Ata Invest Dynamics

In Spring'17, I took a gap semester from the university for an internship opportunity at an international brokerage firm named AtaInvest based in my hometown Istanbul. It was my first long-term internship, and I worked at the Equity Research department of the firm for about seven months between January and July. Being very interested in finance and the stock market, I thought that working at the ER department at a brokerage company would benefit me most and allow me to learn about different business structures of different publicly traded firms and grasp the market dynamics.

As a Specialist Assistant Intern, at first I was responsible of translating quarterly company reports, since the reports were first written in Turkish, but needed to be translated into English before being sent to the firm's subsidiaries in New York and Dubai. Translation work is a great way for an intern to learn about the unique jargon used at this line of work. There is an urban legend saying that people in finance talk in coded words or abbreviations to make it impossible for other people to understand what they are saying, and make what they are doing look like impossible. It is kind of true, there is a huge terminology pool with a lot of abbreviations in the quarterly reports, but I got used to it pretty quickly, and was able to come up with good translations. At some point, my peer reviewers would not even find any mistakes in my report translations.

After becoming more used to the companies' numbers at the market, I was given tasks, partially creating valuation models of some firms in the AtaInvest coverage universe, and in the end helped me to combine the different excel sheets to see the big picture and complete the company valuation. Now, I am fully capable of starting up a valuation model for any Turkish company, maybe international too, and write an accurate report.

Now, I want to talk about the structure of the firm that I worked at. First of all, it is a subsidiary of Ata Holding, the parent company of AtaInvest, which operates more than 25 medium to large scale firms both domestically and internationally, like TAB Gida which operates Burger King in more than seven countries including China. AtaInvest itself can be divided into four: 1) Equity Research 2) ICM 3) Portfolio Management 4) Brokerage & Traders. ER, where I worked, is basically where each company in the coverage universe of Ata is scrutinized and modeled financially, resulting in a quarterly report that has the Target Price that is reached by the valuation, and the reasoning of what lead to that number. The other three divisions could not do their jobs without my division's valuations and analysis of the market. 

ICM's job is basically deal with international clients who invest higher amounts of money to the Turkish market. They in constant contact with clients and since they trade in huge volume, every little percentage increase at the stock price equates to a huge amount of profit. Portfolio Management takes care of managing portfolios, which people can invest in by buying shares from.  Each portfolio is designed to carry a certain amount of risk, with diversified financial instruments like futures and options, stocks or foreign currencies. The stocks that are put in the portfolio must be in the coverage universe of AtaInvest. 

I wanted to talk about the Brokerage division separately, because it is also related to the "transaction cost" topic. First, brokerage division is responsible from calling their clients individually and give updates about their current investment standing, new comments on stocks from ER department, and give them advices about how to invest further, and eventually enter the customers' trade into the system manually. In return, they are paid a "transaction cost" that is also called commission. The regular/average commission of a broker from each trade is 1/1000, or in other words 0.01%. Therefore, when investing, the customers also need to take that figure into consideration when buying and selling. 

All in all, it was a very beneficial and interesting experience for me, and I received a job offer for when I graduate after I left AtaInvest.

WHO IS ARMEN ALCHIAN, AND WHAT ARE HIS CONTRIBUTIONS TO ECONOMIC THEORY?

Armen Alchian, is an American economist of Armenian descent, and is one of the relevant and most important economists that will be discussed in class. He was born on April 12, 1914 in Fresno, California. In 1932 he attended Fresno State College, and transferred to Stanford in 1934. He obtained his B.A. from Stanford in 1936. He continued at Stanford as a graduate student, finishing his Ph.D. dissertation on "The Effects of Changes in the General Wage Structure" in 1943. As a founding father of "law and economics" school, his approach emphasizes the implications of property rights for risk bearing and incentive reasons, and the inefficiencies that result from common ownership.

During 1950's Alchian contributed to the theory of the firm by introducing a maximization debate. He introduced the "survival" principle of evolution into market structure analysis, implying that not all firms consciously maximize profits; but the competitive price mechanism and the market will naturally will not allow ones who do not maximize profits survive. Although at any point in time there may be non-profit-maximizers in the market, in the long run, as the process of evolution continues, only profit-maximizers will survive. "Thus, the assumption of profit-maximization in economic theory, Alchian argued, was a valid generalization even if it did not correspond to fact at any point in time."

His interest in law and economics lead him to investigate the operation of the firms and other organizations, and published a paper with Harold Demsetz in 1970 on the theory of the firm. This paper mainly focused on how externalities associated with incentive problems can be internalized. During late 70's he continued further research on the topic with Robert Crawford and Benjamin Klein.

He was the pioneer of the idea that information costs can lead to resource unemployment, especially of labor. In addition to the basic idea of unemployed resources searching for more productive uses, Alchian emphasized the role of middlemen in the facilitation of resource employment.