Tag Archives: A Day in the Life

Day in the Life of An Equity Analyst Event Recap

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By John C. Bird, Operations Analyst at Nuveen Asset Management and CFA Level II Candidate

Day in the Life: Equity Analyst, featuring Andrew Rem, CFA and Paul Dwyer, CFA

Day in the Life featuring Andrew Rem, CFA and Paul Dwyer, CFA

Interested in pursuing one of the investment world’s most exciting careers? On September 21st, a group of professionals and students listened to Andrew Rem, CFA and Paul Dwyer, CFA talk about their experience as Equity Analysts. Over the course of lunch, our speakers shared with us their backgrounds, what they do on a daily basis, important lessons they’ve learned, and even some tips on breaking into this extremely sought-after career.

Background

Our speakers: Andrew Rem, CFA and Portfolio Manager of Small Cap Value Fund at Nuveen Asset Management, and Paul Dwyer, CFA and Senior Research Analyst at Punch & Associates, did not start out life knowing they wanted to be Equity Analysts. Andrew spent some time in Retail management, while Paul did a stint in Investment Banking before finding their passion in Equity research and analysis. Both men have found they are value-oriented in their investment approach, and that they prefer small and (in Paul’s case) microcap companies when looking for investment opportunities. With Nuveen being part of TIAA, a multi-billion dollar financial services company, and Punch being a 15-person, employee-owned, RIA, with ~$1 billion under management, you could say Andrew and Paul work in opposite ends of the spectrum when it comes to firm size and organizational structure. However, Andrew and Paul cautioned their young listeners not to be picky when trying to break into the industry. “Just get a job with a firm, large or small, and develop your craft first. Once you are in the ecosystem, then you can worry about firm size, investment style, and the like.”

Tasks of an Equity Analyst

It presents a unique challenge when summarizing a “typical day” in the life of an Equity Analyst, because no two days are the same. However, our speakers were able to broadly summarize an analyst’s duties in the following categories:

  • Research at the Office
    • Includes reading, financial modelling, making / talking to industry contacts, Peer / Competitor reviews, Management calls
  • Travelling
    • Includes Industry / Investment conferences, field trips to companies, and Investor days
  • Activities around Earnings Season
    • Includes listening to Quarterly/Annual calls, updating models / forecasts, reporting on company given updated information

While all this might sound fun, it is important to remember that being an Equity Analyst is not a “9-5” job, and with little oversight from supervisors, one must be a self-starter, highly motivated, and interested in the work to succeed. The best Equity Analysts have a process.

Investment Process

Our speakers stressed the importance of having a repeatable Investment Process. “Focus on creating and then improving your process,” Paul encouraged the audience. “A good process will yield good results over time, while no process is no better than gambling.”

The speakers went on to describe the typical process in researching investments will often have the following steps:

Source -> Research -> Pitch -> Decide -> Monitor -> Close

Andrew recommended having an independent view and being skeptical of the “consensus” when analyzing and forming an opinion on an investment. “It’s only by doing something different, and zigging when the market zags, that one can expect to outperform over the long term.”

Food for Thought

Not surprisingly, given the exciting, intellectually stimulating, and often financially rewarding nature of the work, it is very competitive to break into and analyst positions don’t open up very frequently. Our speakers shared some of their recommendations on breaking in. These included:

  • Study for and obtain your CFA Charter
  • Be active in the stock market. Manage your own portfolio of investments and have a reason for why you own what you own.
  • Get to know your local investment community. Be active in the CFA Society of MN and in your Investment Club on campus (if applicable)
  • Demonstrate an interest and a passion for investing. This is a tough business and only a genuine love for the trade will get you through the tough stretches.
  • Attach an Investment write-up to your resume and cover letter when you go to apply for an open role. Even if you are wrong about the investment, this will demonstrate you are thinking about your investment decisions and will help you stand out in an interview.
  • Follow professional investors, read books and articles on investing, ask to shadow professional investors, and be persistent! The journey is part of the fun!

A special thanks to Andrew, Paul, and all the members of the CFA Society of Minnesota that make events like this one possible. Now it’s time to get out there and invest! Cheers! Be sure to check out upcoming Day in the Life events on our events calendar.

A Day in the Life: Investor Relations – Event Recap

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–Austin Bogestad, Hill Capital Corporation, Level I Candidate

The Day in the Life event held on June 8th was led by Terese Wilke, CFA, a senior investor relations specialist at Capella Education Company.  Terese addressed the unique challenges associated with effectively communicating a public company’s story to a broad audience of investors. Terese described her career path and past experiences as a fixed-income and equity analyst, and how these experiences have helped her in her current role by allowing her to appreciate the perspectives of the investors and analysts she speaks with on a regular basis.

All in all, it was an enjoyable luncheon that provided many insights into a growing and increasingly relevant role that seeks to facilitate a meaningful dialogue with investors, improve investor decision making, and support the stability of capital flows.

The Portfolio Puzzle – A Defense of Active Management – Event Recap

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Presented by Greg Stalsberg, CFA, CAIA Director of Capital Markets Research at Slocum and Scott Tonneson, CFA Vice President, Senior Research Analyst and Co-Portfolio Manager at Nuveen

A filled room heard from two industry experts on how the use of active management (vs. passive), in their opinion, is not a simple all or nothing decision. There are critical factors that go into the use of active (and passive) investment strategies that revolve around an in depth knowledge of the client, strategic vs. tactical asset allocation and the current market environment.

