NZ analysts to face the world's best

Two New Zealand analysts head to New York this weekend to vie for the title of financial modelling world champion.

To reach the final, which has a $US25,000 first prize, PwC's Alex Gordon and First NZ Capital's Tom Picot have made it through two rounds which started in mid-October.

Mr Picot is related to supermarket magnate and educational reformer Brian Picot, who died in August aged 90.

Brian Picot's 1987 taskforce, which produced "the Picot report", led to widespread reform of New Zealand's education system, including establishing business-like elements such as school boards of trustees.

Messrs Picot and Gordon will compete against 14 others from Russia, the USA, Canada, Hungary, Poland, Australia and the UK.

Mr Picot told NBR ONLINE he expects they will each be given a case study, from which they will construct a model using Microsoft Excel.

He is not sure what the questions might be, but assumes they will be harder versions of what he encountered in the earlier rounds of the competition.

"One of the exercises was an evaluation of a company.

"We were given a bunch of information about a company such as the starting balance sheet, revenue and a few key assumptions.

"The assumptions were things such as revenue growth, and how the working capital will change.

"And then we're asked, 'what is the value of this company'?"

Mr Picot says using financial modelling, the aim is to predict how changes to elements such as revenue growth, for example, will affect the value of the company.

"They were testing if the model has been built to withstand things such as a change in revenue or a different discount rate."

Mr Picot has been with First NZ Capital's Auckland office for three years since graduating from Otago University with a Bachelor of Commerce in finance and economics and a Bachelor of Science in computer science.

He says financial modeling is a well-established practice which is not changing much.

"Especially in investment banking, there are certain ways to build these things.

"It doesn't matter if you're in Auckland, Sydney or New York, there's a lot of training and resources around the best way to build models.

"Excel has been around for a long time. If you opened a model from 15 years ago it wouldn't look too different to what it is now."

Mr Picot says winning the competition would look good on his CV, but it isn't essential to building credibility.

"If you've done three years as an analyst at an investment bank, people are going to assume you are competent in that area.

"The experience itself would be a lot of fun. But I'm not concerned whether I win or not."

The contestants arrive in New York on Saturday before the competition starts on Sunday afternoon.

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2 Comments & Questions

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Can't think of a more boring competition. I hope they have skimpy cheerleaders to help. How about no Excel and using abacus only. That will make it a bit more interesting.

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And "no one could have forseen" the financial crisis coming ....

.... financial modelling championships, yeah right.

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