How to write a report on a stock without models?
Hi. I recently had an interview for a summer internship with a small fund that I think went pretty well. Afterwards, my interviewer asked for a report of a "company I like". He specified that no modelling was necessary.
I have no modelling experience, so I'm glad he doesn't expect a model, but that means I don't know how to structure it. Without a model to reference, what exactly should I talk about in the report. Purely their business model, news, products etc? Should I still try to reference some ratios, or is that irrelevant considering I am not including a model?
I tried to do some research on how to properly make a report, but they all include a model and are heavily about forecasting, which makes sense. I can't find much about a more simple report on a company.
TLDR: how to write a report on a stock/company without any models?
Not sure what he's looking for so take what I say with a grain of salt.
People in my investment club pitch stocks all the time without having a model. They focus a ton on SWOT analysis. Other things to include are potential catalysts, analyst recommendations, ratios pulled from yahoo finance or any research they can find.
Sounds like a high level exercise. The story/investment thesis for the company is often more important than the model. The model helps organize your thoughts and assumptions but it's rarely the crux of an investment thesis. Discuss the company from a fundamental perspective. What are its competitive advantages? Why does it have higher margins/grow faster/stock does better than its competitors? How does it stack up against competitors? Is the industry growing or shrinking? What are the future opportunities for this company? What do you think of management and their track record of value creation? How is management incentivized? There's lots of stuff you can write about without modeling it out. You can of course include numbers like market share, leverage ratios, etc. if they help your story but do it sparingly because people don't remember numbers as well as the story.
Pick a company that just got acquired by a SPAC. They all have to create a robust Lender Presentation w/ slides that give u all the answers to these questions. 1) sponsor investment thesis 2) Company "at a glance" slide - 1 pager 3) KICs - Key Investment Considerations 4) Competitive Landscape Slide - differentiating metrics vs competitors 5) at the end - valuation comps - vs. those same competitors, w/ EV/EBITDA multiples, some even give a slide w EBITDA Margin vs Competitors
This same info you can also partially find in the accompanying DEFM14A doc - basically same info that you saw in PowerPoint, but in Word (without logos n charts) Happy to discuss. Kinda hard to hit the ground running on this without initial guidance Here's an example - enjoy
https://www.sec.gov/Archives/edgar/data/0001833835/000119312520311998/d…
I would definitely include some sort of relative valuation analysis and a comp sheet. You really don't need a model to write a report, but he still wants financial analysis. He is just saying I don't expect you to waste the time to build out a full financial model.
Seeking Alpha is actually a great cheap source to help out. They have decent financial information and Street EPS and revenue estimates for most companies.
The SPAC idea is great actually, one of my go-to pitches for interviews a couple years ago (before SPACs were sexy) was a SPAC and it was great because I basically used the management projections and backed up why I thought management was being conservative etc. It gives you alot of information to work off.
I've done something similar to this in the context of an assignment for one of my courses in the past.
The goal is to basically look into the qualitative aspects of the company and analyze whether its good.
I'd recommend external frameworks (PESTLE, Porter's), internal frameworks (Business Model Canvas, Lean Model Canvas, others) and then with that research/framework, look into: Business Operations (how does the firm make money), Size metrics (Employees, stores, geographies, Assets under management if relevant), Leadership and Employee Morale, Market Growth Plans/projects according to their MD&A and their Executive/BOD qualifications/competence.
With that, you can piece together whether or not they company is worth investing in based on their current position, the sector overview, and the leadership's growth strategy.
Including a comps analysis of historic micro metrics (sub-industry specific - like daily active users or barrels of oil/day) and general metrics (revenue growth, margins) can also help.
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