"Off-limits" stock pitch ideas?
I'm finishing my third associate year at a large PE firm (think Advent/Warburg/TPG) and am starting to recruit for public markets roles at longer-hold L/S SMs. This may be a stupid question, but as I'm prepping a few long ideas to pitch, would it be looked down on if I pitched the main public competitor of a private company my team invested in? I'm not worried about compliance issues (I worked on the private deal two years ago so have no MNPI) and believe in the space overall, but I wouldn't want to be viewed as lazy or derivative if that was my go-to.
Thanks in advance for your thoughts.
As long as it suits your next employer's investment style, I don't see any problem of it.
I for one don't care about lazy if it makes me money. Lame would be a different question - like if you pitch Apple or Google.
I think it can be perceived as lazy if that’s all you have. But it’s all fair if you have a backup pitch or couple others in a different sector/subsector.
I always found this bizarre. Like in interviews, you “can’t” pitch MSFT, Google, NVDA etc. But the fund will probably have those names as a big part of their holdings. More so than some other random company.
Good pitch doesn’t necessarily = profitable. But you need a good pitch to get the job first so I guess that’s that.
This is weird, right? Avoiding pitching certain names just for the sake of avoiding them. And there's also the fact that the majority of the market's returns are driven by those few names themselves.
Truly it is not weird, if you assume the process of the pitch is to see your thinking style, logic and evaluate your overall process. Let’s say you spent 8hrs building a pitch you think is superior, you should be judged in 8hrs of effort. Now think how much confidence/time a major fund needs to make that name a large holding. 10x or 20x the time you spent? Resources you would never have access to begin with.
Now you come in and provide that quick summary in their mind and basically bore them or say something silly and right away they like yah “that aint it.”
If you have the confidence to come in and teach a PM something they do not know about a major position they stare at daily, feel free. I have seen people basically get hired on the spot when it happens or “typically” its more “yah that aint it”.
Why can’t you pitch anything… if it makes money…
Because you can't run an investment BUSINESS owning just stocks others own, it's "undifferentiated" even if owning FAANG beats market every year.
When we interview people we ask if they had previously done work on the company they did the case study for. If they have then the expectations are higher for them to know the company and thesis in greater detail. Doesn’t mean you can’t pitch something you know well, but the expectations for the quality of your pitch will be higher, and you might harder or more nitpicky questions than you would otherwise.
Ignore title
I don't think pitching something as common and widely known as a FAANG company will help you stand out in the interview if every other candidate will do the same. In this business, you want to tell your PM something they don't know.
Don’t pitch anything obvious or well known unless you have a real edge and different angle because every chump does that and the average chump can’t beat the market.
Don’t pitch something that hinges solely on a judgment call because the chump interviewing you might just think differently (or worse, may actually be way smarter than you on the name and know different because…he owns a couple hundred million of it and spends real money on research backing up his views).
Make sure the strategy aligns with theirs, justify it in a way that they would appreciate, and make sure you understand things that would cause you to reconsider or revise the thesis.
It’s that simple…if it’s compelling and actionable regardless of name it’s good to pitch
Congrats on advent
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