Reasons people fail a case study
Hi folks
I recently finished my case study with a L/S MM, the task was to come up with a long/short recommendation for a name they provided. Spent a lot of time on it but was told I did not get through. The HR did not provide any feedback and started ghosting me when I asked for it. Can anyone share your experience or feedback you got or provide insights on some common deadly mistakes?
Just wanted to understand why I failed and how I can improve next time. Thanks all!
I think you'd be surprised how many people present case studies that don't actually have an investment thesis. "Trading at a discount to comps / DCF value" coupled with some business facts is not a thesis. That's one reason why you can see some people fail a case study. Another reason is some get so deep in the weeds with the situation that they hem and haw and can't come up with a convincing buy / sell recommendation. Holds are ok, so long as its backed by a sound thesis, but a lot of holds I see in case studies are really "I can see both sides..." arguments. No need to over complicate things. Even if it was dead wrong I would pass a case thesis of "Consensus is X on EPS but [downstream customer / upstream supplier] commentary suggests incremental GMs likely to lead beat vs. Street" because that is a thesis.
Yo that answer above is great but bumping for more. Would also be interested in hearing if LOs expect the similar.
Yea, the above are very common symptoms. The consensus X on EPS piece of course doesn't apply that much but that's a different audience.
One thing to add is thinking through the catalyst path and what has to happen for your thesis to work out. Good thesis are always quantifiable and you should convey your desired topline/margin/unit economics/returns/etc. are achievable in a certain time frame.
Really great perspective- thank you!
don't be sad
If you tell us the prompt and outline what points you were making, we would be able to be more specific.
Most often, the reason that case studies fail is because there is a mismatch in investment style. For example, you interview at a pod but then focus on longer term drivers that might be more appropriate for a HF with a longer investment horizon. Or vice versa. Those are usually the immediate deal killers. It's rarely "this guy pitched a long when it is a short. He is a moron."
Maybe you fell into one of the buckets here:
Don't know the prompt so I keep it generic.
One frequent reason is naivety about what is discounted in a stock price and what isn't. Many candidates recommend AAPL because it's "a good company with a strong brand and a loyal customer base". While that is all true, it's well known by everyone, so in an efficient market it's not news and shouldn't make the stock go up on its own. Many HFs are looking for surprises, inflection points and that type of thing. Pitching something based on things that are obvious and consensus often comes across as naive and "this guy doesn't get what makes stocks move".
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