Just wanted some feedback. I have an interview coming up for a l/s equity hf with $10B in AUM. I have seen several posts that say its best to pitch mid-cap stocks for which the interviewer will be less familiar. I understand the logic here, but is it really that harmful to pitch large-cap stocks? I am very excited about a global telecom company with substantial growth that is I believe is significantly undervalued. The thesis is not as headline grabbing as a MSFT or AAPL but it is still well represented by the sell-side and a big position for several large funds. Does clearly articulating such a thesis outweigh the weaknesses?
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Know your audience.
There are many funds out there who would never consider such an investment. Just make sure you know their strategy before you show up and pitch something irrelevant
I'm a huge believer in pitching middle-market picks for interviews.
agreed.
mid caps will have IR depts that are easier to get a hold of, won't be as complex as a large cap, and very few managers exclude them. for example, I run large cap within my group, we'd never consider a small company (less than 2bn, but we might consider something like 8-10bn. look at their 13F and see what companies they typically invest in.
I'll expand on this. had a kid pitch me a stock (he was an intern), and it was completely out of left field. not traded in US (not even an ADR), micro cap, and hardly any liquidity. my eyes glazed over on the first page when I saw the symbol and the market cap. if you aren't in the ballpark, you'll lose your interviewers attention.
Base it on the fund's strategy. If they run a concentrated book with $10bn AUM, then mid-caps are a bit pointless because of size and liquidity.
I don't believe "well represented by sell-side" is a legitimate reason to not pitch a stock. But you need to have some good reasons why the stock is mispriced and how that gets corrected. Either way, I'd rather hear a well thought-out thesis on an actionable idea rather than a great idea that can't fit my strategy.
Exactly - they run a concentrated book. I checked their 13Fs and it's actually a smaller position for them (think 1-3%). This means I would be pitching them their own stock.. This make it a no go? Love the thesis but might have to let this go....
Hey MI23, I would highly advise against recommending a stock currently in the portfolio. The analyst / PM may have been following that name for several years longer than you.. it would be safe to assume they know more on the name and that leaves a lot of room for them to poke holes in your knowledge.
Would be nice to recommend something within the fund's strategy that doesn't have a lot of attention from the street. Ideally, they will never have heard of the stock you are pitching and are really engaged in the discussion. Best of luck!
Would not recommend a position that you know the fund holds. a) You may look like you're sucking up/picked something they're known to "like" b) Even if you know it as well or better than the person at the fund (which is probably not the case), it's easier for them to be critical/pick apart flaws if they know the story and details well.
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