HH #13

Let’s talk about two different things happening in the market.

1. SPACs and retail companies are going bankrupt at an unbelievable clip.

2. This bull market is largely due to the performance of the largest, tech-focused companies by market cap: Apple, Google, Nvidia, Amazon, and Microsoft. 

Regarding SPACs and retail, the rising cost of debt due to the FED’s interest rate hikes have really F****d these companies. Companies (startups) that went public through Special Purpose Acquisition Companies in 2020 and 2021 have largely posted terrible financials. These companies tend to overpromise and underdeliver.

After brief jumps in their stock prices post-SPAC merger, investors are quick to realize that these companies are mostly unprofitable and rely heavily off of future projections for positive stock performance. In due time, 2022 was killer for these companies. Investors stopped believing the bulls*** and sold their stock. As their prices tanked, the cost of debt rose with FED hikes. The result? These companies had practically 0 access to funding in 2022, resulting in bankruptcy in 2023. If you don’t make a profit, you can’t pay your debt. It is also very difficult to sell stock to the market when every other shareholder is already selling it. Lordstown Motors and AppHarvest are a few of the SPACs which recently filed for bankruptcy.

Retail: Not going to say much other then you know what happened to Bed, Bath, and Beyond. The pandemic changed the world in a couple of ways and one big change was the death of brick and mortar stores. People want to shop online. Once again, 2022 was killer for primarily brick and mortar based retail companies. Retail traditionally runs at slim profit margins, so inflation increasing operating expenses and interest rate hikes boosting the cost of debt has only further squeezed retail profit margins.

Ok, let’s talk about the recent market performance. I’ve explained in previous editions of the HH newsletter that the market has gained 20% since October, effectively sending us into a bull market. However, a deeper look at the “market’s” performance can quickly be boiled down to the epic performance of the mega-cap tech companies.

The names I mentioned above make up over 22% of the S&P 500 as the S&P 500 is a market cap weighted index. Take a step back and realize that the performance of the S&P 500, a tracker of the 500 largest companies, is significantly influenced by the performance of a handful of companies. The NASDAQ is calculated the same way, and these mega cap tech companies account for nearly 50% of the NASDAQ! How can we possibly determine the “market’s” performance when it is so severely influenced by just 5 companies?

Be sure to reflect on these points and draft thoughtful answers for your interview questions.

Banking: Qatalyst Partners has launched their FT app with a quick deadline. Grace Matthews has also opened their app. On the SA side, PJT and DB have reposted apps for SA 2024. September looks like a big month for app deadlines, so be sure to submit soon.

Consulting:

SA: Capital One released a business analyst app, Kearney (DEI) business analyst, Alvarez and Marsal, Renaissance Strategic Advisors

FT: Alvarez and Marsal, Renaissance Strategic Advisors,

The next update will be a big one for the consulting side.

Buyside: Plenty of new MM firms opened SA 2024 roles. To name a few, Sumeru and CF opened their apps.

Recirculating our initiatives from the last update. Internally, we have A LOT cooking, but can’t share the details at the moment.

1. HH Study Buddies: Plenty of you have shown interest in finding other students going through similar recruiting processes. Drop us an e-mail with the subject line “Study Buddy” and tell us the type of recruiting you’re doing (banking/consulting/buyside) and we will match you with other HH users.

2. Info Sessions: Want to learn about what banking/consulting/buyside actually is and how they’re interconnected? Shoot us an e-mail with the subject line “Info Session” and I will host a call over Zoom to give attendees a rundown of what actually happens in these industries. This call will likely take place on a Sunday.

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Happy to help,

Hoos Helpers

HH #13