How to get an internship in
MBA Class of 2007
VP of Equity Research, Finance Club and Investment Association
In collaboration with other
members of the Finance Club and Investment Association at the
Stephen M. Ross School of Business at the
University of Michigan
August 27, 2006
TABLE OF CONTENTS
TABLE OF CONTENTS...........................................................................................................2
I. Introduction: What is involved?...............................................................................................3
II. Deciding on Investment Management....................................................................................3
III. Researching Companies.........................................................................................................4
IV. Attending Company Presentations and Networking.............................................................4
V. Recruiting Off-Campus...........................................................................................................4
VI. Preparing for Interviews........................................................................................................5
VII. Attending Wall Street Forum and Conducting Informational..............................................7
VIII. Sending Cover Letters and Resumes..................................................................................7
IX. Practicing Interviewing in Mock Situations..........................................................................7
X. Conducting Interviews............................................................................................................8
XI. Following up after Interviews...............................................................................................9
XII. Researching a Stock.............................................................................................................9
XIII. Pitching a Stock................................................................................................................11
XIV. Recommended Classes.....................................................................................................15
THIS DOCUMENT IS FOR INTERNAL USE
ONLY. DO NOT DISTRIBUTE IT TO ANYONE
ELSE OUTSIDE THE ROSS SCHOOL OF
BUSINESS AT THE UNIVERSITY OF
I. Introduction: What is involved?
How much effort and time will it take to get an internship in Investment Management
(IM), and why should you put up a lot of extra effort? The time you need to spend
preparing for interviews will depend on how much background you have in investment
analysis and how successful you want to be. Your success in the recruiting process
will be directly related to how well prepared you are.
If you have a lot of background in this business you will probably need to spend only 5
or at most 10 hours per week over the next few months before interviews start. If you
are like most people, who do not have experience in the business, you should be
spending 10-20 hours per week preparing for interviews. You will have to treat
recruiting as a regular class and spend time on a daily basis.
That sounds like a lot of extra time and effort but the reality is that it is not easy to get
an internship in IM but the rewards of the business are exceptionally good for those
who get in. To give you a sense of how much time you need to invest, and what you
need to do, I outline what the most successful people have done in the past.
II. Deciding on Investment Management
The first and most important step is to decide whether you really want to do this.
Because it is not easy to get an internship in IM, you should have a commitment to go
through the tough recruiting process. What we have seen over the years though is that
if you are ready to commit yourself to this career path and put in the efforts required
to prepare yourself, you would get a job in the end. Moreover, keep in mind that the
effort required for interview preparation would not allow you to pursue other back-up
career paths, particularly two careers that have very little in common, such as
consulting and investment management. Those who are not convinced that they want
to do this and do not commit themselves typically end up working somewhere else.
The question naturally arises on how you can decide whether you want to get into IM.
Following steps can help you understand what is involved:
a) Read this document in its entirety
b) Read ‘Roadmap to the Buyside’ available on the IM website
c) Talk to second year students who interned in research last year
Once you have decided that you want to pursue a career in IM, make sure to join both
the finance club and the investment management club. It is essential that you join
both clubs and do not miss any of the club events. You must treat the club meetings
as regular classes.
You should target to make a decision by end of September. Remember, sooner you
make a decision, more time you will have for interview preparation.
III. Researching Companies
You should complete this by October, and your goal should be to:
First, learn about IM as a business and decide what aspect of it sounds most
attractive to you. In other words, do you want to work on the "buyside" or the
"sellside"? Do you want to do equity research, fixed income research, or quantitative
research? Finally, do you want to research domestic companies or focus on
international companies? You do not need to know exactly what you want but it is
good to be relatively focused once interviews start. Most people interview for both
buyside and sellside but few would pursue both equity and fixed income together.
Second, develop a target list of firms that that you want to interview with. Most people
try to interview with as many firms as they can but you will do better if you know
which ones are most important to you and concentrate your preparation on them.
Third, learn as much as you can about the firms on your target list as possible by:
a) Using the resources available on Student Career Services website
b) Talking to Ross students who have worked there before, even if they were not in IM
c) Attending company presentations and meeting company representatives (see Step
IV for further details)
d) Talking to alumni who currently work at the firm. But, make sure you have basic
knowledge before you talk to alumni.
