New York Module – Week #2

Day 6 – Tuesday, 26-05-1015 – Morning Session @ Bard College

Speaker: Paul Toldalgi, Chairman/coFounder, BTAPartners, LLC

We were given a high level intro to the world of finance.

Key takeaways:

  • It is important to have well trained traders who understand not only financial products and markets but the human psychology as well because it contributes a lot to the way trading works.
  • Technological advancements changes trading (e.g. high frequency trading)
  • Supporting activities behind a portfolio manager are very important: market analysts do valuations and occasionally visit companies instead of just simply listening to quarterly reports.
  • Role of innovation:
    • Product level: new products are being created
    • Technological level: infrastructure advancements
  • World is full of uncertainty
    • Being an entrepreneur is possibly one of the most exciting jobs but one has to be prepared for uncertainty and have the required supportive infrastructure (e.g. emotional support, family, etc.)
    • Create your own carrier portfolio and be ready for career changes
    • Work for somebody and make mistakes on somebody else’s account and learn
    • Do not just sit back and wait to be discovered
  • When investing:
    • Stick to the basics: do not lose capital
    • Understand what are you investing in, what is behind the scenes
    • Be skeptical regarding ratings: do not just take the ratings but understand the company, its business model
  • CEE
    • CEE capital market is still fragmented: some regions are more developed than others
    • CEE is developing at a faster pace than the rest of the EU
    • CEE is no more an emerging market – there are central regulation and rules dictated by Brussels

Day 6 – Tuesday, 26-05-1015 – Afternoon Session @ General Atlantic (GA)

Speaker: Matt Nimetz

  • Career stages:
    1. Lawyer
    2. Government career
    3. Private Equity
    4. GA

GA facts

  • Invests in private companies and ventures at a very early stage
  • Buyouts: buy a large portion of firms (20-40%) with an aim to take them public and sell them
  • Usually they hold a company for 5 years (deviations might happen)
  • Target: invest $2 billion per year with 20% IRR
  • 10 offices
  • 200 employee
  • GA uses cutting edge technology on a daily basis and invests a lot in it (e.g. advanced video conferencing system to facilitate inter-office video conference calls)
  • $8 billion in assets

Vertical split of activities

  • GA looks for technologically advanced companies in the following sectors:
    • Financial Services: banking systems
    • Healthcare
    • Internet and Technology (e.g. Alibaba, RBnB, Facebook)
    • Business Services (outsourcing)
  • GA has specialist teams for each sector they invest in.

Career development – How to be an investor?

  1. Have a degree
  2. Find a job at a financial, a consulting, an accounting firm, or a bank
  3. Get the skills of looking at and analyzing companies
  4. Good to have a skill in a specific sector: technology, business, finance, energy
  5. Get hired by GA

How do you get comfortable with investing outside your local market?

  • Many firms do not go outside their local market
  • Hire advisors in the target country
  • Have a local partner
  • Enter into countries in the same geography where they have trust (e.g. in the payment system)

Bubbles?

  • GA is very concerned about bubbles
  • If people are selling more than buying, it indicates a bubble

Emerging Markets?

  • Political changes or instability change the investing environment
  • GA does not invest where the dependency on the government is high
  • If GA goes into companies where there is a significant local risk, they want a higher premium
    • In risky geographies: 30-40% IRR

Source of money?

  • Private investors
  • Wealthy families
  • Minimum cash to be invested: $100 million

Day 7 – Wednesday, 27-05-1015 – Morning Session @ Bard College

Speaker: Béla P. Sándor – www.new-eu.com

  • Independent consultancy
  • Background in IT, big networks
  • Worked for many service providers – AOL, Worldcom

Tricks of the trade

  • Do not go to companies saying you can do it all – work together with other parties
  • Offer service packages that lead to a business outcome in a certain amount of time (2 months)
  • Build a team
  • Think globally, not just inside your country

Manage cash flows

  • Never undersell yourself
  • Always know the profitability of each gig
  • Plan engagements carefully
  • When do you need to deliver and how much will it cost
  • Always use milestones
  • Do not let customer payments slide
  • Remember: They need you, that is why they hired you
    • No favors from each side
    • Customer is not doing a favor by hiring you: they need the service

How do I get customers?

