Howard Leung, CFA, CPA, CA, is a senior equity analyst and an expert in understanding details in financial statements to discover high-quality companies. Howard is actively involved in accounting standard-setting and mentoring the next generation of investment professionals. He shares his career path toward his current role in Fiera Capital, his views on finding the right information in research, and his advice for making an excellent stock pitch. 

CAREER HIGHLIGHTS:  

• Senior analyst, Fiera Capital 
• Over ten years of experience in accounting and equity research, covering a range of sectors from real estate to software
• Board member, Accounting Standards Board in Canada 
• Ranked #2 analyst for stock returns by Refinitiv StarMine for the Real Estate Industry in 2019
• Mentor at the University of Waterloo’s Student Investment Fund

You started your career as an auditor. How has accounting and auditing helped you transition to a career in finance? 

My time at Deloitte allowed me to appreciate the types of financial and general risks that will impact the company’s performance. It also helped me understand how auditors inspect statements. This experience directly applied to my first equity research job at Veritas Investment Research. This unique opportunity allowed me to leverage my accounting and business knowledge to understand the details in companies’ financial statements—primarily real estate and tech entities—and assess how the underlying risk or opportunity would impact a company’s valuation. I then shared my findings via reports and meetings with clients across the country. Although I have changed roles from the sell side to the buy side, I continue practicing the analytical skills I learned to research and expand them to cover additional sectors such as mining.

If there is one guiding principle that helped me navigate my career, it is my passion for learning and my curiosity and drive that motivate me to continuously improve my skills. I am always curious about how things work, be it how a company makes money or understanding what drives its growth. 

With the advancement in artificial intelligence (AI) technology, analysts are exposed to an unprecedented volume of information. How do you find the information that works for you?  

Finding the right information starts with an understanding of your investment style. My style is to focus on quality, so I take a more patient view of the market to find the long-term drivers that will bring sustainable growth to investors. 

Understanding a company’s long-term strategies is like putting different pieces of a puzzle together. I use a variety of information sources, such as the company’s financial statements; management, discussion, and analysis (MD&A); and investor presentations. Other information sources may include interviewing the company employees on the frequency of changes in strategic directions and any key management initiatives. Currently, this information is not readily synthesized through advanced AI technology, but technology is catching up.  

In terms of deriving value from these sources, it depends on each analyst’s style. The same information might be presented to different analysts, but the value to them can be very different. For example, reading from a company’s financial statements or earnings presentations, I would focus more on capital deployment for the next five years, while a momentum-style investor may focus on quarterly growth trends. 

I must also give my coworkers a shoutout for promoting a quality-focused culture and mindset throughout the team, which encourages me to tune out the noise! 

Speaking of value and long-term investing, environmental, social, and governance (ESG) investing has gained considerable attention in the investment community. How have you considered ESG in your analysis? 

To me, the term ESG is a broad term that can lead to very different interpretations. Some may perceive ESG as separate from the investment process and see ESG indicators as an additional filter to sort through when making investment decisions. I prefer the term sustainable investing, because ESG is an integral part of the investment process itself. For example, climate change may cause a shift to renewable energy, which can lead to a decline in oil and gas demand. This factor would be incorporated into the risk analysis and factored into an energy company’s future earnings and cash flow forecasting. As financial analysts, we are skilled at identifying the risk and opportunities faced by a company. ESG factors are integral to a company’s core fundamentals, which would have been analyzed via fundamental analysis in the past. The difference between then and now is the heightened awareness of sustainability and ESG by investors, which has put ESG risks and opportunities under the spotlight. 

You also serve as a board member of the Accounting Standards Board in Canada (AcSB). What surprised you the most about working as a standard-setter? 

The different angles the standard-setters need to consider before making a decision that could ultimately impact how things get accounted for and reflected in entities’ financial statements. As a financial statement user, I focus on whether the accounting reflects the economic reality and helps people understand what actually happened. I also frequently provide feedback and complaints I have heard (either from my colleagues or other buy-side members) on how some accounting treatments do not reflect the right information. My view could be different from a preparer’s, or an auditor’s views, and that is okay. As a part of standard-setting, we need to balance diverse views, weighing the benefit of better information against the cost of preparing it. Through the standard-setting process, I have more appreciation for the financial statements I am reviewing in my day job because I understand the care that went into creating the underlying standards. And working with the talented members of the board and the AcSB staff makes it a much easier and more fun experience! 

You have been a mentor to many students through the University of Waterloo Student Investment Fund program and the CFA Institute Research Challenge. Can you tell us about your experience with these programs?  

I joined the Student Investment Fund as a student at the University of Waterloo. It gave me a valuable opportunity to have hands-on training in equity valuation and portfolio management. I still remember being grilled about management compensation by investors during my first pitch and how I appreciated the preparation I received from my mentor to be able to answer them on the spot. This experience inspired me to pursue a career in equity research and investment management. So, when I was asked to mentor the fund, I gladly accepted the opportunity. 

My role in the Student Investment Fund program is to bring real-world experience to them and help them prepare for unexpected questions they may face during their stock pitch. Of course, I get to hear their pitches and ask them some tough questions myself. I hope with my help, more students will find their passion in the equity research and investment field.  

My involvement with the CFA Research Challenge was coincidental, as one team was researching a company I was covering for my day job, so I was asked to provide some insights. Through this process, I also connected the team with other buy-side analysts; some of those connections later became my coworkers. Looking back on this experience, I think a benefit of being a mentor is the connections and relationships I created along the way, which helped me professionally as well.  

Any advice you can give on pitching a stock? 

One thing that separates a great stock pitch from the rest is the Q&A. The formal presentation usually only lasts ten minutes, with the remaining time for Q&A, so how well the team handles the Q&A is critical to the overall success of the pitch. 

The secret sauce to running a good Q&A? Being prepared! This means having an all-encompassing understanding of the company. Seek help from industry experts and mentors to prepare and understand factors such as key risks and opportunities, the company’s competitors, their relationship with the government, etc. Bring the research to the pitch as appendices in the slide deck, so they are easily accessible. Being prepared will project confidence to the investors or judges. It shows them that even if you don’t have a specific answer to their questions, you have thought about them and can still share some insights that are valuable to them. 

Regarding the actual pitch, the team needs to cover what the company does, what makes the investment attractive, qualitatively and quantitively, and some potential risks. Dividing the ten minutes equally among the four sections, that is two and half minutes for each. This requires the team to be concise, both in their speech and the material. Again, lots of practice is needed to make an outstanding pitch. 

What is something you are proud of outside of work? 

I really enjoy playing board games. I love learning about new games and socializing with friends. A few friends and I are working on developing a board game about cooperation and strategy. We have finished testing the rules and are working on the illustration right now. I’m very excited to one day publish this game and share this passion with others. 

FUN FACTS

Favourite Board Game: Hard to pick a single favourite! In larger groups, it has to be Code Names or Dixit. In smaller groups, I like A Game of Thrones or Carcassonne.

Bucket List Destination: Two places I’d love to visit: Singapore and Rio de Janeiro, Brazil

Favourite Drink: Ginger beer – the spicier, the better!

Personal Motto: Understand and be compassionate to yourself, and you will do the same for others.

This interview was edited for length and clarity.