Pitching a stock in an interview
Hi guys. I've been invited to interview for an entry level position in the asset management/wealth management arm of a MM Investment Bank. I've been told that I should have 1-2 stocks prepared that I would pitch to my interviewer, and that the companies should be mid-cap/niche stocks (pitching AAPL or MSFT isn't interesting). What I'm wondering is whether there is any preference as to whether the company I'm going to pitch is already being followed by an equity analyst at the bank? Specifically, I'm looking at a $4-5B company with about 12 analysts following it, one of which works at the bank I'm interviewing.
As I'm being interviewed by someone in the AM division, they may not even know that an analyst is covering the stock, but maybe they may think I'm just trying to flatter them by coming up with a similar price target/buy rating. Currently, as far as I can tell, the analyst has only published a price target, with no commentary as to the who/what and why, but clearly I'd do my own quick valuation taking into account the relevant value drivers I've been able to identify in my personal research.
Also, what would you say is a reasonable amount of detail to go into when pitching the stock? Giving a 2 minute run down of the most important revenue drivers and their forecasted CAGRs, forecasts regarding operating and net margins, top line and bottom line revenue projections and a 1 year price target?
My advice would be to go with a stock that they don't necessarily know. You don't want to pitch something they might know more than you about.
Pitching a stock isn't about being right. Heck, most respected analysts are wrong 50% of the time. They just want to hear your thought process, why you picked the stock, what are the risks, catalysts and so forth. Don't get too boggled with ratios and the micro of the company. Just focus on having a thesis that is supported by fundamentals, but also makes sense when considering your overall view of the markets. ie If you talk about rotation into cyclicals then don't pitch a growth stock.
I think the details you mentioned are good. But I wouldn't just bombard them with all of it. I would be more general and just have that in your back pocket to answer questions/back things up as the discussion unfolds. Remember, people like a story.
1-2 minutes is good. It is likely that they cut you off and start asking questions so make sure to know the thesis inside and out, and try to anticipate potential questions. Even simple stuff. YTD return? How has it performed vs broader market (SPX)? Your PO? At what level would you unwind the trade if it goes south? That sort of stuff.
Thanks for your take. Just wondering what you meant by my PO?
Sorry meant price objective and also your time horizon for the trade. I'm in S&T so the trades I see tend to be short term but I guess in WM/AM it could be buy and hold.
Just be sure to have an objective in mind, as well as what catalysts will help get you there. You shouldn't pitch something just because it is undervalued. Make sure there is some type of catalyst you see or something that the market isn't pricing in.
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