but ideally Peer Group Multiples are used rather than Peer Group Metrics - median and mean would be different 1b. for the p/b you need you need book value (the logic as above applies Note for both if you get apply the EPS or BV/Share then you will directly get the share price instead of the equity value
Equity Research Interview - Supporting senior analysts (Originally Posted: 02/03/2011)
Hi,
I have an interview next week for a trainee equity research role at a small non - BB firm. I have a background in hedge fund sales and a degree in history from an Ivy League School. I am looking at a role that is more technical hence the reason I am interviewing for a role in equity research. The role is essentially supporting the senior analysts of which there is a team of six.
Can anyone give me an example of the types of questions that I will be asked in the interview? What I should brush up on and if there are any resources out there that could help me? I do not come from an accounting or finance background so I need to brush up on these areas so any pointers anyone could give me would be most appreciated.
Thanks in advance.
The firm interviewing you likely understands that you don't have an accounting background. The vast majority of that can be learned through the required FINRA exams (7, 63, 86, 87 depending on your state) which you have to get within 6 months of hire normally.
I've spent 5+ years in ER and the best advice I can give you is to make sure to have a stock or two that you feel comfortable pitching to any analysts/associates that interview you. Also, make sure from a 30,000 foot level that you can name the 4 financial statements and recite back a rough breakdown of them. Whether you can calculate ROIC is something that can be learned on the first couple of months of the job.
ER is (for the most part) really more about telling the story of a stock as opposed to getting into the nitty-gritty details of capitalized interest expense and the like.
2nd Round Equity Research Interview (Originally Posted: 10/22/2007)
Is there generally some sort of quantitative test for 2nd round equity research? Can somebody give a few examples if they have been through this in the past?
Thanks
..better put your helmut on. Gonna be a rocky ride! In all honesty, lets just say Fidelity is very "thorough".
You will need to be very conversant in accounting as well as every valuation method you can think of. Don't show up ill-prepared. It WILL show and you CAN'T fake it.
questions do tend to vary depending on your background. What is yours?
Finance major top 30 undergrad (semi-target), one internship with a fortune 100 company, no banking/investing internship
Could be a difficult session for you. You will need to show them that you have a deep interest in investing and the stock market. Know your current events and macro commentary VERY well.
I would like to thank everyone for their input
Equity research modeling interview (Originally Posted: 12/02/2013)
Hey guys, I have a sell-side ER modeling interview coming up, and I have been asked to create a one page earnings writeup & forecasting model going through 2014 for a technology company.
Honestly, I've never wrote an earnings note - an example would be great. I'd appreciate any advice/tips for this project. Thanks!
Is it for JPM? I've interviewed with them for SA in the past and they require a 1-page ER write up.
It's not for JPM, but the task requires for me to create a model and earnings note based on the press release. I find it hard to find any sort of example of a written report based on a earnings call/transcript. I was wondering if it would be possible to take a look at your report? I would be immensely grateful of your help.
Nvm
Have you looked at sell-side research notes? This is probably a good starting point... ThomsonOne or Bloomberg should be available in most campus career centers.
PM me your email address and I'll send you something. (trying hard to procrastinate today)
I would really appreciate it if you could send me something as well! Thanks!
@jankynoname If you get this, would you mind sending me a/the model and earnings note you've sent out in the past? Model update and note test in two days and would greatly appreciate it!
@jankynoname would love it if you sent what you have to me too. Thanks!
@jankynoname me too please!
@"jankynoname" do you have an example of sell side research or is it a model that I could update with a PR? If its the latter I'd appreciate that; have an interview soon and wanted to practice.
First Equity Research Interview (Originally Posted: 08/02/2013)
Hey guys,
An analyst e-mailed me and wants to set up a 30 minutes first round phone interview on Monday. This is my first equity research interview. I wanted to get a taste of what questions would be thrown my way. Will this first round be similar to an IB Analyst phone interview or a tad different? Any help/advice/suggestions is much appreciated. Thanks.
