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CAREER PRIMER
Presenters
Darren Viegas
BMO Capital Markets – Equity Research Summer Associate
Justinne Poliarco
CIBC World Markets – Investment Banking Summer Analyst
Agenda
Networking
Recruiting
Resumes
Sell-Side
Investment Banking
Equity Research
Sales & Trading
Buy-Side
Private Equity
Wealth Management
Hedge Funds
Networking – Background
◦ A diverse set of business contacts is necessary for any job in finance
◦ Networking is a term thrown around a lot in the business world, in finance it is one of the three tools that will land you a job
Job
Interpersonal skills
Networking
Technical Skills
“It’s not what you know, it’s who you know”
Networking – Establishing Connections◦ As an Analyst it will be
important to first establish a network as diverse as possible
◦ Once you have found your vocation, specialize
◦ McMaster Alumni will be more responsive because they were once in your position
3r
d
Degree Connections
McMaster Alumni
Cold - Connection
Networking Hierarchy
Resp
onsi
vene
ss
Networking – E-Mail DraftDear Mr. Smith,
My name is Darren Viegas and I am a [4th year Commerce] student at McMaster University. I am interested in pursuing a career in [Specialized: Equity Research] the Capital Markets. I have taken an interest in your firm – BMO Capital Markets – after reading a research report from Andrew Kaip.
I will be travelling to Toronto on October 29th for the day. I was wondering if you would be able to meet with me for a coffee? I would love to get your thoughts on the industry and hear any advice you may have for me.
Thank you,
Darren Viegas[] indicates optional inclusion
Networking – Initial Interaction◦ Once you have reached out, wait a few days for a response
◦ DO NOT spam the same person continuously. Wait a set amount of time [e.g. wait every two weeks].
◦ Make sure grammar and spelling is flawless◦ Meet at their convenience
◦ Meeting preparation◦ Read up on current news◦ Have a few key talking points◦ Dress in business formal attire
Networking – Coffee Meeting Dos and Don’ts
Speak Well Mention current events
Have material ready
Background research
Follow Up
Be a Robot Be a Know-it-all
Be Rude Be Boastful
Be Late
DO DON’T
Networking – Following Up◦ Always be polite and follow up with a Thank-You Email
◦ Thank you for time + advice◦ Add on Linked-in◦ Create a spreadsheet of contacts
◦ Re-establish connection periodically◦ Your goal is to stay top of mind for recruiting season◦ Discuss current events + stock pitches◦ Consistently mention and inquire about internship opportunities
Networking – Analyst DeliverablePick an finance area of your choosing
1. Search for McMaster Alumni (Linked-In Alumni function)2. E-Mail to arrange for coffee OR phone call3. Report to your PM once completed for guidance/feedback
Recruiting Target School vs. Non-target School
◦ Target School: all the major banks actively recruit at these schools◦ “Actively” means info sessions are held on campus, major banks attend
their school’s conferences and events, first round interviews are held on campus
◦ Non-target School: no major banks actively recruit on campus
For interview selection:◦ Students in target schools will compete mostly with other students
WITHIN their school◦ Students in all the non-target schools will compete against each other
◦ McMaster is typically considered a non-target school
Recruiting Recruiting Timeline
◦ Info sessions◦ Accelerated
interviews
◦ Applications open◦ Due start of Jan
◦ First week: First Rounds
◦ Second week: Final Rounds
Oct to Nov Nov to Jan Jan
Recruiting Interview Process
◦ Competing against students within non-target schools
◦ 1-3 interviews◦ 30 minutes to 1 hour
◦ Competing against all second round candidates
◦ 2-6 interviews◦ 1 to 4 hours long
First Rounds Second Rounds
CandidateReception
• Candidate receptions or candidate dinners are often used within the process
• Used to gauge whether the candidate will fit within the team
Recruiting First Year & Second Year Opportunities
◦ Most formal internship programs mainly recruit third year students◦ Opportunities are still out there (reach out to those that have done it)
Wealth Management Small Investment Firms / Banks
Resumes Finance Resumes
◦ Keep to one page◦ STAR - Situation/Task-Action-Results◦ Focus on RESULTS◦ Watch your formatting – attention to detail is important
◦ Consistency is key◦ Cover letters are required but not necessarily the most important
◦ Ensure no errors
Resources (Templates)◦ Mergers & Inquisitions◦ WallStreetOasis
Buy-Side vs. Sell-Side Main Differences
1. Buy-Side◦ Acting as the investors, actively managing money or a portfolio of assets◦ Example: Private Equity, Wealth Management, Hedge Funds
2. Sell-Side◦ Acting as a market maker, selling assets or recommending assets◦ Example: Investment Banking, Equity Research, Sales & Trading
SELL-SIDE
Sell-Side Sell Side Firms
◦ The major banks have operations in Investment Banking, Equity Research and Sales & Trading through their Wholesale or Capital Markets division
◦ There are also small firms that specialize
Investment Banking What is Investment Banking?
◦ The main role of an investment bank is arrange financing for companies though the issuance of securities by underwriting or acting as the agent
◦ An investment bank will also provide advisory services on mergers and acquisitions
◦ Product groups will focus on a specific advisory service or function within the investment bank
◦ Mergers and Acquisitions (M&A)◦ Leveraged Finance (LevFin)◦ Equity Capital Markets (ECM)◦ Debt Capital Markets (DCM)◦ Restructuring
◦ Industry Groups will provide all of the bank’s advisory services but will focus its coverage on a particular industry
◦ Metals & Mining◦ Financial Institutions◦ Technology, Media and
Telecommunications◦ Real Estate◦ Power & Utilities◦ Diversified Industries
Product Groups Industry Groups
Investment Banking What does an Investment Banking Analyst do?