IV. Attending Company Presentations and Networking
1. The point of these presentations is to help you learn about the companies which
will be interviewing but more importantly to give you the chance to meet and talk
to people who work at the company.
2. These presentations are a great opportunity for you to figure out what a particular
firm is like as well as learn about the IM business in general.
3. These are also an opportunity for you to get to know some of the people who work
at the firm. It is worthwhile to meet the personnel representatives as well as other
members of the firm. If you had a good conversation with someone then you should
get his or her card and send a thank you note to him or her.
4. Ask insightful questions during the Q&A. If you are not sure whether your question
is worth asking an alumnus, talk to a second year. While a good question does not
necessarily make a good impression, a bad one can definitely hurt.
V. Recruiting Off-Campus
Unfortunately, there are very few companies recruiting on-campus for IM.
Therefore, it is essential that you recruit off-campus in order to ensure that you
have an internship. While it may sound little scary, most of us get jobs off-campus.
You should follow the steps outlined below to succeed in off-campus recruiting:
a) Read the ‘Roadmap to buyside”. It explains the process of networking in great
b) Participate in stock pitch competitions such as those held in Cornell and UNC.
Many firms are sponsors in those competitions and you will have a great
opportunity to network
c) Talk to alumni. You will be surprised how helpful our alumni are. But you must
respect their valuable time. In addition, they expect focus and commitment
from you and do not want to spend time explaining why you should be in the
VI. Preparing for Interviews
1. Polishing your story: The bottom line here is to have very good answers for the
questions "Why do you want to do IM?", "Why do you want to work in their firm in
particular?" and "Why should your background make them want to hire you?"
Another important part of your story should focus on why you chose Michigan over
other schools. It is common to get a question like “Why did you choose Michigan if
you wanted to do IM?” Also, I must emphasize here the importance of your story. It
can make or break your chances for a job. While nicely polished story does not
ensure a job offer, a less structured one will certainly keep you out of one.
2. Walking through your resume: In almost every interview you will be asked to
walk the interviewer through your resume. You should have a polished 2-3 minute
story. This is a great opportunity for you to answer the questions listed above. As
you talk about your resume, emphasize the skills you have gained that would be
relevant to IM, show them how your experience has led you to pursue a career in
IM and why you want to work at their firm. When you talk about your experience
and your desire to pursue IM, you should try to show some enthusiasm. You are
unlikely to get a job offer if you are not passionate about the job, no matter how
qualified you are.
3. Preparing strong stock pitches: (Most of the time you will only need 2 stocks but
you should have three ready. 2 of them should be buy and 1 sell.) This is by far
the most important step in the whole process. The interviews will be largely focused
on your stock pitches and they will decide to hire you or not largely on how well
you know and present your stocks, and how enthusiastic you are talking about
stocks and markets. (See step XII on researching stocks and step XIII on pitching
stocks for more information)
Preparing for industry oriented questions:
Interviewers may ask questions like, "If you were to analyze the software
industry, what would be the most important factors that you would think
about?" Or "Tell me about the specialty retail industry and whether you think it
is a good industry to invest in right now." What they are looking for is whether
you understand the things like the cost structure of the industry, the key
drivers of earnings growth and how those things affect the stock performance in
the industry. Some industries are affected by macroeconomic factors and you
should have a view on the economy.
To prepare for these type of questions:
Read Porter's book Competitive Strategy: Techniques for Analyzing
Industries and Competitors, which gives an excellent framework for industry
analysis. (The first two chapters give you the basic outline of "Porter's five
forces" so if you don't have time to read the whole book you can just read
the first 50 pages). This is also covered in CSIB 502 and hence, you should
understand the basics when you work on your cases.
Read about the specific issues of many different industries and make up an
industry notebook, which has a 1/2 or 1 page summary of the key drivers of
the different industries. There are a group of 15 industries that are asked
about most often. They are: Autos, Airlines, Apparel & Footwear, Banking,
Broadcasting & Cable, Computers Hardware, Foods & Nonalcoholic
Beverages, Healthcare: Pharmaceuticals, Household Durables, Investment
Services, Lodging & Gaming, Publishing, Restaurants, Retailing: General,
and Transportation: Commercial. If you do not have time to read about these
many industries, make sure to learn about the industries you worked at
before you came to the business school.