I had an equity research interview with a fund manager at fidelity managing about 8 billion, and an equity research analyst at Loomis Sayles. The questions were honestly rather simple. Why do you want to be in this field, typical fit and resume questions. I manage a fairly sizable portfolio so I was asked what my investing style is, how do I manage risk, what sectors do I like. Overall id probably have a pitch ready for at least one company, make sure you are up to date with everything that is going on in the economy / market. I would also recommend looking up the guy and see if you can find any information on him. DO NOT find a company he covers and give your take on it, chances are he knows substantially more than you do.
Oh to add..
What books have you read recently? Three characteristics that make a successful analyst?
I got interviewed recently by one of the above also (don't worry I'm not your competition anymore).
One of the better questions I got by all the groups that I would've liked to work for was "tell me about one of your stocks picks that didn't go well". This shouldn't be anything groundbreaking though. I would have at least two pitches.
I don't think I got any real macro questions like "where do you think China is going" but I did have to go into valuation of markets and which areas I thought were better than others.
I mean the interviewer will have a pretty good sense to how much you follow markets even if they don't ask anything macro related.
As far as I know, all typical IB questions are fair game for an ER interview. Also be able to speak about some investing books you have read as NiceModel said. Having knowledge about some books can lead to easy conversation and shows that you have interest in the market.
What would be great investing books to read?
Equity Research Interview Coming up (Originally Posted: 04/21/2013)
Hey guys,
I have a ER interview coming up for SA position at a boutique. I am very excited about this opportunity and would like to be in the best position for the interview. However, I had never had an ER interview before so I am not sure I should prepare.
All advices and inputs are very much appreciated.
Thanks alot guys,
I understand this is informal and online but you're writing is horrendous..and from what I've read/seen being highly proficient in writing is a must for ER.
lol
cough
I would recommend having a few stocks that you can confidently pitch, ideally with each stock being from a different sized company and from a different sector so that you can relevantly bring up the stock if and when necessary (some companies will ask you to outright pitch a stock, but in my experience I also got a couple of questions such as "what multiples do you look to when evaluating a company?" and I would give one of my stock's P/E ratio as an example). Be comfortable talking about what has been going on recently in the market. It is much better if you have a broad, and critical, understanding of current events than if you read the WSJ everyday but don't really have anything insightful to say. I would recommend having a few investors that you genuinely respect and follow -- watch some of their interviews, read something they have written, etc. Understand their mindset. But, most importantly, as everyone has said time and time again, have a coherent story as to why you are interested in equity research and what experiences you have had that have prepared you to excel.
And this is what I get...unfortunately you can't throw poop at yourself
I don't just recommend having a stock to pitch... it's a must. And prepare several - at least one that is in the coverage universe of the boutique, at least one short, and then one or two more that can really be whatever (probably good to stay relevant to the sector at least though). Seeking Alpha can be a good place to get started on those (don't plagerize their ideas though). And as has been mentioned, don't assume that just a few pitches will be enough, be able to talk about valuation and anything sector specific. Ie. I was asked where I think oil & gas prices were going, how I felt about the oilfield services industry, and what some complications to valuing an E&P might be. I'm sure other sectors have their share of talking points as well.
Otherwise just work out a list of questions you think they'll ask, and prepare and recite answers. I keep a spreadsheet with questions and point form answers. Questions to consider (far from exhaustive of course):
And probably the most important part, have good questions prepared to ask after. Nothing looks less prepared/interested than "do you have any questions?" "nope, seeya". Questions like "whats a day in the life", "whats the training process like", "whats expected of me in XX months", "what would my ideal career path be for (company)?", "will I do any traveling as an SA", "what distinguishes this firm from the competition", etc etc. A decent interviewer will probably have already answered most of them though, so definately have lots prepared.
Great post, thanks !
Interview Questions - Equity Research questions? (Originally Posted: 04/13/2007)
What questions might someone expect for an equity research position?
http://www.ibankingoasis.com/node/2073
http://www.ibankingoasis.com/node/4023
http://www.ibankingoasis.com/node/3197
Run a few searches.
Buy side equity research interview (Originally Posted: 01/26/2011)
Hi everyone. Could anyone please share any experience for buy side equity research interviews? The position is analyst (3rd yr) with a large asset manager. What will be involved in each round and generally how many rounds will there be? Much appreciated!
