Recommended Books for equity research

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I've locked up my internship for this summer as an equity research analyst intern. Now that I don't have to worry about interviewing and can put less of a focus on networking I would like to find a few books on equity research to read in my free time. Any good recommendations? Any books that you have read and really enjoyed or learned a lot from? Though my focus is on research, please feel free to recommend books that you just think are a great overall read as well. Thanks, I look forward to your thoughts!

Comments (98)

 
Jan 30, 2010 - 5:40pm

wall street meat and liar's poker

Smokey, this is not 'Nam, this is bowling. There are rules.
 
Jan 31, 2010 - 5:02pm

listen, i am pretty sure an intern is not going to want to read graham and dodd for a summer internship. it is better to get the gist of what working at an investment bank is all about rather than learning the intricacies of valuation.

... he also said, "please feel free to recommend books that you just think are a great overall read as well"

Think before you speak.

Smokey, this is not 'Nam, this is bowling. There are rules.
 
Feb 15, 2010 - 6:55pm

Take a look at "Applied Equity Analysis." I just ordered a copy. Supposed to be a very practical book from someone who worked in sell side research. I was debating between this and some others, but will probably read this and then potentially dive into either a) Security Analysis, or b) Steven Penman's financial analysis textbook thereafter. If anyone has any thoughts on which to choose, it'd be much appreciated. Both books require very very many hours so I'm still wrangling over what to go with.

 
Feb 25, 2010 - 7:52pm

I'd recommend "The SuperInvestors of Graham and Doddsville" over "The Intelligent Investor" simply because it's a quick read and gives a good overview of what value investing is about. I would avoid "The Intelligent Investor" for now because it's enormous and you need time to chew over and digest what Graham is saying. You should definitely read it, but when I tried reading it before my internship it gave me an enormous complex about how much I didn't know :-)

http://www7.gsb.columbia.edu/alumni/news/hermes/print-archive/superinve…

I don't think any one's mentioned Buffet's letters, but you should definitely look at those if you want to do some reading. One letter is about 22 pages, so it's good for reading on the go. Man's got style.

 
Feb 26, 2010 - 12:32am

For general equity research, assuming you are just building a foundation, I would recommend any Warren Buffet related books. One that I enjoyed and has helped me a lot is "A Random Walk Down Wall Street" mainly because its current.

If you are looking for specific books dealing with valuation, I am halfway through Jim Kelleher's book "Equity Valuation for Analysts and Investors." Some things, particularly in the beginning, have gone over my head but it is a great and relatively simple book that walks through DCF, multiple method, and ratio analysis.

Recent College Graduate
 
Feb 26, 2010 - 12:33am

James Valentine's Best Practices

It's one of the better ones around for practitioners and is apparently updated annually or so (can't verify this as I bought the first edition and not going to buy another copy for the luxury of looking for updated material). I keep this one on my shelf in the office.

Note that I said practitioners because a big part of the book is about workflow and process. It may not be that applicable for an outsider, so to speak.

 
Feb 26, 2010 - 12:39am

Books for Wannabe Equity Research Analyst (Originally Posted: 02/13/2014)

Hello everyone,

I'm graduating with an MA Economics in May, and want to go into Equity Research. While I have full confidence in my abilities to do the job and to interview well and everything, I'd like to spend these next few weeks/months preparing as much as I can.

I'm looking for a good book that goes over financial modeling that equity analysts need to do. Does anyone have any suggestions? I'd preferably like something that focuses on what equity researchers need to know as opposed to IB, but if you're suggestion includes IB too, that's fine.

Thanks a lot, I appreciate the help.

 
Best Response
Feb 26, 2010 - 12:44am

//www.wallstreetoasis.com/forums/er-modeling-test-1 .... check my post in this link - the links in my post will be more important than the other stuff i wrote -- the stuff in this should help you in the short term

do the CFA - should be good for the long term but you can learn ER stuff without it

below is a list of books ... My personal favorites are:-
1 McKinsey Valuation
2 Financial Valuation: Applications and Models
3 Financial Shenanigans
4 Intelligent Investor
5 How to Read a Financial Report: Wringing Vital Signs Out of the Numbers (there are other similar books by Mariusz Skonieczny & Thomas R. Ittelson - without being able to analyze Financial Statements and the notes to the statements everything is pretty much pointless

