starting out

what is the best way to pick up coverage of an industry? do you start reading the 10Ks? build industry models? company models?

some background: i started an internship this week at a L/S hedge fund. they assigned me to a pm who does energy, which is a new area for me. while he has given me specific tasks already (data driven assignments), the goal is for me to learn the space over the next semester. he has little time to teach me what he knows, so i'm going to have to do this on my own. i plan on reading some primers from the sell side.

 
Best Response

Your school library should have access to Morningstar, Reuters, MarketWatch, or other data sources that would have detailed research on competitiors, risks, and future growth of the industry as well as specific companies.

Read some of the analyst reports on specific companies. I would get some primers on the industry and then read/learn about 6 companies within that sector. Monitor the stocks, keep up with the fundamentals and technicals.

Keep asking the PM questions and try to show the knowledge that you have gained. Ask questions about why he chose different companies, why he made XYZ investment decision, what was the reason for the decision, what factors have to change for him to change his positon.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 

Energy companies have a number of metrics that are unique to the space. For example:

Power generation companies: Heat Cost, Spark Spread, Debt/kWh, etc

Drilling/Extraction companies: Proved reserves

Refining: Crack spread

There are a lot more. Knowing what these are (at least in theory) would be a big head start.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 

sounds like a pretty sick internship assignment: "spend the semester learning about a fascinating and extremely critical industry, bill me for it, put my name on your resume, and potentially get an extremely high paying job here post graduation"... alas, how I miss internships...

 

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