My Summer at Greenfield Investment Management
Before returning to Western University, Volunteer Equity Analyst David Hascal reflects on his summer at the firm
Warren Buffett has given a lot of great advice over the years. But one piece of advice really stuck with me. I think it perfectly sums up my experience volunteering for Greenfield Investment Management over the summer. “Do what you love and work for whom you admire.” Erin has been a fantastic mentor and my experience working for Greenfield has been a transformative one.
My name is David and I’m entering my second year of university at Western. Three years ago, I stumbled upon value investing. I quickly took to reading books and listening to lectures by successful value investors. I’ve been passionate about investing in public companies with favourable risk-reward trade offs ever since. I continue to compound my knowledge on investing, and develop the mindset required to be successful.
I approached Erin near the end of my first year. I was looking to gain experience researching companies and be mentored by someone in the investment management industry who I felt was very knowledgeable on value investing. He agreed to let me volunteer over the summer at his firm. I’ve been able to attend various investor-related events, learn about a variety of businesses and industries, and create an in-depth research report on a company.
Turning to the research report I created over the summer; I researched Omnicom as well as four other ad agencies. I summarized my findings in a 50-page research report. I tried to be as objective as possible when providing my thoughts on the company. I tried to differentiate business quality from a business being a good investment.
This was my first time doing an in-depth dive into a business that relies so heavily on human capital. I learned a lot through the process. I’d say one of the biggest differentiators I found between the various ad agencies was in how the businesses themselves were run from a managerial perspective. Firms like Omnicom focus on not making poor decisions when it comes to allocating free cash flow generated from operations. I don’t think that's the case for most firms in their industry.
I found that the amount of knowledge you can gain from reading through and modelling out ten years’ worth of financial history for a business is incredible. While I don’t believe a business’ future is the same as its past, I think understanding all aspects of a company’s history can help you underwrite future predictions more accurately.
Firms like Omnicom focus on not making poor decisions when it comes to allocating free cash flow.
Erin was able to coordinate meetings with the investor relations departments for Omnicom, Interpublic, WPP, S4 Capital, and Publicis. For those meetings, I was able to create and ask questions relevant to the long-term nature of their businesses and the industry. This gave me a good sense of the industry and competitive landscape and helped me in estimating the probabilities of future events.
It was a first for me to build out such connected models and I learned a lot from doing so. It’s one thing to just plug numbers into a template. However, building out each model myself, figuring out what worked and didn't work, and all the variables that go into each model furthered my understanding. Seemingly small changes to assumptions can change a valuation model dramatically. That's why I used the valuation models as a guide as opposed to fact when coming up with my expectations for future returns.
The amount of knowledge you can gain from reading through and modelling out ten years’ worth of financial history for a business is incredible.
One major takeaway from this experience has been the value I place on writing. Writing down my thoughts clearly and concisely not only furthered my understanding of what I had learned, but it also allowed for others to better understand and therefore question my ideas. Becoming a good writer doesn't happen overnight. It takes practice. It’s something I hope to continue improving.
Erin coordinated a meeting during which I presented my research to other value-oriented portfolio managers. This was an incredible experience for me. Many thought-provoking questions were asked, and I learned where I could improve my report and understanding of the business.
In conclusion, I’m grateful to have had the opportunity to volunteer for Greenfield Investment Management over the summer. I really enjoy the entire process of analysing and valuing businesses. I hope to work as a full-time equities analyst when I graduate.
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