Is it okay to pitch a hold rating in a stock pitch?
I have an interview soon and I am asked to do a case study on a company. Is it okay to pitch a hold rating in my stock pitch instead of a classic long/short recommendation?
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Never recommend a hold. Form a view and go long or short. Since it is a case study, your view doesn't have to be backed up by primary research, but you should still have a view.
No.
Yes as long as it’s nuanced for example:
like business and upside to numbers but valuation doesn’t work
hste business and mgmt but next few quarters will beat so don’t short
If you do you should probably have a view on what price it would be actionable at.
Could you suggest a covered call/put instead?
The last few case studies I did (got offers from both) my recommendation was to pass at market price and buy at whatever level I cared with returns based on those parameters. I used to be in the camp that a case should always be a firm long or short, but the reality is that most things you look at on the job will not be actionable at the time of review but you'll still come away with what level you'd be interested. In most of my cases the name was something the team had looked at in the past, maybe passed on, but had familiarity, and wanted to see how I thought. If thats the setup, I think pitching a hold but care at X price is perfectly reasonable.
If it's a name that you are picking, you should only pitch a long or short. If it's a name that is given to you, I think a "pass" with a clearly defined this is what I like / dislike and this is what would need to happen for it to be a long/short should be OK -- i.e., just because you don't think it's a long does not make it a short.
That’s OK if you were assigned the specific company. Maybe say what would make you change your mind either way.
If you want the job, sack up and make a decision. The recommendation isn’t the point, examining your thought process is.
Wtf is a hold
Basically choosing not to swing. If you're doing your job right, that should be most things realistically. Long/short are two ways to try and hit the ball which means you can strike out.
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