2-hour Modeling Test for HF (Fundemental Equities) - What to expect?

se7ensinz's picture
Rank: Senior Chimp | 25

-I have a final round analyst interview at a fairly well recognized fundamental equities shop in NY. I was told to expect a two hour test and it's likely to concern either a model update or a ground up modeling excercise.
-The PM will then decide based on what you produce and the fit you bring to the table. From my understanding the PM is an incredibly meticulous fundamental guy.
-Does anybody have a rough idea as to what SHOULD be attainable in this timeframe if it's a ground-up build?
Just the usual 3 statement + DCF?

Large PE shop experience, but the lbo models I built were relatively simple and could always use aids like and previous templates obviously; this is out of the question here, so I'm sort of biting my nails off...

Any help is appreciated. Trying to avoid a major embarassment.

Comments (17)

Nov 30, 2017

Following, curious as well

Dec 1, 2017

Same ^^^

Dec 1, 2017

Probably a revenue or cost build

Feb 3, 2018

.

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Dec 1, 2017

Interesting take. Thanks.

Dec 2, 2017

The old SAC modeling exam consisted of 3 statements with each having some line items missing and you had to fill the historicals for those missing values and also project out. That tests both your accounting knowledge as well as forecasting ability.

Not saying that's what you'll see, but others have copied that approach.

Another one is to stick you in a room with transcripts, press releases, and K's/Q's and have you do a stock pitch. That one takes longer so I don't think 2 hours wouldn't be enough.

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Feb 3, 2018

I'm in a similar situation with the test on Tuesday. Can you PM me to share your experience and how the test went?

Best Response
Dec 2, 2017

Key is to use logical assumptions and keep it simple. My typical 3 statement model covers everything below the IS in 100 lines - and that includes lines for key metrics like ROIC, etc. Except in rare situations most of the differentiation will be in how you model the key IS items (top line/ cost) unless its distressed or special sits.

Dec 5, 2017
se7ensinz:

-I have a final round analyst interview at a fairly well recognized fundamental equities shop in NY. I was told to expect a two hour test and it's likely to concern either a model update or a ground up modeling excercise.
-The PM will then decide based on what you produce and the fit you bring to the table. From my understanding the PM is an incredibly meticulous fundamental guy.
-Does anybody have a rough idea as to what SHOULD be attainable in this timeframe if it's a ground-up build?
Just the usual 3 statement + DCF?

Large PE shop experience, but the lbo models I built were relatively simple and could always use aids like and previous templates obviously; this is out of the question here, so I'm sort of biting my nails off...

Any help is appreciated. Trying to avoid a major embarassment.

Since I am suffering from insomnia I figured it would be a great time to come back on what happened:

  • Upon arrival I was escorted into a conference room with a laptop running a blank excel sheet, next to it about 15in tall stack of papers including industry body updates, Ks, Qs, board minutes and all that jazz
  • Somebody from fund admin came and said that I have two hours to "process" the material
  • Put together a haphazard IS, didn't even bother with the 3 statements, only drove the key line items to get me there
  • Rather abruptly, about 45 minutes into my drowning in information, the PM steps in and says he thinks this was enough time for me to start having a conversation
  • He asks me to walk through what I did.. so I feed him back the key takeaways from what precious little I gleaned from the material etc. (he didn't know the target industry much either, so this was a lesser issue) then went on to explaning the projections and take on FCF at which point he decided to take me out for a ride
  • Serious grilling followed as to why even model without understanding the company, industry etc. I tried to BS but he really seemed to be bothered by my expediency.. (I was like WTF, after all this was supposed to be a modelling test..)
  • Because I ran the numbers the financial statements were fair game, so I got some serious flank on hard accounting stuff pertaining to the target.. (gains and losses crap)
  • At this point he probably realized that I had no idea what I was talking about so we went on to discuss general attitude to thinking about targets in certain industries etc.
  • I don't expect to hear back from them....
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Dec 5, 2017

That's a crappy experience...sounds somewhat misleading to setup a modeling test and then be asked "why did you do any modeling?" but oh well...

For what it's worth, have a background in fundamental credit, and this sounds familiar. Fundamental guys will just smell blood and run with it, picking at every little detail and going further and further down the rabbit hole until they've exposed you for the BS'ER you are - its what they do. Turns into a giant debate and they literally get off on that kind of stuff, so wouldn't take anything personally (not that you are).

Good luck in future.

Dec 6, 2017

Set-up wise.. yeah, exactly. Not sure about others who did this, but if anybody had the balls to sit down and do no modeling whatsoever, well, I sure want to shake his/her hand..

Overall experience, not entirely out of blue though, was expecting a few wrinkles on this in some shape or form anyways. So fellas, beware of the neurotic world of fundamental shop interviews...

Jun 24, 2019

can u PM me which fund?

What concert costs 45 cents? 50 Cent feat. Nickelback.

Jun 24, 2019
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