How to prepare for HF summer internship?
Going to be interning at a hedge fund (P72/Citadel/Millenium) next summer as an undergrad. Was wondering how I should prepare for it and what specific things I should know before starting. For reference I'm already going to go through Wall Street Prep and 3FS modelling alongside accounting.
I've got a reading list already and I'm currently going through the Intelligent Investor; you can be a stock market genius is next. Reminscences and stock market wizards after...
Given I have don't have a finance background, what sorta concepts would you expect/suggest I go over? Even if the topics/words seem basic (EV, Valuation for eg) please list them as even if I'm already familiar with them I'll undoubtedly see some I'm not and can make sure I understand it as much I can before my internship.
Thanks
bump
Bump
Valuation, McKinsey
Best Practices for Equity Research Analysts, Valentine
Papers by Michael Mauboussin
Read high quality Equity Research
Read Earnings Transcripts
Practice concision and the ability to figure out what is important
Where do you find high quality equity research?
BRC function on BBG / Connections via Finance Societies / Find online (there is more available than you need)
Then it is a matter of filtering for analysts that are good business analysts and stock pickers
Thank you, I'll take a look. Got a couple questions about filtering for analysts like you said; how can you tell which ones are genuinely good/talented? Also interested in how you utilise their research on the job, if someone is known to be a good stock picker/bizanalyser, wouldn't any alpha generated from their reccomendations be crowded/drained by other competitors having the same access to them? I'm under the impression that alpha (especially at beta/factor netural shops) boils down to individual, contrarian thinking so just wondering how that plays out vis-a-vis sellside research utilisation. (Guess same goes for using things like tegus)
Thanks
For US Software: Eric Sheridan at GS is great. So are Tsie Tsin at JPM and Karl Keirstead at UBS.
Big part is figuring out what the analyst is playing for: Providing corporate access? Providing the "best" models and fresh numbers? Sector expertise? Proprietary data? There are many things at play...
No alpha is generated from information providers or sell-side recommendations. You use sell-side to ramp, for models, corporate access and to gain an understanding of the distribution of views/narratives (i.e. an anchor for expectations).
I would cut out The Intelligent Investor... It's not relevant to what you'll be doing at a pod shop anyways. IMO, trading books will probably be more helpful (Reminiscences, Market Wizards, etc.). Make sure you have modeling and accounting down. I would get good at building out 3-statement models + DCFs in the meantime. See if you can get it under 2-3 hours for a simple model.TBH, I would say that reading 10-Ks will probably be more helpful than reading books.
Once a week pick one of the more interesting companies you read about and build a quick 3-statement model + DCF. Because you'll be at a pod shop, you'll have to forecast quarterlies, so make sure you practice that. Start with a sector you're interested in (even better if you know what sector you're going into) and go from there.
I concur on putting down that Intelligent Investor.
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