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Your Turn to Be a Portfolio Manager: Choosing the Best Equity Analyst Candidate

“What's your vote, Peter or Dale?”

This question that has dogged me all week, and now my boss is asking it to me point-blank. I have to answer, but how do I choose between two well-qualified candidates?

After four rounds of interviews, one candidate is going home to spend the next week over-analyzing his every move in a desperate attempt to determine where he went wrong. What tiny misstep was the difference between a career in finance and a Dear John letter?

The other candidate will be at the bar with his friends celebrating the reason for the shit-eating grin on his face. He'll even buy the first round of drinks.

Only one candidate can receive a job offer, so let me ask you: Who would you choose, Peter or Dale?

Today I want to turn the tables and make you the PM for a day to evaluate the two finalists for the buy side equity analyst position at our fictional hedge fund, LBS Capital.

Enough of the background, time to get you up to speed on our candidates.

Enter Peter …

When I first saw Peter for an interview, he was wearing that ubiquitous dark navy blue suit, plain white shirt, and non-flashy tie that every university career center prescribes as “proper interview attire.” What’s so wrong with a grey suit, I wonder? I don’t even own a navy blue suit because I still can’t figure out what color shoes I should wear with navy.

Average suit aside, everything else about Peter gives the first impression that he is just your average university student: medium height, medium build, nothing too memorable about him.

He attended a big state university in the Midwest US and majored in finance. His GPA was good, but not great. Like most things about Peter, it's not memorable enough to recall.

Peter tracks his interest in investing back to the mid-to-late 1990s during the TMT boom. Everywhere he went there was talk of stocks and fortunes being made on the latest tech IPO. While many people dreamed of starting the next great tech company and cashing out via an IPO, Peter was more interested in how investors made millions buying IPOs.

Before long, the IPO wave ended and the easy fortunes disappeared into the Matrix, but Peter's interest in investing never waned.

In university, Peter chose the finance track at the business school. While the finance track at the undergraduate level is quite broad, Peter found the opportunity to put his passion for investing to use.

First, there was a student-run investing society that he joined. The society’s activities included bringing in real-world portfolio managers and equity analysts to speak at their events, in addition to stockpicking competitions judged by professors.

Second, in his fourth year, Peter was able to participate in a class that taught students how to manage money by given them real money to manage and no safety net. It was hands-on Investing 101. In the class, Peter created stock recommendation reports for professors and several alumni to critique as part of the final project. He even brought one of his stock pitches to the interview, and it wasn’t too bad. This kid really wants to be an investor.

On the work experience aspect of Peter's resume, sadly he was unable to secure an internship in investing. Given the recession going on while he was in school, Peter was only able to find a job doing bookkeeping work for a local construction company. Certainly not glamorous, but it did give him some exposure to financial statements which he conveyed during the interview process.

Peter career desire is to analyze companies and make stock recommendations. His long-term goal is to become a portfolio manager.

Enter Dale ….

It's hard to see how Dale wouldn't make a good first impression when he enters a room. He's well-dressed, tall, good-looking, and he walked right up to me and looked me in the eye while giving a firm handshake. This fella is well-bred.

Dale was always an outstanding athlete and scholar in high school. I'm certain the girls were in love with him and the guys were jealous. While I can admire the kid today, I’m quite confident teenage me is just a bit jealous of Dale.

Despite being a gifted athlete, Dale never reached a level high enough to play at the private university in the Northeast where he attended. It's a well-known and excellent school, but it isn't one of the top-tier schools like Harvard so the sporting talent pool is a bit more competitive.

A finance major was not an option for Dale, given the liberal arts school he attended, so he chose to major in economics. Like Peter, Dale's GPA is good but not great, but for some reason I recall Dale’s GPA being better than Peter's.

On extracurricular activities, Dale was Vice President of his fraternity. This does not shock me as Dale seems like a natural leader. I was VP at my fraternity, so I can relate to Dale on this part of his resume.

On the work experience part of Dale's resume, he has an internship at his uncle's venture capital firm where he helped analyze potential deals. He said the internship was a tremendous opportunity to see how the gritty world of finance really works, as opposed to the academic theory that dominates his economics major.

When I asked Dale about where else he is interviewing, he responded that he has also interviewed at several investment banks and a few private equity firms.

Dale really wants a job in finance; he’s just not that specific about exactly what he wants to do in finance. Dale believes he has the talent to succeed; he just needs to opportunity to prove it.

Enter You ...

The majority of web readers never take part in online discussions. That is true of LBS, M&I, and any other website. That's all right, though. I rarely leave comments either.

But today I'm shining the spotlight on you. I'm asking you to vote for your preferred candidate via the poll on the LBS Facebook page and then leave a comment below about why you choose that candidate.

After everyone has had a chance to weigh-in, I will be writing a follow-up post with analysis that can help you break into the world of finance and investing. After, isn't that why you are here?

Looking forward to hearing from you ….