The best resource for learning about the particular issues for industries is
Standard and Poor's Industry Surveys. You should have online access to these
surveys through Kresge Library.
Preparing for general stock market questions:
The best way to do this will be to read the Wall Street Journal, and Financial
Times, and to watch CNBC regularly (although CNBC is of less importance
than the WSJ and FT). While WSJ covers US well, FT is better for
international coverage. If you are planning to pitch an international stock or
want to express your view on a particularly industry outside, you should
read FT regularly.
Subscribe to Barron’s. It nicely summarizes the economic and market events
of an entire week. In addition, interviews with successful fund managers can
help understand what works and what does not.
Read books on the stock market in general (One-up on Wall Street by Peter
Lynch is good for starters)
Preparing insightful questions about the firms:
Interviewers will almost always ask you if you have questions for them in the
last five or ten minutes of an interview. They do this mostly to see how much
you know about their firm. Have at least 5 good questions prepared for each
company. Again, if you are not sure how good your questions are, get those
run by a second year student.
The more knowledgeable your questions are, the more they will think of you
as someone who is genuinely interested in their firm. If you are switching
career, you can show a lot of interest, enthusiasm, and passion by asking
VII. Attending Wall Street Forum and Conducting Informational
You should have your resume finalized, a polished version of your story ready, and at
least one stock pitch handy before you venture into these following steps.
1. Wall Street Forum, a yearly event organized by the finance club, takes place after
Fall A is over. You MUST go on WSF. Your objective in WSF would be to meet with
as many people from research as possible. If you do not get to meet with anyone
from research in a particular firm, talk to the recruiter and let her know that you
are interested in research. Request her to get a contact in research and follow-up
with the contact.
2. Chicago Forum, which was organized for the first time by finance club last year, is
another event you should consider to attend. It is not mandatory but it does not
hurt to learn about different firms, even if they are not your targets.
3. Informational interviews are not mandatory but strongly recommended. Do not go
on these interviews unprepared. Companies do not ask you to come for
informational interviews and hence, you should go there only when you feel
prepared. Although these are called informational, you must treat them as real
interviews. If want to practice an informational interview, get in touch with any of
the club officers from the investment association.
VIII. Sending Cover Letters and Resumes
1. This step does not require a lot of explanation. You simply need to send cover
letters and resumes to the contacts at the companies that are coming for campus
before their deadlines. The companies and the names of the contact person are
listed in Job database. To get a list of companies that are coming to campus simply
go into the Job database and search for all companies in the IM industry coming
for internships. You can post your cover letter and resume to a job through Impact.
For off-campus recruiting, you will have to email your resume and cover letter to
the recruiter directly.
2. Sample cover letters are available from club officers on request. We do not want to
post them online in our club website.
IX. Practicing Interviewing in Mock Situations
1. It is one thing to prepare what you think you should say and another thing all
together to say it well in an interview situation. The best way to get very polished at
interviewing is to practice a lot with other people.
2. In December and January, both Finance and Investment Management club will
conduct mock interviews. Make sure to participate in those. In addition, you can
do mock interviews through the career services mock interview program with
3. Apart form the mock interviews with second year students, I strongly recommend
that you form groups of first year students and practice interviewing each other.
That way when interviews start in January each one of you will have gone through
enough interviews before you have your first real interview.
X. Conducting Interviews
The typical interview will be a half-an-hour which will be structured something like
1. Interviewers will almost always spend first 5-10 minutes having you walk them
through your resume. You should have a very polished story that sells your
analysis skills and shows how what you have done has led you to your interest in
investment management and, if possible, their firm in particular.
2. They will then spend the next 10 minutes having you pitch them stocks. They will
usually ask for 1 stock. They will ask you what stocks you like, you should give
them a 2-3 minute pitch, and then they will ask you questions about your stock
Beware of interviewers who ask you question like, "What stocks do you own now?"
or "what was your best or worst performing stock in the last year?" Interviewers
know that you work hard to prepare 2-3 stocks for interviews and they will try to
get you to talk about stocks you have not prepared to see how deep your
knowledge goes. If you know the details of your best performing stock this year
very well then go ahead and talk about it. But I would recommend that you stick to
talking about the stocks that you prepared as much as you can. The best way to
prepare is to have answers to those questions ready but when they ask questions
like the ones I listed above and you are not prepared for them, I would recommend
that you talk about one of the stocks that you prepared as if it was a stock you
owned rather than talk about a stock that you may not know about the details.
