I find it quite remarkable how the first thing every person in the US told me on hearing that I would be doing my summer internship in Chicago was how “great Chicago summers are”. And they were correct! Despite my determination not to make any effort learning the heretical Fahrenheit scale, I can tell that in Chicago summers are marvelous: very hot and yet soothingly windy. In fact, they are much hotter than is usual back in St. Petersburg, where I’ve spent most of my summers growing up. While the pine tree forests covering the Baltic shores of the easternmost corner of the Gulf of Finland spend at least a third of the summer under dreary drizzles, the southwestern shore of Lake Michigan delivers a perfect weather you would want to read a book outside while sipping an espresso.
At all my schools - St Gallen, ESSEC and Plekhanov - I have always enjoyed, among other, the topic of equity valuation - both vanilla and, especially, the more exotic varieties. I cannot determine where exactly this passion originates, but I figure it is fair to say that I just love modelling things. Isn’t it exciting to try and simplify the continuing work of a thousand men with all its key drivers, uncertainties and business specifics into a ten megabyte spreadsheet and, of course, turn this “world on a napkin” into a reliable source of profit-generating insight?
Naturally, I could not but satisfy my urge for modelling on my spring academic exchange at Duke where I took the MBA valuation class. In a somewhat entertaining discussion about cash flow modelling (one would have to be there to appreciate it) Frank Ecker, the professor, told me that HOLT would be a very interesting place to work at. And, like with the “great Chicago summer” remarks, it proved to be a keen insight! Although most of the work at HOLT had already been done before me, the changing nature of businesses, economics and accounting practices always create opportunity for pockets of unidentified value to phase in an out of existence even in the most efficient market. Hence the need for a constant reassessment and testing of different approaches to valuation and modelling – something that I have focused on in my internship.
Arguably, one of the great things about being a global investment analyst is that you get to see how the decisions and strategy implementation of managers and policymakers with time deliver a profound impact on the value of their businesses – one way or the other. Did you know that Caterpillars’ failure to penetrate the Chinese market to the extent they had originally planned could cushion the blow to the Midwestern industrial group from the slowdown of the economy of Middle Kingdom? Or that, in line with my 2012 observations about the quality of corporate governance and institutions, Russian state-run companies are trading at a very sizable discount compared to their Singaporean peers? Or that a poor choice of a one particular performance metric for the executive compensation can and indeed has ruined several companies over the years?
Finally, there’s the culture. HOLT has a genuinely stimulating environment with people keeping the balance between a wide coverage with its global issues and a pressing need to keep focused and be able to communicate with clients over some extremely specific valuation details. Having a “glocal” mindset like this is a remarkable feature, a thinking framework over which one can build a very impressive career.
As my internship draws to its inevitable end in just a couple of weeks and the summer heat has been blown away by the fresh winds of the Great Lakes, I prepare to come back and finish my studies back at St. Gallen. It does, of course, remain to be seen what opportunities await upon my graduation, but regardless, a man is a sum of his deeds and I am glad to admit that this experience has already added a nice hefty bit to my grand total!