HOW DO I DO CHANNEL CHECKS??

I'm a senior in college who has been managing a small PA for the past couple years. I adhere to a deep value/special situations strategy.

While I'm not a big fan of getting on the phone and speaking with people I don't know, I always make it part of my due-diligence process to speak with management (or IR) for my larger investments. Typically this entails calling IR and scheduling a conference call with the CFO, or calling the CFO directly for smaller companies. With enough prep I don't have much of an issue speaking with management, although I haven't yet achieved socializing nirvana to the point where I can joke around with them (I probably sound like a nervous robot undergoing a self-destruction sequence).

My question is regarding channel checks: I want to gain my competitive edge by speaking with suppliers, customers, competitors, etc. My issue is I don't know how to introduce myself...I'm a college student with a PA the size of a walnut. The last time I introduced myself as a private investor to one of my investment's competitors, I felt like they were trying to push me to provide them capital for capacity expansion.

If I call, say, a Papa Murphy's franchisee to ask about SSS, and about their terrible relationship with the parent company, I highly doubt these people are expecting a call from a "private investor" and would be very reluctant to provide me with their financials. Whitney Tilson wrote about cold-calling Hardees stores while providing them honest knowledge about who he was and why he was calling...but I, a student, don't think I could get away with that. The last time I provided honest info to the CEO of one of the suppliers of my core holding, I was not called back even though he initially was interested in a conference call.

When I was interning at a fund, I found that most of my calls went without much resistance from gatekeepers, and I was able to get away with asking the most idiotic questions ever thought up, and even my legendary 10 second "ummmmmms" went without interruption! Even my cold-email hit-rate was high...now it's less than 10%.

If I could lock myself up in a closet and read 10-Ks all day like Walter Schloss, I would! But now it's much more difficult to outperform the market by a hefty margin by only using traditional value metrics. To win nowadays one needs to dig even further to understand the business "grapevine."

Comments (5)

7y 
Addinator, what's your opinion? Comment below:

I shouldn't need to tell you this, but you are a student. Why on earth would you call them up as an 'investor' when you can leverage the student card doing a project or some such. End of story.

7y 
burrym, what's your opinion? Comment below:

I suppose it may work for some calls, but the last time I called a company introducing myself as a finance student doing investment research, I was not called back. Not sure why an "engineering" or "chemistry" student would care about IRR and ebitda multiples.

7y 
Addinator, what's your opinion? Comment below:

Maybe you can find an alumni from your school on linkedin that works for that company, they might be more willing than just another person who works for that company. If you are looking for suppliers, you could always call in inquiring about ordering etc. All comes down to having a dialed in 30 second elevator pitch for multiple situations and being quick on your feet.

Props for hustling to try and get this information, hopefully it has been working out for you in your trading.

Best Response
7y 
Frieds, what's your opinion? Comment below:

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