3. They will usually spend at least 5 minutes asking you general questions about
stocks or to analyze a particular industry. (See Preparing for Industry Questions
part of "Preparing for Interviews")
4. Finally they will almost always spend the last few minutes of the interview as a
time for you to ask them questions.
You should NOT have any notes or handouts (other than your resume) with you since
you will be expected to have everything about your stocks memorized. In the interview
you should be focused on achieving the following things:
Subtly convincing them that you have the skills to analyze stocks very well. They
will judge you on this through how good your stock pitches are, how good your
answers to industry and other stock market questions are, how well you present
how your past experience has prepared you for this job.
Communicating your passion and enthusiasm for investment management in
general and their firm in particular. This is far more important than your skill.
Most companies assume that because you are at one of the top MBA schools, you
have the necessary skills to do the job. What they look for is your passion. All your
answers and even your questions should bring out the strong interest that you
have in this career. Remember, it is difficult to fake your interest. The recruiting
process is so exhaustive that they will filter you out at some of point of time.
Creating rapport with the interviewer. The fact is that a lot of the decision
regarding whether or not they hire you will come down to how well they think you
will fit in at the firm. I have heard that one of the questions that interviewers are
asked about the people they interview is, would you want to work in the same
office with this person 10 hours per day. So do not get carried away with trying to
impress the interviewer with your knowledge and forgetting to create a good
personal rapport with the person.
XI. Following up after Interviews
1. Send a brief thank you note via email to the interviewers. In the note you should
tell them something like this: you enjoyed the conversation you had with them,
mention something specific about what you talked about in the interview that
supports you, reiterate your interest in the job and finally thank them for taking
the time to talk with you.
2. If you do not get called back to the next round of interviews, email or call the
interviewer you spoke with in the first round (being very considerate of their time)
but ask for feedback as to why you were not chosen. The feedback can often be
very informative about how you are being perceived which can help you be more
successful in your other interviews.
3. If you do get invited to the next round, I would recommend a thank you note as
well but in this case you should ask the person if they would be willing to give you
feedback as well. Your first round interviewer(s) clearly liked you and probably
does not want you to do poorly since it would make him look bad so it is probably
worth while to talk to the person and more insight into what the firm is all about
and what to expect in the second rounds. As always, be very respectful of their
time since being too demanding could seriously hurt your chances going forward.
XII. Researching a Stock
This is too complicated to fully address in this context but there are certain
frameworks that are useful.
1. The best single source that I have found that will teach you how to research stocks
is Security Analysis on Wall Street by Jeffery Hooke. This book walks you through
every step of the process.
2. There are really two major ways to come up with stocks to research.
This means that you start by assessing the prospects for the economy and
decide which industries will outperform in that environment. For example,
in the early stages of a recession more defensive companies (such as food
companies) will do better since their revenues and profits are likely to be
least impacted by bad times. People don’t stop eating just because it is a
Then analyze each promising industry for the stocks that are most likely to
be successful in the economic environment that you are predicting.
Finally, analyze the companies that you have chosen to see which one has
the most price appreciation potential for a given level of risk. Keep in mind,
a good company does not always mean a good stock.
In this case, you start by looking for individual companies with certain
attractive characteristics. Most people who use this technique will screen
for certain fundamental characteristics that they want to see in a
company. For example, some people will screen for companies with
earnings growth over 15%, low debt to capital ratio, and a P/E ratio that
is lower than the industry average. You can make use of FactSet,
available in our trading lab, to screen stocks.
Once the person has a list of stocks that fit whatever criteria they think
is useful, they will research the stocks that seem most promising.
The last method is to choose a stock that you know well and like the
business. The advantage of this approach for picking stocks to research
is that in interviews past knowledge of a company may be very helpful
when you are being asked detailed questions about a company.
3. There is not a single set of information you have to know about a company but the
following is what Fidelity tells its analysts they should be focused on.
Assess the condition of the industry.
What are the trends in the industry?
What are the drivers of profitability in the industry?
What is the competitive landscape like?
Analyze the company's operations
How efficient is the company relative to its competitors?
