Point72 Training Academy Case Study
Sharing the sample case study for everyone’s benefit so you can prepare accordingly.
Objectives:
Complete an investment write-up and recommendation for [company name] Your submission should not exceed 5 pages. Use your judgement to provide something that best represents your work, understanding of the company, and a thorough investment recommendation. While we would like you to show your understanding of the company, we do not need a detailed background of the company. The focus of your written submission should be on your differentiated prospective view. Create your own financial model for the company. At a minimum, please include at least 2 years of quarterly history and 1 year of quarterly forward estimates. Provide any other supporting analysis or relevant work used in your research and conclusions. Note: This should be your own working 3 statement flowing model built from a blank sheet. Do not use a model template, sell-side model, or example from any other source, even if you are just using this for formatting purposes. Any submissions with models that appear to be taken from a third party will be immediately rejected. For historical financials, please ensure you manually enter. Please do not leverage third party services (i.e. CapitalIQ).
Deliverables: Write-Up & Recommendation Financial Model & Analysis Evaluation will be based on quality of analysis and insight
Further Instructions:
MODEL Take the time to organize your thoughts on what matters and how to simply present the model. The goal is to make the model detailed enough that it captures the variables in the business, but not too detailed that one gets lost in the minutia. Structure your model in a way that demonstrates that you understand components that drive revenue, costs, and profitability and allows you to make projections of future revenue/profits in a logical manner consistent with how management of a company in this industry might look at the business.
Please include the following in your model: Include a price target and risk/reward supported by valuation analysis at target price and risk price. Capture the main drivers of revenue & costs What are the most sensitive variables/drivers in the profitability of the company? Choose the most important driver of profitability and project EPS sensitivity
Build a DCF
Calculate ROIC and use as many valuation metrics as you feel are relevant to your specific investment recommendation Base/Upside/Downside scenarios Clearly state your assumptions throughout the spreadsheet – you can write comments in the model to explain your rational for key assumptions Color code figures in the model to identify sources of your information: Black font = numbers reported by the company (either in a press release, presentation, filing or a conference call) and calculations Blue font = your own assumptions Green font = street/sell side assumptions You can use plots/graphs in a separate worksheet to illustrate trends or rationale for your assumptions. Again, only use this if you think it will help to get the point across in an efficient manner and focuses on key points; do not overuse plots and graphs.
WRITE-UP Please include the following in your write up: Detailed Investment Thesis & Recommendation (long or short) Articulate the key drivers of your investment thesis Risks to your thesis Event Path & Catalysts: How will you track your thesis? Please explain/preview significant upcoming events. Bull/Bear & Valuation Explanation of bull and bear view Determine a price target; explain how you get to your price target and what the period is to reach your target Risk/Reward (probability weights for different scenarios that tie to the bull/bear views) Business/Industry Overview How does the company/industry make money? Industry level dynamics and review of the competitive landscape Benchmark vs. peers Outstanding Diligence
Address how you could gain further conviction in your case.
