Hi all, I don't have anyone in real life to ask this so here I am.
1) Where can I learn how to practice looking at a CIM, come up with an investment thesis, evaluate risk, and make a recommendation? How would I go about getting GOOD at this? I could do it right now, I just don't think well.
2) Does anyone know where I could find CIMs of public companies? Just to practice with. Thanks.
Also ignore my job title that is not accurate.
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CIMs are almost always under NDA, so unlikely you'll find one online, Either way, every CIM is pretty different, so that's probably not the most constructive approach.
I would just use 10Ks, 8Ks, etc. to practice. After all, a CIM covers the same type of information for the most part with less sales-y language and projections, but you make your own projections and thesis anyways.
Thank you for the help Yasuo. Will do!
Id say a CIM has a lot more salesy language than a regulatory filing that's for sure
yeah I second this. CIMs infinitely more salesy than 10-Ks and Qs. no CIM has a 20 page Risk Factors section listing everything that could possibly go wrong under the sun
(1) You can practice by taking any 10-K/10-Q in reality to come up with an investment recommendation. The best way is to do the work and make a recommendation and then follow the company and see whether your thesis plays out. Very hard to learn without just jumping in and start doing. Post up your write-up on value investors club and get some feedback
(2) Public companies some times will have CIMs published if there's a blowout required in an NDA (typically for lenders). But for what you are doing, you can grab a couple of 10-Ks or if a company has recently had an analyst day, those are typically the types of presentations that we'll adapt into a CIM for a public company
Hope that helps
Hi, thank you for the great reply. This is great. I will certainly do that.
Do you have any feedback on HOW to evaluate a 10k? Is there somewhere I can learn how todo that? I have taken a corporate finance class, understand accounting, and am able to use excel and build basic models.
I just would like to find some sort of resource that could help me learn how to accomplish this.
The private equity firm I will be interviewing at is going to give me a CIM and I have to come in with a thesis, highlight the risk, and have a recommendation. I just don't know how to go about any of that.
Thanks a lot if you have any suggestions where to look.
If you haven't ever done it before, pick a company that you may already know reasonably well and read through the entire 10-K. That way you know where everything is and more often than not, you learn a few more things about the business that you probably didn't know despite knowing the company.
At a very basic level, since you're preparing for PE interviews, I would always start by figuring out (1) how does this company make money? What drives revenue? and then (2) what is the cost structure like? i.e. what is fixed vs. variable? These are the very baseline, minimum questions you want answered reading through the 10-K.
Next, I would lay out the historical financials and then start practicing building models based on the historical financials. Try projecting out the financials and building out a DCF and sensitivity tables to determine / flex valuation.
Once you're comfortable with an unlevered DCF, then you start adding on financing, i.e. layering on some debt and building an LBO model to determine what cash actually goes to the sponsor. The WSO PE guide is helpful and includes some practice models (wasn't paid for this plug,).
I'm going to say it again, you just need to try doing it. It won't be easy the 1st, 2nd or 3rd time. But after you get your reps in, you start to get the hang of it.
Again on CIMs, the long and short of it is that if you can do the analysis with a 10-K, then you can do it with a CIM. A CIM is nothing more than the bankers condensing what is in a 10-K / investor presentations at the end of the day.
AWESOME. Thank you so much dude.
I have the WSO PE guide, and have practiced the models. Will put those to use when I look at a 10K.
This is the perfect context I need to start. Thanks again.
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