Welcome to Five on Finance with the Business Library! Today we’re talking to Sameet Banerjee, a business student majoring in finance at the SMU Cox School of Business.
Business Library: Thanks for being here, Sameet!
Sameet: Of course, happy to be here.
Business Library: So, you recently attended all four workshops from the topical deep dive sessions taught by Professor Don Shelly. The sessions discussed business resources for financial analysis, relative value analysis, industry analysis and using Excel for Bloomberg and FactSet. So, we would like to know what interested you in this workshop series.
Sameet: So, I was scrolling on LinkedIn one day, probably sometime mid-October, and I saw that the Business Library had posted the Topical Deep Dive advertisement that Don Shelly for the next four weeks, Tuesday evenings, will be teaching on four different topics, and it really interested me because I find that the classes at SMU teach you really good finance skills, but it’s very academic and it’s hard to really bridge the gap into what the real world is expecting when it comes to valuation and finance concepts. And so that was the main driver of me attending and wanting to learn more.
Business Library: That’s great to hear! So, if you don’t mind, would you share something new you learned that you didn’t know from these workshops that you can now do in Bloomberg, FactSet, NetAdvantage or Capital IQ?
Sameet: The biggest one was actually discovering NetAdvantage. I didn’t know it existed, but it’s actually probably the most helpful resource I’ve learned about because a lot of times, whether it’s in the Alts class or for internships, you’ll have to build industry overview slides. And finding information on an entire industry can be really hard, but what NetAdvantage does, it aggregates lots of industry information from CFRA equity research. And it puts you in the view of how do you analyze this industry in terms of Porter’s Five Forces, in terms of qualitative factors and quantitative factors? And so I found the NetAdvantage tool, probably the most helpful for my own work within jobs or the Alts class.
Business Library: Excellent. I always love to hear when students find new resources that come from the library. You alluded to this just a little bit, but could you share more about how you plan to apply this knowledge to your classes or career?
Sameet: Definitely, so Don Shelly really went through Bloomberg and FactSet. Very in depth, and so what I learned was that there are a lot of resources in these databases that I didn’t know existed. For example, Document Search within Bloomberg, or DS, aggregates almost all the news, all the equity research, all the reports from the banks that are being made on these companies. And so, for a company that I’m valuing like Disney that’s so huge that just had an earnings call, there’s so much information that just happened yesterday. Like where do you find the revenue estimates? Where do you find the earnings estimates? Where do you find what the management is saying? And so Bloomberg and FactSet both aggregate all this information to one, and so I definitely plan on using these aggregates, whether it’s DS or BRC, to find equity research to make more detailed slides and have better fundamental analysis within my models.
Business Library: That’s great! So, what are your top three takeaways from attending this workshop series?
Sameet: I’d say the first takeaway is that my model, no matter what I’ll do, will be wrong. An example Don Shelly provided was: cash in the first four years for Exxon, was about 4 billion to 6 billion. I think even if you were modeling it in the most positive, optimistic way, maybe it becomes 7 or 8 billion. But in the very last year, 2022, of what Don Shelly showed us it was actually 29 billion. And so that’s a huge like, there’s no way a model can contain that kind of estimate. And so, that was one takeaway I learned where you need to incorporate an investment thesis with your model, and the way to do that is by just exploring Bloomberg and FactSet and seeing what the analysts are saying that are reviewing this company.
Another takeaway that I had was to view certain investments in industries within the lens of Porter’s Five Forces. And so, what Porter’s Five Forces does is it allows you to view the industry in terms of new entrants, competition, customers, suppliers, and that’s something that I’ve never really thought about until Professor Don Shelly walked me through or walked us through in the workshop: how to really view companies, how to view their market share, their power rather than just what is strictly in their financials, but how they’re positioned within their general industry or market.
And then the last takeaway I had was just to explore. In the very last workshop on using Excel for Bloomberg and FactSet, I’ve had the FactSet excel add-in for about two years now, and I never really thought to explore the Excel template library. And that was the first time I clicked the button after Professor Don Shelly said to check it out, and there was a wealth of information that I feel like I’ve been ignoring this entire time. There were accretion and dilution models, discounted cash flow models, there were interest rate risk analyses and there was so much more. But I feel like I was opened up to a new world when I was shown that tab within the FactSet Excel add-in because having the sanity check to see: oh, how are others thinking about this? How’s FactSet illustrating the valuation of this company? That’s huge. And so, those are my top three takeaways from the workshops.
Business Library: It’s amazing, isn’t it? When you learn from an expert what’s been in front of you this whole time, and you maybe didn’t quite realize it was there, or how you could actually apply it to make your assignments, takeaways, insights even better. So would you recommend this workshop series to other students, and if so, why?
Sameet: I would definitely recommend this workshop to other students because the finance classes at SMU teach you a very strong academic skillset. How do you find the weighted average cost of capital? How do you find portfolio return and covariance? But, what the classes at SMU don’t do is help you apply that knowledge in a very real-world setting. It’s getting to that point, but you still need to take that extra step towards looking at every day like how is the stock trading? What are people thinking about this company that you’re valuing when the earnings come out? When the new subscriber count comes out?
And so, the workshop opened me up to different ways of looking at the company, for example, relative value analysis. Which comparable companies are you going to include in your model when valuing the company you’re looking at? And being very meticulous with: FactSet uses this industry sector to decide the comps, Bloomberg uses this database to start the comps. And so which one are you going to use?
And I’ve learned that it’s more of an art, rather than a science. And so I would definitely recommend this workshop series to other students.
Business Library: That’s a great way to think of it, because it is very subjective, isn’t it? [Sameet: Definitely]. Depending on biases and the sectors where the people that are valuing those companies come from.
Well, thank you for taking the time to share your experience with us Sameet and we hope you’ll join us for another Five on Finance in the future!
And for those who weren’t able to attend Professor Shelly’s Topical Deep Dives this semester, watch the Business Library’s News section of our website at smu.edu/business library for updates.