Investing in the Future: A Summer in Buyside Equity Research

By Yan Zhang, Class of 2019

Yan Zhang Headshot.jpg

When you think about portfolio managers who make billion-dollar investment decisions, you’re probably not thinking about Baltimore, Maryland. But that is exactly where I spent my summer. I interned at T. Rowe Price, a long-only mutual fund with $1.0 trillion in assets under management. As a buyside equity research analyst intern, I was tasked with evaluating the pharmaceutical contract manufacturing industry and sizing our investments in that sector. I was an EMT for two years and took AP Bio in high school, but I had no formal medical training, so I spent twelve weeks conducting intense and creative fundamental due diligence on this niche sector of the economy. My recommendations led to a $200 million investment in [name withheld], whose stock has since appreciated 15%, resulting in a $30 million unrealized gain for T. Rowe Price. This more than covered my intern salary.

What is Investment Management?

Often called the “buyside”, investment management encompasses a range of career paths concerned with direct investing of client assets. Private equity, hedge funds, and mutual funds all fall under this umbrella. While private equity seeks to take majority ownership of companies and run them as private enterprises, hedge funds and mutual funds purchase shares of publicly traded securities they think will appreciate in value over time. T. Rowe Price takes a long-term view to investing (i.e. 3-5 year holding periods), and is a Top-5 shareholder of household names such as Facebook, Amazon, Tesla, Visa, and Alibaba.

 Yan Zhang, ‘19, attended the BioProcessing Summit in Boston this summer to conduct due diligence that would ultimately help shape his final recommendation.

Yan Zhang, ‘19, attended the BioProcessing Summit in Boston this summer to conduct due diligence that would ultimately help shape his final recommendation.

Day-to-Day Responsibilities

My favorite part about investment management is the autonomy. As a buyside research analyst, you are a team of one and you decide how to spend your day. Want to lock your door and watch YouTube videos about biologics all day? I did that. Want to fly to Raleigh, rent a car, and drive two hours into rural North Carolina to visit a rubber factory? I did that. Want to network with other investors at a growth equity conference and conduct a 1-on-1 interview with the CFO of [name withheld]? I did that too. I’m a people-person, so I spent my summer flying around the country, speaking with biotechs and CDMOs, and doing everything I could to understand the pharma contract manufacturing landscape. My ultimate deliverables were two company reports, a biologics industry overview, and a presentation in front of T. Rowe’s entire equity division.

Recruiting Process & Timing

 Presentation Day: Prepping for the final presentation and recommendation at T. Rowe Price; the gym isn’t the only place for gains.

Presentation Day: Prepping for the final presentation and recommendation at T. Rowe Price; the gym isn’t the only place for gains.

Large mutual funds such as T. Rowe Price, Fidelity, and Capital Group will recruit on-campus and host formal Corporate Conversations. But hedge funds and smaller investment managers do not have the capacity to visit every business school, especially since their hiring needs often max out at two interns per firm. Thus, it’s important Boothies compete in national stock pitch competitions and engage in specialized search to get facetime with funds outside the Chicago area. Applications are due in GTS mid-December and interviews commence immediately after winter break.

Resources & Reflections

Booth’s Investment Management Group and the Student-Managed Investment Fund (“SMIF”) were instrumental in helping me practice my stock pitches and developing my investing skills, so as a second-year co-chair of IMG and a Portfolio Manager of SMIF, I’m doing everything I can to ensure first-years have the same opportunities I had to succeed. For extracurricular reading, I recommend Howard Marks’s The Most Important Thing, Warren Buffett’s Letters to Shareholders, and Michael Mauboussin’s More Than You Know.