Stock Pitch - Visit Company in Person?

Employees at large publicly traded retailers are told to not give this information out

I think one way you could earn some points in the interview is to go into the store and ask the sales clerk what some of the biggest selling items are right now or what particular outdoor sports are most popular. Maybe the guy tells you that they cannot keep enough caribiners on the shelves and that rock-climbing has been increasing in popularity. You could go back home and do some search on the the rock-climbing industry and use that data to support your thesis.

Most retail sales clerks and managers will not tell you much but I think the effort of actually going to the store and trying to glean information is enough to earn some points in the interview.

Also, I think Socrates makes some good observations but a lot of that information is readily available in filings and investor research reports (i.e. target demographics, seasonality, etc.).

The point of a stock pitch is to convince the other party that the stock is attractive and that they should buy it. You are looking too closely. Start at the macro level and determine if an outdoor retail store is situated well given the current and prospective economic environment. If it is, good, now move on to the industry level and figure out why this firm is situated to better than its competitors (or situated similarly, but priced more attractively, etc).

The employees can't really give you anything substantial, and if they did, you can't use it as it would be material non-public information.

I suggest you look through the companies press releases & MD&A to see what spin they are using to sell their stock, and if you agree with it, build a similar pitch, otherwise, change it (according to your macro & industry view).

I'm guessing this is Cabela's (don't know of other big outdoor retail companies), make sure you comment on the real estate part of this, google cabela's excess real estate. much of their stores' value is in the land they own (many of the stores own several acres around the actual store), that is a potential value creator. what everyone else is saying is good, but just keep in mind that your data set this time of year will be different than if you did this in May, as outdoor sports change with the seasons. now, I'd expect hiking and rock climbing to be more en vogue than kayaking or skiing (though ski season is approaching). you could also call up some of the suppliers to that store (patagonia, kavu, arcteryx, etc.) and get their input.

let us know how it goes.

1) I don't know why he's supposed to explain why the company is the best one. It might happen to be, but the recommendation should be the product of the research and not the starting point. No the point is not to say why the stock is attractive. The point is be intellectually honest and understand how/when/why the stock will move. Given both your answers, it seems like you are predispositioned to read information positively.

2) I think showing the initiative to doing primary work / field research is highly attractive. We can agree to disagree on this. We also seem to disagree on if field research is worth conducting since I do think you can get material nonpublic answers legally some of the time.

Thanks for the replies. They were very helpful, but unfortunately did not come in time.

The interview went really well. It was not terribly hard - there were no technical questions, but a lot of "case" type interview questions to see my thought process. One example which threw me for a loop was: "You have the choice to invest in a restaurant or an airline, which one is better and why?" I thought great, two shitty industries I would never invest in. Both are cyclical and tied to oil prices and make no money. I sided with the airline, reasoning that the barriers to entry were much higher and there was much less competition. Moreover, I think that collectively, airlines had more flexibility to raise ticket prices to absorb a rise in oil prices, which would affect every airline. For the restaurant industry, the price for pasta may go up, but if one restaurant raises their price to offset this, customers are gonna go down the street to the steakhouse - there are plenty of different alternatives. I wasn't completely 100% sure in my answer, so I asked her how she would walk through the question and she agreed with what I had said.

Regarding the pitch... After throwing together a DCF and comps analysis, I got 14% upside potential in the stock. I pitched the company as a buy based off of the attractive valuation, growth prospects (expansion into Canada and 13+ stores opening each year in the future - big giveaway) and projected industry growth.

The stock pitch was easy. The following questions were hard. After pitching the stock, I made a huge mistake. I mentioned that from a purely academic standpoint, this company is a buy, just by looking at the valuation and numbers. The valuation supports this, because of the 12% upside potential. However, I mentioned that I started to think macro economic factors in the future and was torn between changing my thesis to a sell. For the record, this company owns about 5% of the total shares outstanding and has been slowly unloading (albeit at a very sluggish pace) over the past year.

When I did my modeling, I did not forecast management's capex projections for 2014. Instead, I used my own projections, which were too low give the growth. Once I threw in management's projections, my upside potential suddenly dropped from 25% to 12%. I though to myself: is this company really worth the risk for 12% upside? It's a cyclical stock, the market is at all time highs, the fed is going to raise interest rates which will make it harder for consumers to borrow, therefore decreasing spending on big-ticket items. In the end, the outlook for disposable income, at least in my opinion, wasn't as rosy as I had hoped.

I told the interviewers this. I saw one write down "thought about pitching as a sell". Not good. I knew then and there that I was supposed to stick to my buy rating no matter what. I was being wishy-washy in my analysis which is NOT something I think they were looking for. I got great feedback, they didn't mention anything about my analysis being split between both buy and sell, but if I could do it over again I would certainly stick to one side no matter what doubts you have in your mind about the company.

great thread! I learned a lot. thanks for sharing your interview. Good luck! hope to hear good news about your offer soon. :)

if this was CAB then i'd say people missed some/most of the big points/drivers in this thread. Tis a shame.

On the plus side, its all about showing your process for interviews, much more important that being "right". This industry is all about batting a high %, not batting 100%.