FIG Primer/Resources
Interning at a L/S fund specializing in financials in the spring. I was wondering if anyone knows of good primers/ways to go about learning. I have all the time this winter break. Any books would be great too.
For preparing to intern at a long/short fund specializing in financials, here are some highly recommended resources and books based on the most helpful WSO content:
Books on Value Investing and Financials:
Sector-Specific Reads:
Hedge Fund-Specific Resources:
Technical and Analytical Skills:
Stay Updated:
Additional Recommendations:
These resources should give you a solid foundation to excel in your internship. Good luck!
Sources: S&T Literature/Books for Interns?, S&T Literature/Books for Interns?, Best Books To Read For Incoming HF Analyst, How to get a Hedge Fund Internship, Advice for summer Asset Management interns
bump
I liked the book Bank Investing: A Practitioner's Field Guide. There's a gook bank primer called Banking 101 by Deutsche Banks' Matt O'Connor that you should be able to find on the internet.
Fins L/S PM here. There are decent primers & books, e.g. ‘The Valuation of Financial Companies: Tools and Techniques to Measure the Value of Banks, Insurance Companies and Other Financial Institutions’ and primers by industry specialists like Autonomous.
But the reason I said decent instead of good is that I’ve have never encountered a book or a primer that has genuinely helped me on the job in a substantial way. The best return on invested time to optimise your learning is reading the releases, presentations, annual reports and transcripts of the companies you will cover.
Try to link the guidance assumptions to commercial and macro drivers, build simple 40-row models for say 3 companies in each sub vertical within financials, compare and contrast how they breathe & make money. That’ll get you miles further than books straight from the source.
Look at the share price 4 qtrs ago, read what they said on earnings day and what the price action was. Create a short-form thesis based on that in isolation, and then roll forward another qtr to see what happened, px action, revisions to guidance and why, until you reach present day. This will give you way more depth and breath. In other words, study the companies the way you would on the job.
As a fins PM, how have you enjoyed focusing on this sector? Going back, would you do fins again, or something more traditional like consumer or tech? Could you also touch on how many fins pods there are vs other sectors, and what fins pod/fund recruiting looks like?
I do enjoy it. I think the space lends itself well for market neutral, factor constrained type investing as there’s a healthy mix of secular winners vs. losers, cyclical winners vs. losers, enough liquidity to deploy risk in companies across different type of vol bands for portfolio construction purposes, and adequate level of uncorrelated sub-verticals for sharpe optimization/hedging.
Stating obvious, it’s a technical sector, which leads to a fair degree of complexity in bottom-up type assessments of say what’s actually peak-on-peak and trough-on-trough type bets. This creates a contrast between how inst’l vs. retail, specialists vs. generalists perceive the same type of market information in abs. and rel. terms.
I love it when I hear “oh no I don’t touch financials because of xyz” from other PMs/investors. Rightly or wrongly, I get a sense of barriers-to-knowledge, as others find distain for some of the quirky dynamics in Fins (e.g. asymmetric betas, up less on up days, down more on down days) etc. Perhaps most importantly, the space is very well suited to my process of alpha capture. I have a good idea who I’m buying from and why, and who I’m selling to and why.
With that said, I don’t think FIG is special in any sense. There are ways to create processes for a repeatable way to systematize and identify alpha buckets in all sectors. It’s a diverse enough space that some pockets always have a degree of cyclicality to form views on, frequent sector rotations prone to generalist inflows/outflows, yet a healthy spread in factor and style loadings (e.g. banks value, fintech growth, etc) to construct a desired risk expression.
In my case, I’ve found areas of Fins that allows me to capitalize on my domain knowledge within overlapping subsectors where there are distinguishable commercial debates, without requiring heavy reliance on forming views based on forward curves and deposit repricings, in what is often a very macro sensitive sector. You don’t play regional banks the same way you play exchanges for instance.
Whilst I personally believe healthcare and financials are some of the best sectors to build deep and lasting domain knowledge (specialization-to-alpha, discriminating headlines based on u/l economic impact), I’d be careful with saying it’s “better” in relative terms, all things being equal. I see other PM’s monetizing differently in other sectors, even PMs harvesting alpha differently in the same sectors.
A bit off topic but… Putting Fins in contrast to other sectors. From the data I’ve seen the GICS sector with consistently highest sector dispersion (difference between winners and losers) is IT (where most of the exciting parts TMT falls, which does include some part of Financial IT/Data plays). So theoretically it should have the largest “alpha pool” in market neutral land if you’re always right. But the risk of blow-ups should in theory be greater as well. I find Fins to be “up there” in relative sector vol (esp amongst insuretech, neo-underwriters etc.) but there are enough defensive low beta places to hide when I can’t read the market. As such it makes it a good place to be for a variety of market regimes.
does fintech / payments / insurtech fall under the purview of fig or tmt at large funds
Depends on the fund and type of fintech. I've seen more capital intensive ones covered more by the FIG-types vs the more software/recurring-forward / higher growth models typically fall under TMT.
Have been focusing on balance sheet financials for a couple of years and would say it is all about understanding asset quality, their behavior in different macro scenarios and liability management
There’s a DB bank primer really helpful online
I’ve looked and it seems to be behind a paywall. Do you have a link?
Have some bank/insurance primers if you still need it, pm me
If you have access to sellside research, look for Barclays’ annual bank primer by Goldberg . It is what is used at some MBA program investment banking training programs.
If you don’t have equity research access, listen to the last 4 JPM earnings calls and look up every topic or word you don’t understand.
LLMs can build decent primers to start (especially for the very basics) net interest on Substack is great (former financials buysider). There’s a guy on twitter who runs a fins hedge fund called gator capital who writes a lot. Eisman has a podcast now and covers fins occasionally.
Reiciendis aut consequatur quas. Qui cum adipisci praesentium rerum eos. Id amet animi quibusdam odio quae magnam modi aut.
Vel distinctio officia eligendi corrupti facere molestiae. Aperiam dolores culpa accusantium voluptas.
Nulla nemo et dolores harum et cupiditate. Sed nemo doloremque consequatur explicabo dolorem.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...