Ever since its founding, the goal and mission of the Finance Club has been to bridge the gap between its student members and the professional world. In hosting weekly networking events and case study sessions, the Club has offered its members a unique platform to interact and connect with industry professionals. Indeed, our platform has written several success stories over the years and the networking events have often served as a first step for our members to get introduced to their future employers. The Finance Club prides itself on these success stories and would like to share some anecdotes of our members’ experiences.
Berenberg - Lorena Pirlet
I - From Brown Bag Lunches to Berenberg
It’s about one year ago that I sat in your shoes, pondering over what the future might hold in front of me and what could be the perfect “match”. When I, by chance, found out about UZH’s Brown Bag lunch with Berenberg, I traded in one sunny afternoon on the slopes for insights into their International Graduate Programme, which ultimately laid out my path in front of me. In light of the basic economic concept of scarcity and limited resources, we will inevitably be asked to set priorities throughout life, as we sadly cannot do everything. And, although it is most certainly impossible to always make the right decision. The one of ultimately joining Berenberg I would, without any hesitation, instantly take again. In fact, the fairly new asset and wealth management specialisation within the overall IGP offering was the only programme out there that could have made me pivot away from my long-aspired goal of joining a leading American financial services firm in the beautiful city of Zurich, in a wonderful team most importantly. Here is why: It’s not Zurich, but even better. A six-week-long induction training in London, asset management rotations in Frankfurt, wealth management rotations in Hamburg, and the prospect of spending some time in the Paris, Geneva or Zurich office.
While at first, a key deciding factor was frankly the programme’s unparalleled exposure to different divisions in different locations, five months into the programme, I mostly admire the practical long-term thinking, which to that extent arguably only a non-listed company can afford. Take the recent growth to value rotation and the flight to safety amid the Russia-Ukraine war, both of which dampened the recent equity fund performances as the investment philosophy essentially targets growth-names within the small-mid cap sector. Although the said shares sell off much more sharply during market corrections than their blue-chip counterparts, instead of betting on short-term macroeconomic themes and departing from one’s principles, the fundamental investing principles are clearly held on to and communicated transparently to clients.
II - Search for value
In general, positions are only sold for which the investment case is broken, faith in the company management is lost, valuations are stretched, or there are better alternatives. As the storylines largely continue to be intact, however, the recent dynamics rather remind me of the idiomatic expression “Don’t throw the baby out with the bathwater”. With passive investments gaining further traction, mispricings in equity markets continue to increase as index constituents are bought and sold proportionately, irrespective of the balance sheet’s quality, the exposure to structural growth trends or the strength of Warren Buffett’s famous economic moat. An extreme example of this was Wirecard, whose shares were still bought by passive investment vehicles that aimed to replicate the DAX when the company had already filed for insolvency.
In times of negative real interest rates, the quality of a business might not be as decisive of a determinant in predicting future stock performance as even “ghost companies'' can finance their operations amid the search for yield, but, with the prospects of higher rates in the not-too-distant future and an exit from the new normal, a thorough understanding of the company’s fundamentals will presumably appreciate in value. At the same time, the mispricing and the potential to generate alpha is highest the lower the research coverage, which adds to Berenberg’s advantages and my personal motivation to grow further with Berenberg.