From what I known of, They expect you to know in very detailed knowledge of stocks you plan to pitch them and also some strategy allocation related questions. So, if you plan to pitch a stock , you should know the breakdown of how all the numbers in its profit and loss move, including the sector dynamics.
asked in 2011
Equity Research Model for Interview (Originally Posted: 10/23/2013)
Hi guys,
I'm interviewing for an equity research position, and they want to me to try an at-home modeling test. It's ~2 hours long with a revenue projection, 3 statement projection and analysis and a DCF. Could anyone point me to or send me examples / templates? I'm not coming from a finance background, so this would be a huge help to me.
Thanks guys. Really appreciate it!
Is this for DB?
Macabus has great templates for the 3 statements, but they are quite detailed for a 2 hour test. Would appreciate insight on simpler templates/models too!
where is a good template for a 2 hour test?
Equity Research interview season (Originally Posted: 01/19/2008)
Any idea when firms start contacting applicants in regard to summer positions within Equity Research? I have been hearing back from IB, but am curious as to when Equity Research interview season begins.
I applied online to Goldman, JPMorgan, Morgan Stanley, Credit Suisse, ML, and BofA. Any insight would be greatly appreciated.
Was in similar situation last year, heard back for online apps around the second week of Feb. Was non-target interview, so don't know if this differs from your situation.
Equity Research Interview with BB (Originally Posted: 02/21/2009)
I have an interview for equity research at a BB, any advice?? Does anyone know the general types of questions that are asked in these interviews? Thanks alot for the help.
If I had a mini cooper how many average males could you cram into it and walk me through your process to maximize the number of people in the car.
for associate intern positions, be prepared to pitch stocks and talk about markets.
"how would you invest $1million" (have specific stocks you like and use them)
"what's your favorite sector right now?"
"are there any stocks you think are overvalued?"
"what's the dow/nasdaq/s&p/etc trading at?"
"how would you value a company like Amazon.com?"
i don't know about undergrad/analyst positions but they want to see that you can think so brain teasers may come into play. how many slices of pizza would it take to cover the entire landmass of italy?
Equity Research Interview - Any suggestions? (Originally Posted: 04/01/2008)
Hey guys-
I have an equity research interview in a few days. Anything I should look out for/make sure to emphasize? I'm in the mindset of ib interviews, and I've heard they're a little different.
Any suggestions?
Thanks
there are a number of relevant posts to this in the equity research forum here (including a few on my own) as well as others at analystforum.com. i suggest you check that out for ER related stuff
Wacc Attack,
Both superdays I went to for ER consisted of market questions, some fit, and an occasional DCF question. Both times I had to pitch several stocks, and defend my position. One piece of advice- pick a company that has a simple business model that you wont have trouble discussing. Good luck
BB Equity Research Interview - 2 days (Originally Posted: 04/27/2010)
Guys,
have an equity research associate interview for Friday at a BB.
A coworker from my former place of employment (a MM) got me the interview with the analyst who is hiring. They are good friends and my former coworker told him good things about me.
I have been working at a small HF for the past 3 months building DCF models, completing ind company analysis' as well as an industry analysis (Education), covering some retail names, a biotech name here and there.
I will be writing my CFA level III in June.
The interview is for the Energy space, I have access to themarkets.com and was wondering if anyone can suggest the best way to go about preparing for the interview. I obviously want to kill it and am concerned about the finer aspects of the energy space being my weakness.
Additionally, any thoughts on the WSO technical guide for a research interview? From what I've read its primarily IBD based but I'm sure it couldn't hurt.
I've thoroughly prepared and practiced a lot of behavioral questions for recent interviews (many which have been postponed) so I feel comfortable with the majority of them.
Any help would be greatly appreciated.
Bump
Make sure you come off as very passionate and intelligent about the financial markets. Also have a stock pitch ready and understand the company's financials, business structure etc. Also know what equity research is and what how the research fits in with a banks overall business.
Pureazn,
I assume you think the stock pitch should be in the energy industry?
Do you work in research?