  • Through partners and former employees
  • Always ask for referrals
  • Social media is your friend
  • Get known
    • Presentations on conferences
    • Teaching

Day 7 – Wednesday, 27-05-1015 – Afternoon Session @ Bard College

Speaker: Aaron Foster – Pfizer

  • Doctor of science in Biostatistics
  • Career stages
    1. 1st job: KPMG LLP. Economic Consulting Services (4 years)
    2. Pfizer Inc. (11 years)
    3. Management Science (5 years)
    4. Communicational Insights (2 years)
    5. Business Analytics & Insights – Emerging Markets (3 years)
    6. Business Analytics & Insights – Global Vaccines & Oncology

The goal of Business Analytics and Insights at Pfizer’s:

  • Help making better business decisions
  • Deliver fact-based recommendations to facilitate making impactful decisions
  • 300 colleagues in over 40 markets
  • Rigorous analytics services to Pfizer leaders, marketing clients and partners throughout the world
  • Goal: consistently communicate and make Pfizer an increasingly analytics-driven company

Day 8 – Thursday, 28-05-1015 – Morning Session @ Ernst and Young (EY)

Speaker #1: Dan Black – Americas Recruiting Leader

HR Facts

  • ~200.000 employee globally
  • 000 new hire to be done in the US
  • ~60.000 around the world to be hired
  • “It all starts with a vision”
    • Building a better working world
  • Vision 2020
    • Focus on winning in the market
    • Highest performing teams
    • Strengthen global, empower local
    • Exceptional customer service
  • EY makes lot of investment in people to achieve the highest team performance è Education
  • Hire new talent and retain best talent
  • EY’s global structure fosters global mindset
  • EY is present in 150 countries

EY intends to build lifelong relationships with people

  • “Would you recommend EY for a friend to work here?” è 90%
  • 2 brand for workplace for new employees / graduates after Google

Big differentiator for EY:

  • Approach to learning
    • Learn
    • Experience: be able to travel
    • Coach: very important is to give constant feedback not just annually

Speaker #2: Marlene Devotto

  • Partner
  • From Argentina
  • 12 years with EY
  • Came to US to do MBA: Washington, Georgetown University

Financial Services Risk Management

Sectors:

  • Bank and Capital Markets
  • Asset Mgmt.
  • Insurance

Financial Services Advisory (FSA)

  • Performance Improvements
  • Risk management
  • Regulations: EY helps adhering to regulations, they provide a benchmark
  • Broader industry standards / trends

Speaker #3: Slavena Bardarova

  • Senior Manager
  • 7 years with EY
  • From Bulgaria
  • Moved to US for college

Parthenon – EY

  • “We are a global organization with a focus on strategy and entrepreneurship”
  • Offering: full suite of services from strategy to implementation
  • Carrier ladder:
    • Consultant è Senior Consultant è Vice President è Managing Director
  • People needed:
    • Smart, Nice, Driven
    • Extremely bright, intellectually curious

Speaker #4: Amanda Donohue

  • Partner
  • 11 years with EY

Key activities:

  • Help clients make changes and the newly created strategy happen
  • Change management
  • Business process creation and improvement

Focus areas of services:

  • Performance improvement
    • Customer
    • Finance
    • IT Advisory
    • People and Org. Change
    • Program Mgmt.
    • Strategy
    • Supply chain and Operations
  • Risk
    • Actuarial services
    • Financial Services Risk Mgmt.
    • Information Security
    • Internal Audit
    • Risk Assurance
    • Risk Transformation

Most common failures and development areas in clients’ strategies:

  • Change mgmt.
  • Project mgmt.

Day 8 – Thursday, 28-05-1015 – Afternoon Session @ Bard College

Speaker: Stephen Ibach

  • Quit Wall Street after 17 years
  • Currently an entrepreneur building data products

Topic being discussed: The future of finance: Yikes!