Is it a low cost producer?
Assess how well the business is run
Assess the quality of management
What is their track record?
How well do they understand their business?
Where do they want to take the company and does that make sense?
Financial statement analysis
Look for trends in key ratios and margins
Look for hidden problems
Conduct full analysis of the relevant financial issues
Competitors and Customers
What is the competitive environment like?
What is the condition and nature of their customer base?
Are there any debt issues?
Is there any liquidity issue?
Will this company be able to survive a down turn in its business?
Using the metrics appropriate to this company decide how attractive the
valuation is relative to the company's peers, its history and its intrinsic
value (i.e. DCF)?
XIII. Pitching a Stock
1. There are two different contexts in which you will pitch a stock. The first is in front
of the investment association officers and the second is in front of interviewers.
There are slightly different rules (such as you should not bring a hand out to
interviews) but essentially your pitch should be the same.
2. The structure of the 2-3 minute pitch should be:
Introduction: Provide a brief description of the firm and key data
Articulate your investment thesis around three bullet points: Include in this
section the answer to the question, why the price is going to change? And how
and when can we exploit this?
Conclusion: Give a price target for a given time horizon and describe very briefly
how you came up with the price target.
What follows is an expanded version of the basic structure of a pitch:
Introduction: Provide a brief description of the firm and the stock
• The purpose of your introduction to the firm and the stock is to help your
listener place them mentally within their knowledge and previous
experiences, for instance to decide what valuation method to use, what
ratios to look for or what industry to compare it with.
• Give a quick, one-line explanation of the firm and sector: e.g. for-profit
education services provider in the north-east region.
• Provide basic info on the stock: current price and market cap (e.g. xyz is a
14 billion dollar company currently trading for $32 per share at a P/E of
Articulate your investment thesis around three bullet points
• Start by giving three bullet points on why to invest in the company in a
much summarized way and then elaborate a bit longer into a full fledged
sentence. Then, you can go on to discuss each point at length, especially if
you are questioned.
• As a rule of thumb, it is a good idea to have your three points address
company performance, financial performance (this is your opportunity to
drop numbers in the conversation), and valuation.
• Guide the listener. Use the golden rule: First, tell them what you going to tell
them, second, tell them what you have to say, and then tell them what you
just told them.
• Example: how to articulate the pitch around three bullet points
Summarized Full fledged Long argument
Strong growth Strong demand Emphasis on security and recent
prospects will help above terrorist attacks has increased the
average growth need for security monitoring software.
for next 5 years Recent terrorist attacks underlines
my belief that security will be an
issue for many years to come, and the
company’s competitive advantage on
scalability will allow it to post strong
Higher margins Increased sales of Current operating margin stands at
software in the 15% with sales mix of 50:50 between
product mix will software and hardware. The company
improve margins has been increasing the software in
the mix for last two years and they
can increase it to as high as 70%,
which will help them improve the
margin to 20% because software
margins are much better than those
Compelling Recent downside The company missed the last quarter
valuation offers compelling and the stock went down by 20%. I
valuation believe the reaction was overblown
and it offers a compelling valuation
because it now trades at 20x
compared to its historical P/E of 30x
and peer group P/E of 28x.
• Within your three bullet points address: Why is the price is going to change?
How and when can we exploit this?
Don’t just relay everything that has been published about the firm. If the
markets are efficient, all the information has already been incorporated
into the price and nothing you do or say is going to make it move.
Therefore, you have to contribute some new piece of information. The
typical objection a portfolio manager can raise to your story is: What do
you know that the stock market doesn’t already know? This can be
something that you have genuinely discovered, or provide a different
interpretation of the known facts and the reason you are right and the
rest of the Street are wrong.
Here are some examples:
a) Analysts fret about exposure to poorly performing auto industry. I
have spoken with distributors and estimate that 80% of new
contracts are with fast-growing health care clients. This tells me that
sales figures are going to be surprisingly positive, up by 12%
sequentially on 3Q 06. Buy;
b) Unit sales are holding relatively well (75,000 Q4 versus 76.500 in Q3).
