I am able to start a new role (Analyst) in a healthcare HF in Jan 2019. How should I prepare for the role given I have no exposure to HF or investing before?
My key expertise lies in healthcare technical fluency (think PhD and postdoc in Biology) and I come from MBB consulting background. The HF that I am joining invests in early stage life science companies based on clinical trial analysis (i.e. event driven investing) among other business metrics. They also have a small data/analytics/quant shop that works with the healthcare group.
So, what should I be reading/consuming now to help with my start? How can I setup myself for long term success? Books, courses, etc?
Generally speaking they hired you - as you said - for a technical skill - therefore that obviously should stack up.
I personally would read broker reports on the industry you cover and other biotech / pharma / healthcare subsectors. Not for you to learn but more to understand how the market thinks / writes / feels about this in general. How detailed do other people look into things? What knowledge do people have (and wherefrom) when taking positions in your universe? impact of certain events etc. Equity stories, capital market communication strategies etc. i.e. everything that is market / share price relevant but not the technical lab skills you posses
Very helpful, thanks!
Is the best way to obtain everything that is market/share price relevant such as broker reports, analysis, etc. available behind a pay wall? Is there anything out there that is free for consumption?
I am trying to see if I should financially invest in this learning process and if so, what would be the most trusted resources as opposed to low quality material. This knowledge will ensure I am not coned!
I'm a healthcare analyst in a tech/healthcare industry-specific fund for the past 4 years that broke into the the HF space with biotech industry experience and no finance background. Similar to your background without the advanced degree (B.S in Biomedical engineering) and without consulting. Have had success in clinical-stage biotech plays though have branched over to other healthcare models. First, I'm assuming you have limited public equity experience and know-how, is to understand how the public equity market works. My preference is youtube videos. Then, clinical-stage biotech valuation. Brokerage initiation reports are a great place to start. Get familiar with valuation methods such as Risk-adjustment derivation for rNPV. Understand TAM calculations, EV/Sales multiple (my favorite back of the envelope first read biotech valuation method), therapeutic landscapes etc. and go through publicly traded Biotech case studies and simply ask, "how is value created?"
When I first started out and in preparation of the industry change, I organized on an excel all the publicly traded companies within my realm, then attempted to go through every single name and looked at what each company's core technology and core pipeline assets. Basically a humongous comp table/valuation map.
Then went through all major healthcare public equity industry reports from bulge brackets (Goldman, JP Morgan, are my picks for biotech), healthcare boutiques (Cowen is my top boutique pick) to draft out major short, intermediate and long-term themes. After reading enough overlapping themes from different banks should converge as well as your own themes should come to light. The main questions are likely to be: 1. Where is the growth? 2. What technology is trending, ie, is it CRISPR, Gene therapy, bi-specific antibodies etc. ? 3. Where is the slow-down? 4. How is the current regulatory environment? etc.
Depending on your exact role in the fund, everything in the end should filtered down to your core high conviction coverage-list filtered by time horizon, risk/reward and a short investment thesis. So to review the key questions to keep in mind: 1. What companies will I be covering and searching through to generate investment ideas and pitches? 2. What are the themes in today's biotech/healthcare industries? 3. What does the market think about these companies and how is it valuing them? 4. What is not priced in yet and what is a fair-value for these companies from my own point of view? 5. What is the risk and how to I mitigate it?
I may not have addressed your answer directly but hope I was able to help.
Thank you very much for your inputs! A few quick follow-up questions:
Thank you once again for your time and help, truly grateful!
just read LDNBNKR's comment. It's possible this healthcare focused fund separates the equity analysis from the fundamental scientific research. I know a few funds that do this. Do they expect you to source ideas and give investment recommendations or are you there to assist in fleshing out ideas and work on the due diligence and research? It's very different. One is assessing stock movement in short, intermediate and long-term time horizons and the other is assessing pure clinical risk (r of the rNPV).
I'll get back to your other questions tomorrow!
As part of my role I do both the scientific analysis and the investment recommendation (i.e. non-scientific financial analysis and other metrics - e.g., people) while sourcing the ideas. So, this is an end-to-end role within the context of healthcare, even potentially including medical devices and health services in the medium-term (starting with drugs - pharma and biotech first). So in the way you described it, I will be assessing stock movement and the clinical risk.
Thanks for taking time to respond to my questions!
@Rui725 - any thoughts on my questions above? Thanks a ton for your help!
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