P72 case study - holy shit
just finished the case study
Holy shit, the company given is the most inane shit ever, hardly enough variant data to support a high conviction but I guess "hold" is not an option, just gotta shit something out and make it sound convincing
My delta vs consensus on key metrics is also super small though, LSD stuff, but I guess it's better than nothing?
anybody feel the same?
sorry just came here to rant, haha
Can you elaborate on what you mean by hardly enough variant data?
You develop a good thesis by 1) having a variant view on the data in front of you, which becomes the “variant data” (forward looking continues to validate your thesis, backwards looking can help form it) and 2) identifying a catalyst that will help realize this view.
Your thesis doesn’t necessarily have to be acceleration/deceleration of key metrics (which I assume many college kids/IB analysts think thats the #1 thing to look at for whatever reason).. it can come from having a short/medium/LT view on the business (for which you rely on acceleration/deceleration of key metrics as part of developing that thesis), misunderstanding of some catalyst, street simply not valuing the business the right way, etc.
I think p72 PMs are sane enough to know not every candidate for an analyst job will have access to yipit or 3rd party data providers for detailed tracking of data to develop/validate their thesis.
Small delta from consensus on key metrics suggest you don’t have a well developed thesis (or are trying to latch onto a data to force a thesis instead of the other way around… which many people do for case studies)
Good advice
That makes sense, maybe I am latching onto data to force a thesis.
I do have a bullish view on the business medium to LT, but hesitant to make a MT to LT call as I thought P72 wanted smth more ST/tactical. And ST-wise, macro won’t turnaround so soon, topline will not grow, margins flattish to decline.
You can do either; ideally, the case study wants to see how you think about businesses alongside the equity story. So pitching around the MT/LT is the goal, with an eye on where your numbers are vs Consensus in the ST. I.e., XYZ hits stock; I know it's likely not a big deal, the underlying business quality hasn't deteriorated, and MT/LT is a long-term play, and I think the earnings downside in NT is priced in.
Also, I would point out that if the multiple has de-rated because of a specific trend, you should focus on whether the trend is getting incrementally worse/better/staying the same over the next 6-18 months and comparing that to consensus.
del
dont say hold lol. are you generally bullish or bearish on the company medium to long term? if bullish at what price does it make sense to buy, vica versa for bearish.
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