Brandes Investment Partners — Thoughts on Firm Compared to Peers?

htj's picture
Rank: Monkey | banana points 35

Does anyone have any recent insight into Brandes compared to similar firms? I've searched the forums but most of the discussion is rather old. How do they treat their research associates/analysts, etc? Any tips on what they like to see in candidates?

Thanks.

Comments (14)

Jul 28, 2018

Are you an undergrad? Pre-MBA? MBA? Post-MBA?

Brandes is a very solid international value fund, great reputation. No clue on comp. Their RA program is quite large, but you get kicked out within 4 or so years. They have industry coverage teams organized by sector. Your experience may vary by the team, and normally you're assigned to a specific analyst. Their portfolio model is a committee based decision making structure, where a committee discuss ideas in detail after having it presented in front of them.

Associates are encouraged to come up with their own ideas and often run screens for them. Note that screens are the most common way to source ideas considering their universe of stocks is so huge (international). You will be expected to take the lead on idea generation to some extent by year 3 or 4.

Recruiting starts in August for pre-MBA. You don't actually need direct research experience to get in as an RA. Exit opps after 4 years is usually RA at another buy-side shop or MBA at a top 10 school.

Obviously since they don't require prior experience in research, expect them to ask mostly behavioral questions. focus will be on passion for investing. Check my recent post on this topic in general. Hope this helps.

Jul 28, 2018

Thanks for the information, very helpful.

Definitely looking at this from a pre-MBA perspective. I just read through your other post, which was super helpful as well.

Where should one be looking Pre-MBA?

I can move this discussion over to the other thread if you want.

Jul 28, 2018

I have no clue how to move a discussion to the other thread. Feel free to do that if you feel that this information would be helpful for prospective RA's.

I am assuming you're undergrad at UCLA or one of the west coast schools Brandes does OCR in? You should try for Dodge & Cox, which should begin hiring relatively soon. I would recommend not being too picky when recruiting for buy-side research since beggars can't be choosers (not saying you're a bad candidate, just commenting on the absurdly low number of openings in this industry versus how many people try to break in constantly). APPLY EVERYWHERE leave no door unopened, leave no rock unturned. Worst case scenario you get rejected at a place, but you gain interviewing experience and you try again. Try every single shop I listed on the other post that hires out of undergrad, and then also do some networking with the ones that do not.

The reason I bad mouth the larger firms is because at this point, they're not really investment managers anymore and have devolved into pseudo index funds charging active manager fees. For instance, T Rowe's value fund has around 250 holdings in it - how could you expect anything more than market performance out of that?

The reality is that if you get into a research associate program somewhere, make sure to be always reading and always improving your skills as an investor. Try to jump ship to a better shop if at all possible, but not career-ending if you do not. After your 4 years are done, hopefully get into the best asset management feeder schools: HBS, Stanford, Booth, Upenn, Columbia and then go from there.

Aug 11, 2018

It's a great place to work but be aware that the entire long-only industry and especially Brandes are under tremendous pressure. Brandes' AuM has collapsed from >$120b before the financial crisis to <$30b today and keeps going down. Their fund performance has been pretty poor across the board so there is no sign of a turnaround anytime soon. It's a good place to get a start in the industry and a great place to live, but it's not a good place to be long-term. If you have specific questions I can answer them.

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Aug 11, 2018

If I recall correctly they've brought on mba interns but haven't given out many offers in the last few years. Don't think that's a good sign at all, although my info may be outdated.

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Jul 28, 2018

Do you have any insight regarding the recruiting process?

I figure it might be helpful to get a lot of the pertinent info into one thread so future people can get a good sense of the firm without jumping all over the forums.

Aug 11, 2018

They used to do on campus recruiting at top undergrad business programs such as USC, Berkeley, UCLA, UVA, Texas, Wharton, etc. in addition to the two local schools (USD and UCSD). They would consider resumes from other schools as well, but the candidate would have to show interest or have a connection.

First round on campus interview was pretty typical - why Brandes, why investing, what is value investing, why did you choose your school and major, etc. They also asked simple questions about the three financial statements and valuation. This part was pretty easy and I think that was intentional because they wanted to fish from a large pool at the superdays.

