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How to Quickly Research a Company or Industry

Have an investment banking interview with the mining team in a few days but know nothing about mining (or any industry group)?

A few days is actually plenty of time to intimately know an industry, but anyone outside of the finance industry would not know where to start looking.

Here is a shortlist:

  1. Industry Primer (the more recent the better)
  2. Industry Trends
  3. Annual Reports/10-K
  4. Quarterly Reports 10-Q
  5. Investor Presentations
  6. Earnings Calls and Special Event Transcripts
  7. Equity Research – especially initiating coverage reports
  8. Press Releases

Google is a great bet, but not a very focused one – fortunately, we are here to help you out.

In a hypothetical scenario, let’s assume you need to learn as much as you possibly can about mining. What you want is to start with a primer. The first step is to really understand the industry at large before getting into the minutae.

Looking for Investment Banking Industry Primers

We have excellent primers on our website for most major industries here:

Sell Side Handbook Industry Primers

However, if you can get your hands on one (helpful if you have friends who are already in the industry), you may want to ask for primers published by major investment banks (for instance a Metals and Mining Primer by UBS). These are extremely comprehensive and can bring you from 0 to 100 very quickly.

Thare are also more than a few just floating around Google – just search metals and mining industry primer or healthcare industry primer or real estate industry primer.

Industry Thought Leadership

The next step is to look for thought leadership and trend outlooks in the space by consultancies and experts.

The easiest way to do this is to look for “Metals and Mining Trends” on Google, and you should get outlooks from firms such as McKinsey, Ernst and Young, Wood Mackenzie and other partnerships that have practices in the area. These will give you views on what to expect over the next little while and analyze current data in the form of fancy charts and easy to read graphics. The best thing is that these resources are generally free (although if you want focused work from Wood Mackenzie or IHS Cera you are going to pay through the nose).

After developing some sort of expert knowledge on the industry macro from maybe 3 hours of reading (as primers are concise and eloquent, you will be miles ahead of other potential interviewees), you will want to develop a micro perspective.

Accordingly, the next step would be to pick a company in the industry that has very good financial reporting – usually a large company that can afford a strong investor relations team and hire smart people.

For mining, you could choose a company such as Teck Resources or Goldcorp.

Sifting Through Annual Reports/10-K

The first place to look is the investor relations section of Teck’s website. Look at the section that gives you annual disclosures and download their Annual Report or 10-K (for foreign borrowers possibly a 20-F or 40-F). These are also available on EDGAR (the SEC’s filings website) or SEDAR, but good companies will have their filings on their own website as well in a fancy format.

The financial statements are helpful but will also be very company specific. Reading through the Management Discussion & Analysis section will give you a full understanding of what happened over the last year and what affected the business – for instance, did Chinese growth lead to more steelmaking demand leading to more steelmaking coal demand?

They will also outline the key drivers of the industry (commodity prices for mining) and break out the financial metrics that people in the industry care about.

For oil and gas, this may be operating netback, production, gas-liquids mix, debt/EBITDA.

What this will generally not cover extensively are the market multiples that you would care about – which we will get to later. So companies will rarely report their EV/EBITDA here.

The annual reports are more of a backwards looking filing than an advertisement for investment – that part comes next.

Sifting Through Quarterly Reports 10-Q

These are smaller than the 10K but will give you good insights in terms of a quarterly update. There will be some information that is omitted here that would show up in an annual filing, so skim through this.

Reading the Company Investor Presentations

There is usually a section on the investor relations section of the company website titled “Events and Presentations” or something of that nature.

You want to look at the most recent presentation, so for instance, June 2018 Investor Presentation – as well as any major once a year investor teach-in, which will usually be called “Investor Day”.

These are marketing materials that attempt to entice institutional investors to purchase their stocks and will go through the merits of the company from a valuation and growth perspective as well as why there are opportunities in the space that this company can exploit.

Never miss the investor presentation – however, from an actual investing standpoint, never trust them either because they always hide the company’s blemishes and a company nearing bankruptcy will say something like “navigating challenges with a first-class leadership team”. Excellent industry resource, although very biased.

Earnings Calls and Special Event Transcripts

Students and outsiders always miss this one, but it is an incredible resource. If your school has access to Bloomberg, find call transcripts by using EVT <GO>. If your school has FactSet, these can be found under Events and Transcripts. Otherwise, Seeking Alpha publishes them regularly.

These calls with management allow you to see how the investor community and industry experts (management) think about how to allocate capital, where the market is going, new actions etc. that you would never find anywhere else. A lot of these items they would not publish on their website but will offer insight when questioned by equity research analysts.

Equity Research – especially initiating coverage reports

Equity research can be fantastic if you have access. Generally most schools will have research allowances so that business students can go on Thomson One or Knowledge Reuters and download research from select brokers (Goldman Sachs, Morgan Stanley).

Equity research will give you multiples that investors care about, an investment thesis for the coverage universe (which miners are good and which ones are bad) and growth expectations.

The best reports are initiating coverage reports, which do a deep dive on the company and have projected financials. These can span 30-80 pages and will get you to know all aspects of a company – unfortunately these are not always current as they will generally only be published if a broker just starts covering the company.

Often, brokers will also publish industry reports or industry updates. So for instance, they may rehash what announcements happened in the Software space over the last week that will keep you very current.

Usually, students will not have access to cutting edge research and instead will get time delayed reports (immediate email blasts are for buy side clients only), so you may be reading things a few weeks back.

Reading Company Press Releases

These are also extremely key and no one knows about them. They will apprise you of any major capex spending, share repurchases and dividends, and potential mergers and acquisitions.

However, you only need updates from the last filing published – so if you read the 10K from 2017 and the 10Q from the quarter ended March 31, 2018, you only need to read press releases from when the latest earnings release was reported.

For major mergers, you may want to look at the Business Acquisition Reports that can be found on EDGAR and SEDAR in addition to anything the company publishes.

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