Books - these books are for the long term and sort of financial general knowledge
1. Financial Risk Taking: An Introduction to the Psychology of
2. Currency Wars - Rickards, James
3. Damodaran - Investment Fables
4. Taleb - The Black Swan - The Impact of the Highly Improbable
5. Antifragile Things That Gain From Disorder
6. Laiou - Morrison - Byzantine Economy
7. Wiley Behavioral Finance and Wealth Management
8. Accounting Shenanigans
9. The house of rothchild
10.The Handbook of Business Valuation and Intellectual Property Analysis
11.the essays of warren Buffett
12.Damodran Investment Valaution 3rd
13.Security Analysis - Graham & Dodd
14.Adam Smith
15.Economics - Freakonomics - A Rogue Economist Explores the Hidden Side of Everything
16.The Bank Analyst's Handbook
17.Stocks for the long
18.Against the gods
19.Common sense on mutual funds
20.Irrational exuberance
21.Business Valuation - Shannon Pratt
22.The Handbook of Fixed Investments
23.Active Value Investing
24.When markets collide
25.McKinsey Valuation
26.The Real Warren Buffet
27.Global asset allocation
28.Investment Performance Measurement
29.The Handbook of Traditional and Alternative Investment Vehicles: Investment Characteristics and Strategies
30.3 Modelling Books:-
Building Financial Models - Tija 2nd
Wiley.Financial.Modeling.with.Crystal.Ball.and.Excel.Mar.2007
Financial Simulation Modeling in Excel + Website A Step-by-Step Guide
31. Quantitative Business Valuation
32. Models behaving badly
33. Restructuring Macroeconomics
34. Macroeconomics: Understanding the Wealth of Nations
35. Economic Development (11th Edition) (The Pearson Series in Economics)
36. Liars Poker
37. The Global Crisis Makers
38. When Genius Failed
39. The Investor's Dilemma: How Mutual Funds Are Betraying Your Trust And What To Do About It
40. Clash of investment cultures
41. The Economics of commmodity markets
42. Damodaran Investment Philosophy
43. Behavorial Investing
44. Financial Markets & Exchanges Law
45. Market Microstructures in Emerging and Developing Market
46. The Economics of Commodity Markets
47. The Future of Finance
48. Information Rules: A Strategic Guide To The Network Economy

General Direction Should be:-
1. Equity/financial modelling Modelling: 30,32 ---- for modelling I would also recommend youtube videos, WSO material, Macabacus, etc … and do learn to Analyse Financial Statements
2. Valuation/Analysis: 25,8,12,31,10,28,29
3. Investment Philosophy: 3,23,38,42,40,17,
4. Investment Psychology: 3,7,20,43,
5. Markets products/regulation: 27,41,48,44,46,47,16
6. Economics current/classic/theory: 14,34,45,35,6,2,5,4,33

these books should be available on piratebay.com, 4shared, etc

 
Feb 26, 2010 - 12:52am

@"TheFamousTrader" Correct me if I'm wrong, but isn't Financial Modeling by S. Benninga a textbook? Wouldn't it be better to take a financial modeling class at school rather than going through a whole textbook by yourself?

Consumption smoothing is retarded. If you stay in this game for a handful of years, money will be the least of your worries. Live it up, because this is the one time in your life where you might actually have time to spare.
 
Feb 26, 2010 - 12:56am

Those book suggestions are great for a general overview but if you really want a feel for what you'll be doing, get your hands on actual research reports published by an analyst. That will give you insight into the specific industry statistics you'll need to research and the various valuation methodologies that are used and why. You'll also get a feel for the tone of the research that you'll be writing as an analyst/associate in ER.

 
Feb 26, 2010 - 12:59am

my previous list was very general because there is more to being an equity analyst than knowing valuation models .. however two books that will cover most of your valuation & modelling needs
McKinsey
Equity Valuation: Models from Leading Investment Banks

and modelling only can be learned from MacaBacus (free with templates), BIWS, WSO and ...
http://www.edupristine.com/ca/online-courses/financial-modeling-for-equity-researcher/

 
Feb 26, 2010 - 1:11am

If you are interested in the modeling aspects (and its gets a bit more nitty gritty) I would recommend "Equity Valuation for Analysts and Investors" by Jim Kelleher. The first few chapters might seem a bit confusing but is a good overview of modeling DCF and P/E.

Recent College Graduate
 
Feb 26, 2010 - 1:12am

Learn to Write Well by Reading Good Research Report (Originally Posted: 12/01/2013)

Hi,

    I work in research as an associate, new to the job and my writing needs some work, looking to improve my writing and analytical abilities. I figure reading good research reports would be a good start. 
    Can anyone recommend any specific analysts or firms that publishes quality reports on a timely basis? (The reports could be on credit, equity, security specific or macro/top down, I am in the alternative investment industry, interested in learning all aspect of the markets)

Thanks

 
Feb 26, 2010 - 1:15am

You can usually find solid equity reports on Seeking Alpha. Look in either the "top ideas" or "alpha-rich ideas" sections. Occasionally, you will find very lengthy and detailed reports by prominent hedge fund managers like Whitney Tilson (Kase Capital), Chris DeMuth Jr (Rangeley Capital), and several more. I publish my investment ideas on SA, with three out of my five receiving "editor's pick". PM me if you would like a link to my articles.

