How have you guys accelerated your idea generation? I continuously flip flop between thinking I should focus on single industries or sectors (like banks or fintech) at a time and learn the basics about all the companies in one industry and see if I "come across" any good ideas in that industry. The benefit of this approach is that I can learn the businesses better over time and assess the competitive landscape and market better as I collect data and insights from all the companies in the space. The disadvantage is that I may or may not find an idea. But another advantage is that I can loosely follow the stock prices and over time an idea may materialize and I can react more quickly because I already have familiarity with the space.
The other approach is to run screens and find possible actionable ideas right now. One week look at automotive dealers, another week look at an oil and gas company, another week look at a bank, etc. This method attempts to go directly to where the current opportunities might be, but I really struggle to get up to speed on new industries over and over again.
How have you approached idea generation to speed up the process?
Based on the most helpful WSO content, both approaches have their merits, but the choice depends on your strategy, resources, and long-term goals. Here's a breakdown:
Focusing on One Sector:
This approach is ideal for those who want to develop a niche expertise or are part of a team with sector-specific mandates.
Going Broad with Screens:
This method works well for generalists or those looking for immediate opportunities without a sector-specific focus.
Hybrid Approach: Many professionals combine both methods: - Use quantitative screens to identify potential opportunities across sectors. - Narrow down to a few sectors or industries where you see recurring opportunities or have a personal interest. - Over time, build expertise in 2-3 sectors while still keeping an eye on broader market opportunities.
As highlighted in WSO threads, thematic investing can also be a useful middle ground. For example, identifying high-level themes (e.g., renewable energy, AI, or consumer trends) allows you to focus on sectors or subsectors that align with those themes, combining depth with breadth.
Ultimately, the key is to align your approach with your fund's philosophy, your personal strengths, and the resources available to you.
Sources: Idea Generation... and Why Wall Street Sucks at It, How many ideas do you generate per week/month?, Idea Generation... and Why Wall Street Sucks at It, How long does it take to formulate a investment idea / stock pitch, Long term, concentrated, deep fundamental investing
Bumping
This is tough since it sounds like you're basically a lone wolf at a small 150 stick ls fund. First and foremost execute what your direct has hired you to do. If he wants to see certain ideas focus on those - nothing worse pitching a 2 week flip when he's usually a 6-12mo hold.
I stress again, anticipate what your direct wants to see. If that is unclear when you ask him. Spend extra hours looking through positions going back 5 years and as him for 15 min to pick his brain on the process that got him onto each historical winners. Be a sponge. Do not ask about the bad ones.
After you consistently provide what he wants - then focus on what you can get in the book after 2-3 years. No need to rush. Congratulations.
Other than that most guys on here will not provide detailed process as that is trade secret learned through the highs and lows of this life.
Some low hanging fruit for such a green equity analyst is knowing your direct's sell process and taking the grunt work off his plate. Immediately know what developments he looks for to start exiting/adding (company KPIs, industry, positioning, cap structure changes, linkedin job postings/firings, regulatory, tails, vol surface changes, TRS flows, gamma strikes, dividend outlooks, supply chain, new correlations etc) and give him daily/weekly rundown emails in quick digestible bullet points. You'll learn a ton while adding major value. Higher probability of you looking like a hero spotting a storm quicker than mkt vs you pitching a new winner. I'd also focus on the smaller positions or the ones you know he doesn't have his eye on. Selling/hedging before a violent -25% drop is extremely valuable.
This will keep you focused on edge and helps with your problem of excessive mental gear changing ideas/industries while you learn. Then apply framework of what you learned to next new positions/ideas.
Buying new positions is easy. Managing is what makes a professional.
Hope that helps! I have more ideas I don't want to share publicly - you or anyone else can shoot me a message if you wish. I feel for you if this is your first desk and they aren't giving direction.
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