Energy would probably be better if the person interviewing you is from there, however, it also means that they will be an expert in it as well. Mainly convince them that you can "tell a story" about an equity. I don't work in research but had offers in research and ended up choosing IBD. Also, I haven't heard anyone moving from HF to ER. Generally it is the other way around.
HF is very small (
Bump
I just read the post on "informational interview" under "Rank."
Should I be creating and printing out comp sheets? Will this be expected?
If it's not expected, I figure I might do it just to show him I'm willing to do the work.
Please help guys.
Thanks
Bump.
Equity research interview - How technical are they? (Originally Posted: 02/11/2011)
hey guys,
I have an interview with DB equity research in NYC. has anyone been to one of these before? how technical is an ER interview?
thanks!
for a summer internship? what group?
ive heard that ER interviews tend to be quite technical, and can actually be more technical than IB/S&T interviews, in that you need to know both the IB side(company valuations, projections, DCF), as well as knowing the S&T side(market movements, where certain indexes are at, having a solid stock pitch).
caveat-ive never actually had one, this is purely from what i have heard (and it makes sense--in ER you need to know how to both value and pick/pitch stocks)
@crabb222, I haven't been assigned a group yet. does anyone know if DB does all its recruiting in NYC and then assigns people an office based on geographical preference? because I really want to work in LA...
my ER SA interviews were mainly fit compared to ib interviews, granted that was just my experience and I havent talked to many others about ER interviews
These are generalizations, so try and cover all your bases and let them decide where you'd be best suited. I got selected for an ER internship because they needed a relationship person in an office full of number crunchers and since I was a bartender at the time it was a perfect fit: technical ability was not an issue. Conversely, the group I'm hoping to go to now is very relationship driven, but the only openings is pretty quantitative so I have to brush up on that.
DB has a weird habit of putting people where they fit well, and where they think they would contribute most. This is somewhat like Goldman, and may have something to do the DB poaching a bunch of Goldman partners a few years back when they starting building presence in the states.
Tennisballz You interviewing in NYC?
@spaceagecowboy yeah I am interviewing in NYC
Did you already interview? How did it go? thanks
bump to how it went
bump
Any insight into DB specifically as a bank? I have a potential interview with their UK office for ER SA (I believe it is a generalist program). I know DB made No. 1 for the All-European Team by Institutional Investor in 2012. Any advice on what sets their research apart?
Interview Questions - Equity Research (Originally Posted: 03/26/2010)
I recently interviewed at a BB for Equity Research, have another one coming up next week. Thought I'd share a few questions and hopefully get some insight on how you would have approached them, especially the first!
If company X trades at 6 times their earnings and company Y at 10 times which one is the most attractive?
How would you forecast the growth of a companies P&L to value it in future?
If a company has EBITDA of $4bn how would you find out the cashflow and what would you do with it to calculate a target share price in future?
If company A has a high oeprating margin and company B has a low operating margin and same earnings, which one is most attractive?
If i gave you financial statements talk me through how you would value the company's share price in the future.
Hope this helps!
6 times is cheaper, all else equal....however, all else usually isn't equal so it depends on other factors (industry, growth, margins, etc.)
grow revenues, get margin information, flow down to FCF, use that to do a DCF
go from EBITDA to FCF...if I had EBITDA, I'd apply a multiple, come up with EV, subtract debt, add cash, get equity value, divide by share, get a target share price...if you can forecast EBITDA,
difference would be debt...higher operating margins is more attractive...business fundamentals better, all else equal
value the company's share price in the future? like the share price in 2012? hmm...haven't done too much of this, but i suppose do a DCF, just change the timing of cash flows....also, can use a current multiple on future earnings assuming no margin expansion/contraction...not sure though
For question 1 i said generally for anything which uses the current share price against some other financial performance indicator, lower is better. Can you expand on your answer around it varying by industry, margin etc.?
Tech stocks for example generally trade at a higher P/E ratio than say consumer staples because tech has a larger upside. That new patent they get may increase their earnings ten fold while say Coke probably won't be making any new innovations to increase their earnings significantly.
Don't mean to hijack but here are a few that i had recently.