From Greg’s perspective as a consultant, there are certain asset classes/spaces that tend to be more efficient, and therefore difficult for a meaningful percent of active managers to consistently outperform. US large cap stock, for example, is a space that was noted as being relatively efficient. The excess return of the outperforming funds tends to be modest and perhaps not enough to compensate the investor for the periods of underperformance. This is a space where using passive investments and just capturing the low cost beta could be appropriate. Greg did mention that there are good US large cap active strategies, however you need to invest the time and resources into proper due diligence. The story is different for US small cap and international stocks. Research has shown that a greater percentage of active managers have been able to outperform in these spaces. Furthermore, the outperformance of the active (US small cap and international) strategies has been more substantial.

As the title of the event alluded to (“A Defense of…” not “The Defense of…”), it really is not possible to defend all active management with a single point. This is because there are numerous types of active management styles. So how does one sort through the universe of active investment strategies? Scott mentioned a few metrics to review when analyzing active strategies. First was active share. Academic studies have shown that funds with higher active share have in general been able to add more value. Secondly, it is also important to know if a portfolio manager invests personal money in the fund they manage. A manager that has “skin in the game” is important for alignment of interests. Lastly, the investment process should be transparent.

Scott noted the importance of patience with investment selection as it can take time for an investment thesis to pan out. Over the last several years, low market dispersion, Fed stimulus, and cash drag have weighed down the performance of some stock pickers. An active manager may underperform for a few quarters before periods of outperformance. Short term performance comparisons, although relevant, should not play a large role in decision making. Markets go through cycles and mean reversion is a powerful force. Some research has shown a strong correlation between active manager outperformance and rising interest rates, which could mean more active managers outperform in the coming quarters.

In a world with countless investment strategies, non-stop media outlets, and never ending distractions, both Greg and Scott agree that remaining focused and following your investment policy is important to avoid making the wrong decision at the wrong time.

A Day in Your Life Well Spent – Event Recap April 10, 2015

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By Graham Acheson, Wells Fargo. Graham is a Level III Candidate and Society Member.

CFAMN members have learned about a variety of different industry specializations at “A Day in the Life” events. On Friday, we were introduced to CFA Charterholders Bruce Langer and Dan Aronson of EPIQ Partners, LLC. Their topic was a new one for this series: Entrepreneurship. This idea, a dream for many Americans, also stimulates fear in some of the most motivated individuals. With their hour and a half, they managed to bring to life many of their experiences.

As they begin, “If we can do it, anyone can do it” seems fitting for a series on starting your own business. However, this is not a motivational speech. This is truth, a statement on their abilities in comparison to those in the audience. More importantly, Dan asks us to be honest with ourselves, “Is this for you?” And if you just answered “yes,” the next step is to see a psychiatrist. Really. They did. Bruce and Dan met with a professional, not to see if they were crazy for considering this endeavor, but to understand each other and create a foundation for a hopefully long partnership.

Forming EPIQ on values that they both agree on, Bruce says that he is happier as a business owner, and without having met him in the past, looks happier too. This exuberance comes from a lifestyle prepared long in advance. The business was overcapitalized, answering a question on fear and uncertainty posed from the audience. Two and a half years in, much of the initial capital still remains. Keeping their costs down was vital for a duo that prides itself on people, not perception. The partnership is at the core. Both agree that they, together, are the most important part of the business. In an upcoming event, they plan to rent a car and drive a couple of clients down to the Berkshire annual meeting. At a larger firm, this event may be overlooked or even considered unnecessary, but as their own bosses, they decide what adds value to their clients.

Their current situation is, as they state, “two men and a Bloomberg,” but they have found a niche. Working on what they add and outsourcing the rest creates a brand their clients can understand. As a small business, inefficiencies still exist. Learning to live with them, and spending a day setting up the complicated business phone system, will get you a long way. A sense of slow and steady comes to mind. With a tone that heeds warning not to overextend yourselves, Dan mentions that in their 600 square foot office, the conference room is the break room is the front desk. In answering another question, think strategy, not simply a plan. Being patient and accountable, they never had to consider supporting a failing business. The thought of continuing just to make it work was never required.

So, if you were looking to make this leap, hopefully Dan and Bruce detailed the pros and cons of forming your own registered investment advisory firm. If you were there for some entertainment, anecdotes of the struggling professionals with three kids each satisfied. And if you showed up just to get a free lunch, the CFA society always provide it. Whatever the reason for attending, the A Day in the Life series truly betters our membership. When you have a chance, check one out, there is a topic for everyone and it would be a day in your life well spent.

A Day in the Life Brings Context to Industry Roles

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Each event in CFA Society Minnesota’s “Day in the Life” series focuses on a specific industry professional, providing insight into the professional’s career and the requirements needed to succeed in that position.

The cost to attend is free to all CFA society members and $15 for non-members. Lunch is included. All are welcome to attend, including students and those in professional transition. Visit www.cfamn.org to learn more about this series.