Internship Q&A (Updated 5/19/2022)

Internship Q&A (Updated 5/19/2022)

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What is the best way to introduce yourself to your sector when you start?

Read the initiation reports and any industry primer you team has put out (if they ever did one) are the best ways I can think of.

If you need a primer for your sector, email me, I can see what I can do. I have a pile of primer PDFs.

Any indication on the types of tasks that are assigned to interns? Do you have any tips to excel at them? Any tips on avoiding mistakes on these tasks/deliverables.

Typical tasks: Three buckets: modeling, writing, and data crunching. Data crunching is just a broad term that is about making some exhibits out of the data stored in a spreadsheet that can be used in whatever notes the full-timers are working on. Just generally be useful.

Tips on exceling at them: I would not stress so much about the writing, because sell-side writing is really about conforming to your MD’s style. Unless the team is working on an initiation, you will likely do data entry for quarterly results and forecast based on historical trends. That's the extent of modeling you will do. I suggest understanding how three statements tie together and the best way is to build one from scratch: start from income statement, flow that into a balance sheet and then create a cash flow statement and tie that into the balance sheet. 

Tips on avoiding mistakes:

  • Print out your work and triple-check
  • If unsure, don’t assume, and instead ask to clarify – but save up your questions so you can ask at once, instead of asking one question every 15 minutes
  • Keep a mistake log – obviously try your best to not make mistakes, but we are human, if you do, at least don’t make the mistake twice.

How would you go about preparing for an internship where you don't know which industry/analyst you'll be working with?

Yeah, that’s impossible to be honest. However, at least you can self-teach financial modeling. On the industry analysis side, practice analyzing any industry using the Porter’s Five Force framework so you have a general framework going in about how to think about your industry:

  • Is the industry concentrated or fragmented?
  • Is the industry high barrier to entry? What is that barrier (or barriers)? Is the barrier the learning curve? Scale? High capital requirement? Network effect? Switch cost? etc.
  • Who controls most of the value in the value chain? Ie. do the customers have the most bargain power? Do the suppliers? For a $100 product, how much gross profit does each player in the value chain (example of a value chain would be: chicken breeder, chicken slaughterhouse, frozen chicken supplier like Tyson Foods, and McDonald's who sells chicken nuggets) keep? This question gives you sense of who creates most value, hence deserving most gross profit.
  • What are the substitutes for the products / services this industry provides?

I have read your post about the different types of shops (BB/MM/Boutique). Could you elaborate on the differences between a BB and a top boutique (e.g., Bernstein)?

The big difference is top boutique does not have investment banking services. It’s unspoken but almost everyone knows equity research promotes the investment bank’s issuer clients (companies going IPO or doing secondary offerings). Boutiques don’t have IB services and they charge clients a subscription fee to access research, so they are more incented to create objective analysis instead of promotional pieces (where rating is “pre-determined”, wink wink, a buy).

At my firm, the analyst one gets assigned to during the internship generally differs from FT. Is this a common practice on the street? How are candidates picked from the intern class to fill full-time openings?

Yes, it is common practice. I cannot speak for all firms because it depends. For the two firms I have been with, once you receive the full-time return offer, the HR will tell you which teams have full-time openings by the time you start, so you can rank which analyst you want to start your full-time with.

I don’t know this for sure, but for some firms, the full-time hiring teams might even interview you, which is great because you get to know their work style before signing up with them.

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