1) Stock ISRG is currently trading at 50x forward 2010 earnings, it is a $12Bn Market Cap company with $2Bn in annual revenues. However, large cap names in its space average 15x forward earnings. How would you justify the valuation of this stock and how would you exactly arrive at your valuation? Walk me through it.
2) On a DCF and comparable company valuation basis, stock BSX is frequently valued at $12/share, however, it is currently trading at $8 per share at has for a long time stayed in this range. How would you account for this difference? Why is this so? What factors would you look at to justify this share price?
I'd be interested ot hear people's thoughts ot the above 2 questions.
1) I'd justify the valuation based on future growth potential, I don't know the company or their products but would assume they are about to/have gone to market with a new product which will give them significant competitive advantage over their competitors and has potential to grow across their sector.
Not sure on how to arrive at the valuation, this is where I get stuck. Anyone help on this?
2) Perhaps the company hasn't delivered on the expected growth potential or investors are undervaluing it/the market hasn't priced in the growth assumptions you have employed. To check the share price i'd revisit my cash flow analysis, growth rates and assumptions used in the DCF to arrive at the share price.
Equity Research Interview - Interview next week for a trainee (Originally Posted: 02/03/2011)
Hi,
I have an interview next week for a trainee equity research role at a small non - BB firm. I have a background in hedge fund sales and a degree in history from an Ivy League School. I am looking at a role that is more technical hence the reason I am interviewing for a role in equity research. The role is essentially supporting the senior analysts of which there is a team of six.
Can anyone give me an example of the types of questions that I will be asked in the interview? What I should brush up on and if there are any resources out there that could help me? I do not come from an accounting or finance background so I need to brush up on these areas so any pointers anyone could give me would be most appreciated.
Thanks in advance.
Hm not too familiar with this role, but if anything you'll need to show an interest / passion for the markets. Questions I expect you will get: Do you invest? What are some shorts / longs that interest you? Why do you believe you have a market edge? What analysis did you perform? If you have a strong stock pitch (doesn't need to be in the sector you are interviewing with, and can almost be a disadvantage if so...) i think it should help you get through to the next round.
Tell them you want to start covering your own names and picking stocks the day you set foot in the door... That will impress them!
Thanks - this is for a sell side role and in a non US firm, so it's a small team and the role is a generalist one.
Would you guys have any idea of the finance or accounting 101 type questions that I will be asked?
I've done several ER buyside interviews. Not sure there is a direct comparison, but they should be largely the same. In terms of accounting questions, you should be able to answer pretty much anything about the three financial statements, know some major ratios, and come up with a recommendation on a certain stock given BS/IS/CS info. For my last round interview, I was given a stock to analyse for 2 hours before being grilled on my recommendation, so valuation techniques are good, as is FS analysis, SWOT analysis. What they want to see is that you can think logically and defend your reasoning, not that you know every ratio under the sun.
I am seeking a sell-side role with a boutique IB. They are going to send me an Excel model, where I need to update the financials in a template, based on information from an earnings call. I'll also need to write up a few bullets and a recommendation. I won't know which company I'll be using, until they send me the exercise, and I'll have 5 hours to complete it. I have never seen one of these templates before and hate to lose out, after surviving 5 hours of interviews with the firm. Can someone refer to me a site, where I can find one of these templates, to familiarize myself? Thank you for the help
First thing you'll do is get the earnings release, which you can find on the company's website. Earnings releases have a lot more operating data in them usually than the 10-q. If they send you the models with the formulas in tact then just look at what numbers were hard coded in last quarter and fill those in for the current quarter. Then let the model calculate the rest and make sure that the EPS number you come up with matches up with the release. Also look for any non-recurring items (gains on asset sales, impairments, foreign currency gains/losses, etc) and adjust for those. After you get the model done you'll want to analyze the results vs. the previous quarter, vs. the same quarter last year and if this is for 4Q, compare fy results. Read the commentary from the company in the release and on the call and use some of that in your write-up as well, especially any type of forward looking commentary on the sector or the company. Good luck
Hello rjroberts1-
Thanks for this. Your reply is REALLY helpful. You prompted me to take a look at Intel's release, for practice, and to familiarize myself with the adjustments and commentary.
