How do you pitch to your PM?
Curious to hear how people pitch to their PM on an idea, do you have a full blown thesis or just a quick paragraph of info?
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I personally try to err on the side of being as concise as possible while highlighting salient talking points. I think this really depends on your PM, but I know mine appreciates brevity (if further details are needed/requested, we get into it at that point). My investment memos are typically 1-2 pages max.
Have had some conversations with people and felt that I was rambling. Any tips in terms of condensing info/speaking to the main points?
Try to be as brief as possible, but know the details if you're asked.
Go through your pitch beforehand and differentiate between primary/vital information, and details that are extraneous/that you can get into at a later point. Condense all your salient points into a bulleted list and go off of it. I had to learn this - since I used to err on the side of providing as much detail as possible - but rest assured that your PM will ask for areas of clarity. Also, pretend that you have a 5-10min time limit to speak.
I used to literally go through my email write ups and just delete as many words as possible.
Typically 2-3 sentence summaries along with cap structure & pricing with more detailed overviews below which may or may not be read. The investment process is organic with this format as things change / additional points are researched, and unlikely I'll be writing up an end to end memo at any given time except for my own records.
How do L/S equity teams at large multi-manager hedge funds make investment decisions and come up with ideas? How do they do their research? What is the time frame? Do they try finding companies that will beat earnings before the announcement and then sell them after the call? If so, how do they find companies that they think will beat earnings? Responses will be greatly appreciated.
At sector MM pods, we have a defined coverage universe so no need to send a huge email. PM has history reading most of my stocks. For me to get an idea in the book, the following matter. I just put together a quick email and my PM may go through my model assumptions with me (if I have a huge beat or miss), but usually not.
-next qtr sales/EPS vs expectations (quality matters)
-catalyst path (path of earnings revisions, ratings changes, conferences, NDRs)
-relative performance vs peers (has stock meaningfully out/underperformed?)
-positioning (more likely to go long if others are short, and vice versa)
-valuation
-"edge" (what do we know that the market doesn't, and how?)
Curious...how big must the beat/miss usually be to warrant a position? Is there a minimum threshold?
Really depends, case by case. But in general it's not about sell side (awful at modeling most companies) but rather buyside expectations. For those you need to make phone calls, not look at Bloomberg. If I can get a beat on EPS and sales vs what I think buyside is expecting, it's a long.
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