Value investor working in the hedge fund industry. Portfolio Manager, Analyst at a $380+ million Texas-based value investing HF. Former Research Consultant, Analyst at a NYC-Based deep value and special situations HF.
 
Feb 26, 2010 - 1:16am

1) Buy-side pitches at investor conferences (i.e. VIC). Some are more coherent than others, but all of them know how to build a thesis
2) Bernstein still has a lot of quality research, but access is tightly controlled. Look up the institutional investor all-americans in your sector of choice and read them, don't discount the top guys at smaller firms (i.e. Imperial in Industrials, Moffet in Cable).

 
Feb 26, 2010 - 1:19am

Equity Research Associate Interview Help - What Books Should I Be Reading? (Originally Posted: 08/11/2014)

Hi guys,

I'm one week away from a final round interview for an equity research associate position. I hear that a common thing that may be asked in the final round is what finance books have you read recently. To be honest, the only thing I've read in the past year or two outside of CFA cram books is Flash Boys.

I know that sounds pretty weak and was wondering if anyone might have suggestions on more recent finance books that might be good to read and discuss during the interview. Apologize if this is a stupid question and thanks in advance for your guys' help.

 
Feb 26, 2010 - 1:20am

I recruited from school and must have met 50 people through the course of networking for an EQR job. I interviewed with 7 firms including first rounds and final rounds. During all that networking and all those interviews, I was never asked what finance books I read. Read for pleasure- it'll make you a more interesting person.

 
Feb 26, 2010 - 1:40am

Other than reading financial reports and news, how else do ER analysts research? (Originally Posted: 07/13/2012)

What are some unique independent research methods used by ER analysts in order to have an edge?

"Respect others in their view, and demand that they respect yours. Love your life, perfect your life, beautify all things in your life."
 
Feb 26, 2010 - 1:43am

1) Company contacts (non-management: guys in sales, R&D, procurement)
2) Industry experts (research institutions, academics, suppliers/distributors)
3) On the ground research (ie: visiting a retail location if you are a consumer analyst)
4) Competitors of the company your cover (ie: Dell, HP, Lenovo, etc.) and piecing together the story.
5) Competitors at other banks (ie: reading other analysts reports)

Financial reports are usually the last method of research and it's just a validation/check - a good analyst should have enough contacts that he/she knows what the company should be reporting, or expected to report.

Granted they are not right 100% of the time as companies do surprise on the upside or downside, but financial reports are backwards looking and everyone has access to that info, so there is no value add in that to clients.

===============

I'm also working on a project to give people insight into the sell-side, would love to have your input in a short 20-s survey:

http://www.surveymonkey.com/s/F8SBV9K

 
Feb 26, 2010 - 1:44am

ER Books - Banks (Originally Posted: 08/23/2012)

What are the best books out there for analyzing banks?

There's a whole bunch on Amazon:

The Bank Analyst's Handbook: Money, Risk and Conjuring Tricks
Bank Valuation and Value-Based Management: Deposit and Loan Pricing, Performance Evaluation, and Risk Management
Banking and Financial Institutions: A Guide for Directors, Investors, and Borrowers

among many others. Anyone have comments on any of the above or can chime in with recommendations of other books on the topic they found particularly useful (preferably on a fairly introductory level emphasizing bank accounting)? Thanks.

 
Feb 26, 2010 - 1:45am

I have read the Bank Analyst's Handbook...don't buy it. 90% of the book is explaining how banks work, and a lot of the regulatory information is outdated post-2008. Also, a Google search may or may not turn up a free PDF of the book...

I would try to get in touch with any contacts you have in a FIG coverage group, or in Banking ER. They often make industry primers for new analysts.

 
Feb 26, 2010 - 1:46am

The Bank Valuation and Value-Based Management book is decent. I would say half the book is useful in reference to valuation stuff. The other half is risk management and that is not all that useful.

Smokey, this is not 'Nam, this is bowling. There are rules.
 
Feb 26, 2010 - 1:47am

Banks & Insurance ER books (Originally Posted: 06/24/2017)

Hi there,

I am a credit portfolio manager on subordinated financial debt (AT1, T1, T2 etc.). I am wondering if there are any good books on financials' (banks and/or insurance) equity research.

For you guys on ER what would you recomand to read to beef up my analyst skills ?
Also, any training that are worth spending the corp' money ?

Tks,

Vincent

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