Thanks again, Hockey2
Hello. I found the link below to be pretty helpful.
http://www.ibankingfaq.com/interviewing-technical-questions/accounting-and-financial-statements/if-a-company-incurs-10-pretax-of-depreciation-expense-how-does-that-affect-the-three-financial-statements/
To be honest I think given your history background, the interviews may not be as technical as other econ or finance majors, but you will need to wrap up decent story in what makes you different from every other applicant.
Most questions I heard from the HR recuriting for my department for non-business majors are relatively more "personality" and "matching" questions
Bump
ER Interview coming up. (Originally Posted: 01/19/2009)
I was gunning for IB, but a contact referred me to an ER position that has opened up at a decent MM. 1st round is in 2 days. Anyone got any good advice? I study finance/accounting so I was wondering what kind of technical questions should I be expecting?
Current interview prep plan: 1) Read vault guide 2) Brush up on ratios/financial metrics 3) Pick a stock to pitch in the interview 4) Quickly look over some of the past DCF models I've done 5) Won't turn CNBC off 6) Prepare some after-interview questions 7) And, obviously get my "story" straight
Should be a fun 2 days :p
make sure ur well rested and look presentable. i hated it when kids came in looking burnt out or forgot to bring a resume or wear a belt or had huge bags under their eyes. it was like looking in a mirror (heh).
i would suggest picking 2-3 stocks (maybe different industries). I assume your school has access to Investext, might be a good idea to read a couple of research reports on those stock or any reports published by your interviewer (if you know who it is).
We're about to enter a Great Depression. Don't you want a president who's already dressed for it?
What people don't tend to stress in preparation is to know your story cold. Every interviewer would ask me how did you get hear, why research, what has prepared you etc, etc. I would move your #7 to your #1. Also you should pick a stock to short. That shouldn't be hard in this market.
ER Interview (Originally Posted: 12/13/2010)
I have an informal interview this week with the PM of a $1.5 Bn fund that focuses on large & mid cap equities with a value bias. Their primary focus is on consistent dividend paying stocks that have been steadily increasing their shareholder payouts over the last decade. Most of the names in the portfolio are fairly blue-chip with minimal international exposure.
What would be some good talking points to bring up during the interview? I plan on having a few stocks to pitch based on the criteria of their strategy. I am pretty well versed in almost anything related to finance or economics.
Current yield spreads vs historical (competing asset classes, treasurys) and the effects of low interest rates and expectations going forward, ie what are you going to due if you forecast an imminent rate hike.
What similarities across business models do the corps that continually raise dividends have in common? (think of some of your own ideas and discuss)
Discuss macro and micro factors that could limit a corp's ability to paid dividends and ask how the fund deals with that risk
Due diligence/ analysis techniques for determining if a company is actually a "value" or simply on the way down
Thanks proforma!
What technicals are asked in ER interviews? (Originally Posted: 01/18/2012)
Just curious about the standard of technical Q's asked at ER interviews for associate positions.
I have seen examples on here range quite broadly in difficulty and I'm just wondering what standard really is required?
Could people give examples of technicals they were asked at interview.
Also are tough technical Q's more of a US thing? Does'nt seem to play as big a role in recruiting in London (although I could be very very wrong there).
Input appreciated.
Hmmm. I'd heard that technicals were a huge thing in all of Europe, what with the assessment centres and all. I know assessment centres are big in Asia. What else would one expect from a region filled with Asians? :D
Every firm is different in how they interview, but to best position yourself you need to have a firm grasp of basic finance and accounting ... think CFA Level I material or a finance undergraduate degree.
ER analysts don't want to spend all their time teaching a new associate the basics, so the more you can do on Day 1 the better.
At the entry level it will be questions about accounting and valuation multiples. You may be expected to know something about modeling as well. You will want to know your way around the standard filings and be able to link the three financial statements. Have an idea what fundamental factors move stock prices up and down.
