Some classmates and I had the chance to sit down with Marshall Heinberg, the head of Oppenheimer’s investment banking practice, for an overview of his firm and an outlook on the investment banking industry. Mr. Heinberg’s insights were unique and bold; below are three general takeaways from our conversation.
- If you’re an MBA student looking to get into banking, he suggested that you consider industry versus product roles carefully. He recommends finding a career that will provide you with a depth of non-commoditized intellectual knowledge. I took this to mean select industry coverage over product investment banking, as industry coverage gives you the chance to develop a deep knowledge base of a particular industry, which brings me to the next great insight…
- A quote from Mr. Heinberg, one which he admittedly likes but did not invent: “There are riches in the niches [because there is less competition]”. This quote can be interpreted a few ways. It can mean that as a banker, if you can become an expert on a niche, say the emerging online-to-offline opportunity (e.g. eBay’s acquisition of Milo.com, Google’s M&A attempt of Groupon, and Amazon’s investment in LivingSocial.com), you can be the “go to guy” for industry deals. Conversely, if you think of “riches in the niches” as an investor, it can help you find opportunities on the margin for outsized returns (as Tom Barrack pointed out as well).
- Finally, while on the topic of investing, Mr. Heinberg had a good comment on investing in things you know. For example, if you subscribe to Netflix, and eight of your friends do too, then you should probably think about investing. In my own life, examples of this include NFLX, SBUX, and AAPL. I think Blue Bottle Coffee falls into this category today.