Tell us about a time when you put knowledge into action.

When I first joined XXX, I put knowledge into action to achieve a very positive investment outcome. I rigorously analyzed and promoted, against market trends, an investment that I believed offered tremendous upside potential.

Creating valuation analyses for the Energy team’s existing positions stood as one of my immediate objectives after my arrival at the hedge fund. One such position was in BBB Energy, an oil and gas exploration and production company. I was the only person at XXX monitoring BBB’s operational progress and carrying out our quantitative research on the investment. In my first week on the job, my portfolio manager told me to value BBB and suggest whether we should keep or sell the stock. BBB’s shares traded around $20 at that time.

I went beyond the evaluation effort expected for a professional at my level. I thoroughly researched BBB’s history, assets, finances, and management, and built a model that calculated the stock’s worth at $35 per share. Despite my short term at XXX, I found it compelling that BBB’s CEO previously sold two similar businesses and that BBB lacked the money to develop its prolific oil and gas reserves independently. Over the next three months, I continued refining my analysis through additional research that included intensive discussions with outside petroleum engineers who confirmed BBB’s asset quality.

The stock market meanwhile punished BBB for aggressive spending, but I believed this was an inadequate justification for the stock’s low valuation. BBB was merely in a period of fast and expensive growth that required more funding than the company could finance on its own. Occasionally frustrated with the market performance of the stock, my portfolio manager contemplated exiting the position, but I reassured him as to the investment’s unchanged merits.

Confident in my analysis, I took the lead and presented my assessment of BBB to XXX's CEO and other senior leadership. I informed them of the investment’s profit potential, and they began buying more stock. Although I foresaw substantial risk of staking my reputation early on with a single stock, I stuck by my conclusion of BBB’s cheap valuation given my quantitative analysis. As I watched the share price remain roughly flat during the spring months, I regularly refreshed and resubmitted my analysis supporting a $35 value to my portfolio manager and XXX’s CEO. Based on my updates, they took advantage of days on which the share price declined to purchase additional stock.

One day, after seven months of watching BBB orbit its benchmark, I noticed a bright red announcement on the ticker tape that XYZ acquired BBB for $38.75 per share. XXX realized a 180% annualized rate of return on the investment, and our seven-month profit totaled $13 million. My work on BBB taught me the importance of putting knowledge into action and of voicing and defending my convictions to achieve the best outcome.