ER interview (Originally Posted: 07/22/2013)
I've got an interview for an ER associate position at a small shop. The first round is at a coffee shop with an institutional sales guy and I was wondering if this is typical / if anyone has any advice on what types of questions I should expect. thank in advance
an ER interview with a sales guy? kind of sounds strange, I'm thinking it's more of a meet and greet. a lot of shops have the associates interacting with the in house S&T guys frequently, so I would think this is entirely a "fit" interview, but that doesn't mean you shouldn't slack on prepping. Somebody else might have better input here though.
So still know your sector, know your indicators, be fluent, have pitches, know the company, and just be plain ol' likeable.
I don't think this is typical, but having said that, try to approach it from the perspective of the position the institutional sales guy is in. He is probably on a morning call every morning listening to 5 - 10 different research analysts pitch their ideas for the day, then he has to somehow take that vast amount of information, pick 1 - 3 of those ideas, and spin them to clients where he might get 0 - 10 trades per day.
I would bet he is looking for somebody who can succinctly describe complex issues while creating a persuasive argument. Somebody who will give him something he can pitch to the buyside rather than somebody he ignores on the morning call.
He may not ask you that exact question, but that will be the frame he is looking through during your conversation.
ER Interview Preparation (Originally Posted: 06/27/2015)
Hi everyone! I am beginning to prepare for recruiting/stock pitches and will be following a few stocks closely this summer. I am wondering if it is best to follow stocks in the same sector or diversify across sectors. Please let me know when you get a chance. Thanks in advance.
bump
Hey, just going to give my brief take on this, but I would advise picking a sector you enjoy most and picking 1-2 names to research closely. If I were interviewing somebody, it would impress me if you did any combination of the following:
-Could pitch me a name (i.e., ticker/size/product(s)/brief history/recent news/investor concerns/your take and why/and where does it fall relative to competitors) -A complete model (IS/Build/BS/CFS/Upcoming catalysts/etc) for me to look at -A mock ER report of the name(s) you've been researching -a good work attitude and personality, so I know I can deal with you, on a person-to-person level.
Help, tips about some interview question with ER interview (Originally Posted: 11/04/2009)
If the research division asks you : what is your favorite class in college?
will I need to gear my answers towards the a career of ER?
also,
if they have asked you
if you have 10,000 USD, what would you invest? - For this, isn't it dependent my investment goal?
If I asked the "favorite class" question, I'd be looking to understand if the reasons you liked that class translated into reasons you might be good at and like research (e.g. analyzing a lot of information, figuring out what the key drivers are, trying to predict what an outcome might be given the key drivers, communicating your opinion about something to an audience). Your answer does not have to be a finance or econ class, but if you've taken some kind of class where you picked or analyzed stocks, it would be unusual for you not to mention that.
Yes where you'd invest money does depend on your investment goals and time horizon. The interviewer wants to know that you appreciate how those things can affect your answer, but they also want to hear your reasons why you picked a particular investment.
"Tell me a stock you like and why you like it" - http://bit.ly/hUwJO
A typical day in the life of a Wall Street research analyst - http://bit.ly/ZIfFr
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Whenever I ask favorite classes... I always cringe when someone says something like: Advanced Microeconomics.
I mean, really?
I'd show you have some character and answer truthfully. For me, it was a World Musics and Cultures class. Personally I'd like these answers more than some Financial Theory class. It's just not true for most people.
No idea on question 2.
I really liked my consumer behavior and marketing simulation class where I get to design experiments and predict results and use analytical tool to analyze it.. But it thing stings me " This is marketing, is it too off for an ER interview Wouldn't that be too off?
;) Thanks for the help!
ER interviews (Originally Posted: 08/05/2013)
Almost everyone tells me not to talk about a firm which the analyst is covering since he'll know more than me. What I want to know is what is the most reliable source to get this kind of information?
I would have thought this kind of information would not be easily accessible
most firms will have their coverage universe somewhere on their website. if you have a specific person you need coverage pulled for, pm me
You can find an analyst's coverage on bloomberg
Well the way some people on WSO put it, I thought they meant that somehow information about specific stocks the analyst is covering is available.
Lets suppose, I am interviewing for the Energy sector ER role- I would think that whatever I pitch should be related to the energy sector. Just that I should avoid pitching firms the analyst is an expert in?
