My Princternship with Hanweck Associates gave me an interesting look at the intersection between technology and finance. I arrived at the office in lower Manhattan with my fellow Princetern, Eric, at about 8:15 am. Richard, one of the firm’s quantitative analysts, greeted us and gave us an introduction to the firm’s business and explained the technological focus of the firm as well as his own background and work at Hanweck. Soon after, we met our host Dr. Hanweck ’87. He then introduced us to Mike who gave us our first project. The project involved spin-offs, which, as Mike explained, involve a larger company splitting off a part of its business into a smaller, stand-alone company. We were tasked with researching spin-offs in the last decade and finding out how many shares of the new company someone received per share of the larger company they owned. After working on this for a few hours, we took a quick break for lunch. After lunch Dr. Hanweck invited us into his office to talk about his career, financial derivatives, high-speed trading technology, and his perspective on the future of his business and the industry as a whole. It was the first time I heard all the economics terms I have learned in class like price discrimination, consumer surplus, and comparative advantage used in a real life situation so it was an intriguing link between my studies and the business world. Aside from that, it was incredible to hear the perspective of an alumnus and learn about his career path and how he believes a business can be successful. After this conversation, I returned to work on the spin-offs project until Mike provided us with another project. He gave us a quick lesson on using queries in Excel and set us up for a project to make a user-friendly format to look up historic equity prices and make graphs from database information. After experimenting with Excel for a while and getting a feel for the database, it was 6:00 pm and time to head home. I took a subway and a train and was home by 8:00, and I was ready to see what the next day had in store for me.
January 31, 2012
I began my second day at Hanweck Associates by working some more on the spin-offs project from the previous day. Afterwards, I returned to Excel and Microsoft Query and was able to set up a system in Excel where a user could plug in a stock ticker and immediately get data on the stock’s equity id number, valid dates, and other information from the company’s databases. Once Eric and I were comfortable with this, Mike provided us with objectives for some larger projects. He brought us into a conference room and gave us a lesson on options and their properties. Then he defined three projects for us to work on. One was to make an interface whereby a user could specify a stock ticker and a start and end date and see the stock information, the day-to-day closing price of the stock, and a graph plotting the equity price against time. The next was an option-contract table. It would allow the user to specify a certain equity-id number (associated with a stock) and a valid date and see all of the options associated with that equity id and valid date. The final project was to make a heat map based on the volatility indices of different options based on their “deltas” and time to expiration. I worked on the first two projects and learned a lot about how to manage databases. I also discovered trends in equity prices and option contracts as I tested the interfaces that I had created. After lunch, Eric and I spoke with Richard and learned about his current projects and the challenges of collecting, analyzing, and storing the incredible amounts of data that the firm collects in real time. I then returned to the projects I was working on and at the end of the day I had working systems in place for each. The projects taught me about the technological challenges in storing and retrieving large amounts of data. Before we left for the day, Dr. Hanweck spoke to us about a project for the next day that would allow us to compare dividend forecasts from two different companies the firm uses against the actual data to determine how close the predictions are. The day gave me some great hands on experience while learning more about financial derivatives and the markets in general.
My final day at Hanweck Associates was centered on the dividends project that Dr. Hanweck had described to us the previous day. I arrived at the office early and after reading the financial news of the day, Eric and I met with Andy, a quantitative analyst at the firm. He explained the specifics of the project and the challenges of “unclean data.” It is often easy to assume that the data that we receive is well organized and accurate, but he explained that that is actually seldom the case. We were charged with looking at thousands of dividend payments and their respective payment dates along with the predictions for those dividend payments from two companies that the firm purchases forecast information from. Had the data been nice and clean, it would have been straightforward to write a simple program to calculate the forecast errors for each dividend for both of the companies’ predictions and then determine which one was better overall. Unfortunately, inconsistency in the data made this very difficult. Instead, we had to put the data in a consistent format and account for the gaps so that the data could be better analyzed. Once this was done, it was possible to compare the forecasts for the different companies and see which ones fared better both overall and in certain areas. Our day concluded with a final recap discussion with Dr. Hanweck. We discussed our experience and what we learned as he shared more of his story on how he started his own company and where he hopes the company will be moving forward. It was a great conclusion to the Princeternship as we had the chance to reflect on our experience and learn more about the firm and its CEO as well as the industry as a whole after having the opportunity to work on some projects and listen to conversations among its employees in the time we were there.
I thank Dr. Hanweck for this opportunity as well as all those in the office who helped and guided me in the time I was there. This is an excellent Princeternship for students interested in technology and finance as there is a lot to be learned from a technical standpoint as well as from the experience of working in the financial capital of the world alongside a group of dedicated and talented individuals.