I have a contact at the company’s major competitor that reveals their
revenues (the competitor’s) are hurting (-8.5% YTD) because company
A is offering big discounts. I see margins deteriorating rapidly, falling
beneath 17% by next quarter. Sell;
c) Electric chainsaws are being touted as the next Father’s day hit. My
research indicates that 50% of US households do not have extension
chords long enough to put electric chainsaws to any good use. The
company has manufacturing capacity for 127m chainsaws annually
or one chainsaw for each household in the country. It won’t be able to
dispose of its inventory, so a big write-off is coming. Sell.
Not only must you add some piece of information, you also have to know
when and how it will be incorporated into the stock price and will
validate your thesis. You need a catalyst.
a) Competitors are reporting next week. Once everybody sees that they
are doing poorly because they lack an entry-level product, it will
become clear that our company (the only producer of cheap entry-
level products) will be assessed differently;
b) The FDA is ruling on a new drug from XYZ Corp. this Thursday. If it
is approved, this will be great news for our company, because its new
blockbuster is based on the same compound as this company’s new
c) Nokia is the major cornerstone of the demand for low-consumption
memory chips. Nokia publishes a quarterly forecast for the number of
mobile phone handsets globally. If in its forthcoming estimates Nokia
lowers its forecast, widens the range or makes any comments that it
is becoming more difficult to predict what the demand will be, this
highlights growing uncertainty for semiconductor manufacturers.
Therefore, an upward adjustment to the discount rate for the stock
would be warranted, and lower stock price should follow.
d) Last quarter’s earnings for Cognos was below expectations and the
stock got hammered. Next quarter’s earnings is going to be far better
because they have taken care of the sales force problem of last
quarter. Improved earnings will put Cognos back in the limelight.
Conclusion: Give a price target for a given time horizon and tell the person very
briefly how you came up with the price target.
At the end of the pitch when you talk about the attractive valuation of the
company you should transition into your conclusion. Very quickly repeat your
three bullet-points and show how those bullet points will lead to earnings (and/
or cash flow) projections and a future valuation that makes this stock a
compelling buy/sell right now.
Given the strong demand for the company's product, its expanding operating
margins I think the stock will earn $2 per share in fiscal year 2002. The cheap
valuation makes the stock a compelling buy because with the conservative
assumption of no expansion of the current multiple of 20 times earnings and 15
times EBITDA the stock should increase 30% to $40 per share in 12 months."
You should also talk about the Discounted Cash Flow (DCF) value for your
stock and why under conservative assumptions this makes it a compelling buy.
Once you have done this just sit back and wait for the interviewer to ask you
questions about your stock.
Some final remarks on pitching stocks
Do not talk about the investment risks or downside of the stock (unless you are
pitching a sell or the interviewer asks for them). It is the interviewer's job to be
a skeptic and find objections to your recommendation. If the objective is to get
them to buy the stock, don’t make their task easier.
Having said this, think about the objections they can raise and try to counter
them even before they are uttered. Think ahead. Anticipate questions. All the
assumptions that you have made to come to your price target are likely to be
the areas of questioning. I don’t believe that it is necessary to write down the
investments risks to on your handout.
Use numbers: Spinning a good story is good, but virtually everybody is able to
spin a story. Hard facts and figures add credibility.
Keep the structure of pitch in mind all the time: 30 seconds of introduction
mentioning three bullet points, 2 minutes of explanation of each bullet points,
and 30 seconds of conclusion mentioning those bullet points again.
Valuation: You should use at least two valuation techniques to arrive at your
target price. One should be a multiple and other should be a DCF. Your target
price should be an average of the two values determined from these two
techniques. In addition, you can always use other multiples to support your
thesis if somebody pokes hole at your argument.
XIV. Recommended Classes
The classes people have found most useful have been in the areas of Accounting,
Finance and Strategy.
1. You want to get as much accounting as you can but especially ACC 502 (Basic
Accounting) and ACC 552 (Management Accounting). ACC 564 (Financial
Statement Analysis) is essential for people interested in IM. ACC 712, which is
taught only for second year students, is also recommended.
2. Finance courses that we have found most useful are: FIN 513 (Financial Analysis)
and FIN 615 (Valuation). FIN 615 teaches DCF, along with other valuation
techniques. Interviewers assume that you know how to do a DCF on your own.
3. Other classes that people have found useful are CSIB 502 (Competitive Strategy)
and MKT 503 (Marketing), which is useful in terms of providing frameworks for
analysis of companies.