Please let me know if I am wrong
You don't have to necessarily pitch a stock in the sector your interviewing for, but I would suggest that you show that you have knowledge of that sector in other parts of your interview. You can just pitch a stock that you've been following and like. They'll know if you're just reciting stuff or if you actually know what you're talking about.
I wouldn't be afraid to comment on stocks under his/her coverage if you can do so intelligently. Perhaps discuss subjects such as what XYZ's competitors are doing, or a recent call a rival analyst made & what you think the issues on that might be, or XYZ's chart technicals. Obviously, don't make any of the chat political or go into areas which are sensitive for him/her to discuss (i.e. thoughts on XYZ management or potential future offerings in the mkt).
OP, I used to think the same thing for ER interviews and wanted to pitch a company in the sector. Everyone I know (from fellow students to PM's at large mutual funds) told me to avoid the sector the analyst covered completely when pitching a stock, but to show interest in the sector in other ways (describing my interest, asking questions etc). Something that helped me in a couple of interviews was taking a stock pitch report I had done (either independently or for a competition)- some interviewers really liked this, and it's a good talking point. I also found that when I took it, no-one asked me to "pitch them a stock" because I was already talking about the one in the report with them. If you do something like this, make sure it is a legitimate report with models and everything, and make sure it is well presented. Hope that helps a little.
See my WSO Blog
ER Interview Help (Originally Posted: 08/10/2009)
I'd appreciate any feedback here. I got an interview for FT ER Associate position at a MM. This is not a NYC/Chicago office, but a medium-sized city.
--When I dropped my resume off in person, I saw that there was no secretary or anyone to greet you, there was no apparent waiting area for before an interview, and it's a pretty wide open office layout with business casual attire. So, should I abide by the 15 minute early rule or just show up on time so I don't have to stand around twiddling my thumbs in front of everyone?
--And what should I bring my resume in? A leather binder? Go casual with a manilla folder? And if there's no table, should I just keep it in my lap, or set it on the floor?
Sorry if these seem silly - this is my first real FT interview and I don't want to blow it by feeling awkward during the interview because of a minor detail.
Thanks.
Arrive 5 minutes early. Bring a magazine (like Newsweek or Business Week, not a fashion mag) in case you have to cool your heels for a bit before the interview starts. I'd bring your resume in a leather folio and you can put the magazine in there as well. Put the folio wherever is comfortable for you during the interview. I imagine you'll be around a desk or table. If you're both sitting in chairs in the middle of an empty room, I'd question what kind of operation you're interviewing for, but you could just put the folio on the floor.
You seem very worried about the small details. Be careful not to project your nervousness during the interview. I'd suggest you try to do a few practice interviews with someone with some professional experience, or at least an older friend who has successfully been through some professional interviews. This will help you get some of your nerves out.
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manilla folder? defintely no. bring your resume in a leather porfolio. and please don't bring any magazines. you are not going onto a 3 hour plane flight. i'm sure you can wait for 10 min in front of the building if you dont want to go up to the floor.
and don't put your portfolio on the floor. on your lap is fine.
Thanks for the input. Slightly conflicting opinions, but I appreciate both.
One last question - I've been told it's ok to write stuff down in an informational/networking meeting, but is it ever a good idea in an official job interview unless explicity required by the situation, e.g. an interviewer verbally giving you an email address or phone number?
Don't write stuff down. Look the interviewer in the eye 85%-99% of the time.
Don't bring any magazines and keeping the portfolio on your lap is fine.
Just convince yourself that you don't really care about that job too much and be yourself. Be honest even if you don't think that it is necessarily the best possible answer, lying in interviews makes you more nervous than anything (I saw many people on film lying and you can just tell). Obviously don't be too honest where it will actually hurt your chances of landing the position, spin tactics are a must in some situations.
Agree with the above. If you get any case questions its alright to use pen and paper as it is expected since they want to see a clear thought pattern. I don't know how extensive your interview experiences have been but remember in an interview its all about making the interviewer say yes to these 3 questions:
1) Is this person smart? 2) Can they excel at the job? 3) Do I actually like this person?
Get all three and your money. Also remember to chew a few mints before the interview. Nothing is more of a turnoff then coffee breath.
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