◦ Detailed research and due diligence are typically performed in the process of completing a financial model or pitch book
◦ Gathering data (financial statements) or running screens (Bloomberg)
Research
◦ Analysts will compile a marketing presentation called a pitchbook to use
◦ High degree of competency in PowerPoint is necessary
PitchBooks
◦ Analysts will use financial models to assess and present the effectiveness of a transaction or strategy
◦ High degree of competency in Excel is necessary
Financial Modelling
Investment Banking What is the Investment Banking Hierarchy?
Director / Executive Director / Senior Vice-President
Vice-President
Associates
Analysts
Managing Director
Equity Research What is Equity Research?
◦ The main role of Equity Research is to provide recommendations and insight on publicly traded companies. Their audience will mainly be buy-side investment analysts
◦ Equity Research will also provide models and advice for the Investment Banking division
◦ Research groups will focus on a specific sector of the equity markets
◦ Oil & Gas◦ Pipelines◦ Consumer◦ Special Situation◦ Commodities
Research Groups
Equity Research What does an Equity Research Associate do?
◦ Associates will accompany their Analysts to meet the senior management of the companies they cover (CEO,CFO,COO)
◦ Interpersonal skills and astute curiosity are needed
Management Meetings
◦ Associates will produce and edit research comments which will be published for the market
◦ Proper grammar and good writing skills are necessities
Research Reports
◦ Associates will update a live financial model every fiscal quarter and re-adjust estimates.
◦ Familiarity of the model and proficiency in excel will be beneficial
Financial Modelling
Equity Research What is the Equity Research Hierarchy?
Research Analyst
Research Associates
AssociateAnalyst
Sales & Trading What is Sales & Trading?
◦ Sales & Trading is an encompassing term that includes the Trading Floor of a bank – the Salespeople and Traders
◦ Traders execute trades on behalf of the bank’s clients or make the market (provide liquidity)
◦ Salespeople call the bank’s clients to pitch sales ideas that will generate commission through the Traders’ activities
◦ Research groups will focus on a specific area of the markets
◦ Fixed Income◦ Equity Derivatives◦ Foreign Exchange (FX)
Sales & Trading Groups
Sales & Trading What does an Sales & Trading Analyst do?
◦ Analysts will tend to code models for their superiors (P&L, Pricing)◦ VBA, JAVA, and Python are beneficial
Coding
◦ Analysts will produce market recaps of news and other pertinent information for their superiors
◦ Grammar and conciseness are key
News Reports
◦ Analysts & Associates will call the buy-side to routinely pitch trade ideas
◦ A relationship with the client is a plus
Pitch Sales Ideas
Sales & Trading What is the Sales & Trading Hierarchy?
Group Head
Vice-President
Associates
Analysts
BUY-SIDE
Private Equity What is Private Equity?
◦ A private equity firm is an investment firm that makes a controlling or large minority interest in a company to look to maximize the value of the investment
◦ A private equity firm will take a company private and use a large amount of debt to purchase the target in order to obtain a higher return (leveraged buyout)
◦ Value = $100◦ Cash Flows = $5◦ Use 80% debt
Leveraged Buyout Example:Year 1 Year 2 Year 3 Year 4
Value of Firm $100 $100 $100 $100
Debt $80 $75 $70 $65Equity $20 $25 $30 $35
Return 75%
Private Equity What does a Private Equity Analyst do?
◦ Investors need to be informed of the current state of portfolio companies
◦ Analysts will periodically review their portfolio and report status
Portfolio Managing
◦ Analysts will conduct research to ensure that a potential target will meet its fund’s objectives
Due Diligence
◦ Analysts will use financial models to determine the right purchase price for a potential target
◦ High degree of competency in Excel is necessaryValuation
Private Equity What is the Private Equity Hierarchy?
Managing Director /Managing Partner
Vice-President /Principal
Associates
Analysts
Wealth Management What is Wealth Management?
◦ The main role of an wealth management group is to manage the funds of a high net worth client for the bank.
◦ This will include investing in mutual funds, tax & estate planning, and investing in equities
Wealth Management What does an Investment Analyst do?
◦ Investments will need to be chosen based off of a client’s risk & reward profile
◦ This will require an ongoing dialogue with the client on a routine basis
Picking Suitable
Investments
◦ Analysts will call potential clients (through referral or cold-calling) to build the advisors “book” (assets under management)
◦ A diverse network of contacts is beneficial
Building the Book
Wealth Management What is the Wealth Management Hierarchy?
Investment Advisor
Investment Analyst
AssociateAdvisor
Hedge Fund What is a Hedge Fund?
◦ A Hedge Fund is a professional money management firm that manages capital for a pool of investors (pension plans, wealthy individuals).
◦ Hedge Funds are set apart from Wealth Management arms in their use of advanced trading and investing techniques
Hedge Fund What does an Investment Analyst do?
◦ Analysts will sometimes strategize direction of the portfolio with their Portfolio Manager
◦ This will require a working knowledge of the Macro Economy
Tactical Allocation
◦ Analysts will build investment pitches for their Portfolio Managers.◦ Experience on the sell-side is usually compulsory
Prepare Pitches
Hedge Fund What is the Hedge Fund Hierarchy?
Portfolio Manager
Investment Analyst
How To Succeed On The Job
Reliability &Consistency Be Proactive
Have the Right Attitude Technical Knowledge