Is Wharton An Undervalued Stock?

ROUGHLY 35% OF APPLICANTS ACCEPTED AT WHARTON DON’T ENROLL

In contrast, Wharton’s yield–which the school says hit a new record this year–is not much more than 65%, a number more in the company of Columbia, MIT, Chicago, Northwestern and Dartmouth than Harvard or Stanford. Wharton does not disclose its yield number, though it is easiest enough to calculate. But it’s hardly surprising that a candidate might turn down a generous scholarship from Wharton to attend Harvard, especially if financial aid isn’t that important to the applicant (though it is worth noting that no business school is as generous as Harvard in dangling scholarship cash in front of its MBA applicants).

As evidence of Wharton’s decline, the Journal also noted that Wharton, which once sent more than a quarter of his MBA graduates into investment banking and brokerage houses now only sends MBAs in the teens into those industries. Those numbers, which are misleading at best, are less a reflection of the school’s reputation than the changing dynamics of the financial economy.

With the Great Recession, Wall Street has shed tens of thousands of jobs and fewer MBAs–at all the top schools–now go into finance. Most of that slack has been easily taken up by MBA hiring in consulting and technology. Consulting firms hired 30% of the this year’s class of MBAs at Wharton.

FASCINATING SHIFT IN THE INDUSTRY PREFERENCES OF NEW WHARTON MBAS

But it’s also true that the world of finance has changed just as dramatically with more MBAs going into investment boutiques, private equity shops, hedge funds and venture capital firms than ever before. In fact, 13.4% of this year’s graduating class accepted jobs in either private equity or venture capital, slightly more than the 13.3% that headed for more traditional finance jobs in investment banking. And yes, because of the decline of Wall Street, investment banking recruiting at Wharton and all other schools is far from what it used to be: it was 18% in 2012 and 26% in 2008.

WHERE WHARTON’S CLASS OF 2015 WANTS TO WORK

Screen Shot 2013-09-29 at 12.25.43 PMThe industry preferences of Wharton’s Class of 2015 show a rather dramatic shift from the school’s past norms. More students in the latest incoming class would actually prefer a job in the public interest sector (5%) than either investment banking (4%) or investment management (4%). That’s a mind-altering shift for a school like Wharton and poses significant challenges for the school’s career development staff (see graphic at left).

The most desired industries? Consulting (18%), private equity (17%), technology (11%),  consumer product marketing 8%, and hedge funds (7%). In two years, Wharton faces a significant challenge to satisfy those changing preferences, especially the desire to land a job in private equity. The gap between the school’s current placements in PE and the 17% preference for those jobs is greatest. Though the Journal noted that Wharton has been late to the tech party, the school placed 11% of its latest class in technology industries–exactly the same percentage of industry preference by its newly entered class of MBAs.