Hello everyone,
I am preparing investment ideas for some upcoming hedge fund interviews. My question is: how detailed does each investment idea have to be? Did you guys actually build your own model to support your investment ideas (I wouldn't have the time for that with my current schedule).
For example, if I say during an interview that 2009 expected EPS for this company is $0.50, and therefore P/E is, say, 10x - can I quote I/B/E/S consensus estimates or do you have to do your own modeling to get to expected EPS? Do hedge funds expect you to actually go and model out the projections?
Appreciate some advice here, especially for those who are actually in the hedge fund industry. Thanks.
In this instance, seeing as this is only an interview and you don't have time to model anything out, I would take 2008 EPS and apply a growth rate to it (ex: 2-3%). Then you can justify your growth rate with a couple of good reasons. That should be sufficient, IMO.
Another (a bit more time-consuming) way is to grab an analyst's report/model, and make your own adjustments to his 2009E numbers. However, here, you need to be able to justify each one of your adjustments.
On the job, I do a lot of the latter, but if I was interviewing someone, the former would be acceptable in my book.
Good luck.
Thanks Mez.
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