Philosophy:

  • Shaking and breaking the traditional model
    • “No suit and tie”
  • Do not work for an organization and get up every day saying: “I want to create something which is my own”, you will regret it.
  • George Soros: “Markets are constantly in a state of uncertainty and flux and money is made by discounting the obvious and betting on the unexpected”
  • If you have doubts about future, about your success that is fine! è You cannot be successful without doubts

Current model of financial services:

  • Identity ==> Transaction ==> Centralized Trusted 3rd Party ==> Counterparty | Public View and Public Participation
  • e.g.: I want to buy stocks on a stock market from somebody.

New model that financial services are converging to:

  • Identity | Transaction ==> Locus of the innovation | Public View, Public Participation

In other words, financial services are becoming decentralized.

Investment banking

  • Investment banking fees are going south and so do revenues and profits
  • Investment banks cannot afford too many investment bankers è expensive, so they keep letting them go
  • Investment banks must become data driven
    • They have to analyze trends
    • Make use of big data
    • Manage risk! è Regulations remove risks so maybe investment bankers should turn to somewhere else
  • If you have an MBA and tech background (e.g. can code, create products):
    • Do not enter finance business
    • Create your own company and manage it
    • There are great opportunities in Eastern Europe and West Africa

Day 9 – Friday, 28-05-1015 – Morning Session @ Zephyr

Company Profile

  • Invest in SME
  • They go in as strategic partner when investing in companies
  • Invest in companies who are:
    • Ready to grow and rethink strategic plan
    • Ready for change: board, leaders strategy (Zephyr holds 1-2 seats in the board)
    • Ready to enter new markets
  • Goal: accelerate growth and then sell the company

Markets for investing:

  • Emerging markets (e.g. India, Sri Lanka)
  • In depth market research and due diligence

Sri Lanka

  • Very real economy (GNP)
  • ~20 million population
  • Strategic location – economic / trade route
  • Small market – not well penetrated
  • Becoming popular tourist destination

Stephen Canter – Senior Advisor

  • Cornell University
  • MBA from Columbia University
  • Interest in asset mgmt.
  • Started managing his career before he started it
    • Network to people
    • Help from people
  • Actively managing career is important
  • Developing a network of people is key
    • Surround yourself with successful people
    • Get a mentor early on
  • Pursued carrier in asset mgmt.
    • Become portfolio manager
    • Become manager of business ==> his specialty

Advice:

  • Get operating experience
  • Manage people
  • Develop a specialty to differentiate yourself
  • Think of your career in a way as we think of investment:
    • Do not have to be the best
    • Think about relative value not absolute value
    • You are not the smartest person in the room. If you think you are smarter, you will lose money
    • “The rising tide takes all boats”
    • Deal with growth business è just show up and you will be a genius
    • Bigger mistake is not to follow macroeconomic trends
    • Follow your heart and be passionate
    • Only when you look back connect the dots – Steve Jobs

Thomas Barry – Investment Committee Member

  • Worked in Latin America and Japan
  • Did MBA, learned security analysis
  • Interested in:
    • Making financial return and social impact
    • Job creation, skills development and local wealth creation

Strategy:

  • Invest in a company that has a product which is valuable to the world economy
  • Value based differentiation
  • Do not invest in companies who to differentiate based on cheap labor è there will always be a cheaper producer

“What would I do if I was in your shoes?”

  • Follow your heart
  • Enjoy challenges
  • Cultural diversity
  • Follow your passion
  • Get on the up escalator
    • Growth business
    • Do not stand in the line
      • Avoid strong competition
      • Do not want to be smarter than the other thousands of geniuses in a certain business
        • Quantitative trader?!
        • Lot of MIT students do it already!
      • Most of the people giving you advices are wrong
      • They look in the rear mirror and give advice based on history
      • When Microsoft was started everybody wanted to work for IBM
      • Do not take much advice from people
      • Biggest deficit is caused by lack of good management skills not financial or investment skills
      • Getting things done is a transferable skill from country to country ==> Operating experience
      • Go to developing countries
      • Become and operating entrepreneur
      • Do not ever take your eyes off the emerging markets
      • Your value is relative
      • Do not compete on the grounds of being smarter than everybody
      • Go where no one else goes, do what no one else does
      • Follow your heart and do what you like passionately
      • Build reputation takes 30 years and 30 minutes to destroy it – Buffet
      • Manage your ego: Hubris = Failure
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s