… well, what are you waiting for? Vote now!

{ 12 comments… add one }
  • Richard

    Peter has a crystal clear vision of what his mid and long term goals are, and he has worked specifically to meet those goals.

    Dale, while talented, is muddled in his approach (wants a job in “finance”)

    For his sheer work ethic and clearly defined passion, my vote goes to Peter.

  • Silver

    I’m a bit more like Dale w/o the rich uncle, but I would vote for Peter. He’s unassuming and clearly knows what he wants. I also believe he would be more grateful for the opportunity and work harder, since he knows his internship experience is weak relative to other candidates. Besides, a pretty face can only take you so far…if Peter already has a good pitch down, then that’s half the battle IMO.

  • Edward

    Dale seems to be more straightforward. Peter’s story is blablabla – I think that stockpicking competitions judged by professors and stock recommendation reports for professors are not the right activities for acquiring valuable investing experience.

    And also Peter seems to be the kind of guy who is more likely to “spend the next week over-analyzing his every move in a desperate attempt to determine where he went wrong”.

  • max

    def peter- guy wants this so bad he would rup dale’s throat out

  • Dave

    If you judge based on the applicant’s passion for investing, which seems to be key, it’s Peter hands down. If Dale is unsure whether he really wants to work in this area of finance, you don’t want to have him finding out this is not his thing after he’s been working for a few months.

    If one of them did actually have a stellar GPA, how much of a benefit would it be to either one of them?

  • GP

    I want to pick Peter, but I would probably pick Dale for the following reasons:

    1) He has actually worked in a finance firm. This is big. Nepotism aside, he can presumably function in a professional environment. Even in this economy, the fact that Peter didn’t even have a PWM internship is concerning.

    2) He is more or less a blank slate, and won’t have any bad habits I have to break. For every well read and prudent amateur investor, there are 10 who take Jim Cramer’s word as gospel.

    3) He might have a bit more mental horsepower than Peter. This is more true if Peter is going to the 2nd or 3rd best school in his state.

    This could easily swing either way with more information though. Do either of them have their own portfolio, or have signed up for the CFA? And, if there is an investment club at Dale’s school that he did not participate in, that is an auto-ding.

  • james

    Dale. Despite his “open” desire for finance he has a go getter/go for it attitude. Peter is enjoying take life as passively as it comes. Results for Dale, if he doesn’t like it in two years fine. His results will be far superior simply because he is here to make an impact.

  • Suyash Kumar

    If only Dale was sure of pursuing a career in investing, it would have been Dale, hands down. However, I feel many people are unsure about the particular career path they want to pursue (including me) and that is perfectly understandable considering the stage of life they are in right now.

    Nevertheless, I would still go for Dale. An important reason for this would be the internship he secured working at the VC firm. Professional experience matters a lot IMO.

    Peter on the other hand, although shows a good deal of interest in investing, hasn’t been able to prove himself. Moreover, I think Dale has better soft skills than Peter.

    I would try Dale but keep him on a probationary period for 3 months.

  • I voted for Peter as he knows exactly where he wants to be, a PM in the future.

  • Kris

    For me, this is a no brainer. It is Peter.
    I might pick Dave had the position been for Investment banking / private equity, where charisma and confidence weighs in a lot.
    But this is an interview for an buy-side equity analyst position. “Stock don`t care how charismatic and confident you are about picking them”. What matters is passion, discipline, hard work and intelligence.
    Looking at Peters track record he seems to have that all. Although his GPA is not as high as Dave, Peter does not seem to be dumb!
    Peter has landed work at construction company by himself, where as Dave has had an internship handed over to him on a plate by his uncle !! That to me is hard work.

  • Gail

    As Kris said, this is a buy-side equity analyst position so charisma typically isn’t as important (although there can be exceptions). I’m also going to assume that employment longetivity is an issue here as well (why hire and train someone for the competition, right? Also, someone who merely works for you will take your paycheck, someone who believes in your mission will give you their heart and soul.)

    Dale has several strengths and I believe he’ll become successful…somewhere. In fact, it sounds as though he’s going to be a headhunter’s dream, LOL. We love a healthy ego and an eye toward the prize. So Peter would be my pick given the two options. I’ll take passion over smarts any day and Peter definitely demonstrates his passion for investing. As I noted above, my guess is that Dale has a slightly greater passion for Dale. Then there’s the teamwork aspect of the role. Without knowing much about the team’s dynamic, I could see Peter blending in more easily with different personality types. Dale might be too much of a love-him-or-leave-him type.

    Having said all that, I am a little concerned about Peter’s ability to produce new ideas so probation or contract to hire might be good options.

  • I like Peter because of his interest in investing, his steady build up on this interest, his focus and clarity on this goal. In his internship, he didn’t get the ideal opportunity but has made the best of it.
    Dale is an impressive personality but his buy side equity analyst credentials are not strong, nor is it a stated career focus.

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