More Stock Picks: Bon-Ton Stores BONT

Before I put this pick out there, I should note my last pick done for the Securities Analysis class was a concrete manufacturer which took some damage from the whole housing crisis. I was right on my view for the next quarter's earnings and its impact on share price but was very, very wrong on the longer horizon.

This pick is one I did for the Seminar In Value Investing class. Its a great book and done from the Value Investing viewpoint as taught by Professor Bruce Greenwald at CBS.

They tell you in Value Investing to write down your views and track them to protect yourself from hubris. Releasing them to cyberspace should be even more effective. My pick:

http://docs.google.com/Doc?id=df9wrf5s_52g8sktfg5

The Yahoo Finance link (for your own research):

http://finance.yahoo.com/q?s=bont

A Hard Disk Failure

My hard disk failed recently. This is a new computer. I bought a new computer got a new hard disk and fixed the old one but the data is gone unless I shoot for an expensive recovery service ($400+) with a variable success rate. Thankfully, I had a physical (CD) copy of all my pre-MBA stuff. I had to recover a lot of things from b-school friends. Lesson: get another hard drive linked through your USB. Get some kind of archiving service and save, save, save your data. Second Lesson: Web based software looks more and more attractive everyday.

Working One Day A Week; Why No School-Run Fund?

I was chatting to a friend active in CIMA and I got a question answered that I used to wonder about during admissions. Schools like Cornell and Wharton have student run investment funds. Columbia which is the Value Investing school, doesn't. Apparently the reason why it doesn't happen, is that a fund like that requires a faculty sponsor. If they set up a fund it would be $10 million or so. At Columbia, the faculty who have the skills to sponsor it, don't consider something like that worth their time. Its New York! They are way more likely to take a paid role in a hedge fund of some kind if they wish to manage money.

Students have the same attitude in some ways. We are in New York and plenty of students headed to private equity, venture capital, buy side or hedge funds took jobs taking up 1-2 days per week.

This is something that you probably wouldn't put in an application essay because admissions thinks it detracts from the overall experience. However, it is a good move if you can find the right firm. I do have to say though, that everyone I know taking that route seems to be a little distracted from the academic experience.

Final Term

I have now started my final term at b-school. I have been negligent in my blogging. I basically took the whole term off. There was a lot going on. There was a credit crisis and a market crash to watch. My wife is working now and I am now spending more Daddy time. The first term of my second year has been the best part of the MBA for me. We got to do some family holidays. Careerwise, I knew where I was going.

I finally got to go home at the end of the second term. A cousin had a kid. That's 4 great-grandkids for one of my grandma's. The other has 6. Family was asking me "how was the MBA?” I didn't even know where to start. So much has happened.

I thought that I had got a lot of done in clubs, job hunting and in academics but the thing that they were most impressed was a picture of me and CBS's distinguished alumni Warren Buffet. I got to go to Omaha last year and he was very kind about taking photos with MBA's he meets. Mr. Buffet is a serious contrast to the tycoons you see in Singapore and Malaysia. He's 10 times richer and far more humble. He's amazingly generous with his time and a testament to the character of Americans from the central regions.

Malaysia was a little bit down. Tensions between the Malay (Bumiputra) and non-Malay populations have got pretty bad. Non-Malays in Malaysia are genuinely wondering if they will have any role in 20 years time. Me and a friend who had reached a senior role in the Malaysia office of a multinational insurer were joking that there wasn't much of a story for the Malaysian economy. There are links to the Middle East (which wouldn't help non-Muslim Malaysians) and ASEAN. Unfortunately an ASEAN Free Trade Zone would take 10 years and talented Malaysians need to know what to do with themselves in the meantime.

If I were an educated young Malaysian, I would be taking a good hard look at Singapore, HK or Shanghai. It might require a 3-9 month investment to studying Mandarin in China for Shanghai but going regional seems to make a lot of sense. One of my MBA colleagues who is joining a bulge bracket bank in Equity Research in HK is using the June-August period between graduating and starting work to do an intensive Mandarin class in Shanghai.

PHD's Versus MBA's

The new CEO of Citigroup is a CBS alum.......... but he's a PHD and not an MBA. This is a trend to watch in Sales/Trading/Structuring Banking and Hedge Fund career paths. MBA's from finance (or from other disciplines) are the real quants of Wall Street. Even highly academic MBA's with quantitative degrees prior to b-school (former engineers, programmers) can rarely compete in quant software development or heavy-duty statistical programming.

We are also beginning to see them in other situations. I met a PHD candidate in chemistry who was trying for consulting and asked to do case training with us (if she got the job she would have finished 'All But Disseration' - ABD and got a Master's degree of some kind). There was a PHD in my internship program at Deutschebank willing to pursue the Associate career track with us MBA's.

I got to do a first year PHD course in Econometrics in CBS. I think PHD's are different. Not better, although often way smarter in an academic sense. They will run rings around MBA's in computer programming or statistical programming but are way more specialized. They tend to have less skills in sales, networking, public speaking, knowledge of marketing and strategy, group skills, market/product knowledge, behavioral biases and organizational behavior outside of their specialty. A Marketing PHD is going to have marketing knowledge but not the strategy.

A good MBA can have a very strong instinctive knowledge of a product or a financial modeling framework but may not be able to run models that take more than Excel or Visual Basic. Don't underestimate the value-add of the qualitative interpretation of aspects of using financial models, its worth more than the model itself in some cases.

As an MBA interested in quantitative roles, I would take roles with a qualitative or sales aspect to the role. It would be crazy for me to join a software development team for a quant trading package. It would make sense for me to do quantitative structuring for a client who will know me face to face and needs bespoke aspects to his package. If I was in Fixed Income, I would go in areas like Distressed which would require an understanding of restructuring which is qualitative. In Equities, figure out a way to play on your skills in the qualitative or strategic aspects of valuation. Equity valuation (because of the strategic component) is often an area that PHD's are challenged by.

It gets back to the big lesson of my strategy class. Doing everything is not a strategy. Trying to keep up with programming skills just to compete with PHD's is not the smartest thing to do once you are an MBA.