Second round consisted of a superday where they would bring in 8-10 candidates. They used to have 2-3 superdays. The superday was much harder and you would be interviewed by two people at a time, 5x interviews, and would be asked detailed questions about financial statements, how to value a company, what makes a value stock, etc. There was also a ~30 minute accounting test and a ~30 minute writing test. This was definitely one of the harder and more thorough interviews that I had in undergrad. Offers went out about a week after the final superday.

Again the above was quite a few years ago so it may have changed. I've heard that they now hire lateral candidates from investment banks or brokers, which is a change from how they used to do it. No idea what the process is like for laterals unless they're participating in the normal superdays which happen in October.

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Aug 19, 2018

Would echo many of the above comments. Brandes is a well-respected value shop, but they've had a pretty long stretch of poor performance.

I've spoken to several Brandes associates, and I heard something strange (not sure if this is a reason for their underperformance). One guy said that they typically look for 5-15% returns (as their base case) a year with new opportunities. I understand this is a difficult climate for equity investing, but even so, this seems a very low target rate of return.

At my shop, we would look at 10% as a downside case scenario (at least targeted), so I can't imagine 5-15% would be particularly compelling is a base case (and we've put up the numbers to beat our benchmarks, so something's working). Either way, Brandes is also going through a divorce right now, so this certainly isn't helping performance. Regardless, they're a 4 year program (at which point, they almost always kick you out), so it's a good place to learn and then grab an MBA to go to an AM/HF post-MBA.

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Aug 11, 2018

One guy said that they typically look for 5-15% returns (as their base case) a year with new opportunities. I understand this is a difficult climate for equity investing, but even so, this seems a very low target rate of return.

They would smash most benchmarks if they actually achieved this long-term, which alas they haven't. Let me know what firm has consistently earned >15% compounded for a long time period especially in international and emerging markets.

Brandes is also going through a divorce right now, so this certainly isn't helping performance.

Charles Brandes hasn't been involved in investment or day-to-day decisions at the firm for nearly a decade.

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Aug 19, 2018
  1. 5% doesn't smash a benchmark. 10% could potentially beat it. Potentially. Besides, it's a targeted rate of return, not an actual return. The entire reason you target higher rates of return (assuming are you are staying conservative on assumptions and not stretching them to fit your magic number) is because you leave greater leeway, whether that results from analysis errors or from the market simply moving against you in the short-mid term. However, 5-15% doesn't offer much leeway for either of those things. We target base cases of often 20-25% year annualized (while staying conservative), often achieving returns in the mid teens range. And if we don't see returns in that range from an investment, we simply pass and look for another opp. You seem to be confusing targeted rates with actual resulting rates of return, and are also taking the higher end of the range (15%) as your argument, whereas it would be more sensible to use 10% as that is the middle of the range. Clearly, they haven't been anywhere near beating the benchmark over the past decade which explains all the redemptions.
  2. I'll go ahead and take your word on this one. Although, I would happen to be concerned as an investor in the fund if I was buying into the founder & his methodology, and he wasn't even involved with the investment decisions.

The information in my original comment, like I said, was from several associates going through the 4 year program a few years back. Like I said though, still a good place to start your career, and get an M7 afterwards. Although, I'm not sure if I would want to be a post-MBA analyst there.

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Most Helpful
Aug 11, 2018
therealgekko:

1. 5% doesn't smash a benchmark. 10% could potentially beat it. Potentially. Besides, it's a targeted rate of return, not an actual return. The entire reason you target higher rates of return (assuming are you are staying conservative on assumptions and not stretching them to fit your magic number) is because you leave greater leeway, whether that results from analysis errors or from the market simply moving against you in the short-mid term. However, 5-15% doesn't offer much leeway for either of those things.

It sounds like they told you they use 5-15% WACC to calculate fair value, which would be consistent with their ex-U.S. investment universe which ranges from Japan to Argentina. They calculate upside / margin of safety after discounting by the appropriate WACC.

I would happen to be concerned as an investor in the fund if I was buying into the founder & his methodology, and he wasn't even involved with the investment decisions.

It's not one "fund" and he hasn't been involved in any meaningful way for a long time.

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Aug 11, 2018

Also please post the performance of the MSCI EM and EAFE indicies over the past decade and let me know whether a 5% return would beat those indicies.

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