Comments (9)

Jul 10, 2019

It depends on the fund, the type of PM you work for and the number of holdings. Many shops have a standard template that you fill in so that it's easier for the PM's to assess ideas across industries. In other shops a quick email and a summary model will be enough. Generally, the more concentrated the fund the more work you will do on each name and the more indepth your memo. A typical memo might have sections on (i) company introduction, (ii) industry positioning & analysis, (iii) financial overview (iv) management and (v) model outputs and valuation scenarios with comps.

Jul 10, 2019

Thanks for the response it's much appreciated!
By your answer I would assume a pitch is much more common and important than a report/memo?

Jul 11, 2019

Well the initial pitch is important in the sense that it determines if you will commit time to a full memo. But the full memo is just as important as it will determine if you actully invest in the name. If you're trying to get your foot in the door a simple pitch is a good idea. A 1-page pitch with a basic model will give you something to talk about and explain how you think about a name.

Jul 11, 2019

Got it! Thanks @Ovechkin08

Jul 11, 2019

We typically meet every week to discuss general news around the portfolio, and if anyone has any actionable ideas they will send out some kind of report or supporting materials ahead of time. Outline is basic stats at the top, high-level business description, then bull case, bear case, recommendation. Last section would be the model or at least the historicals. No standard length or anything, just whatever you need to include to support the idea. Typically maybe 3-5 pages all in, longest I've seen was maybe a little over 10. When we send the materials out ahead of time as attachments, the email usually includes a brief summary of the recommendation and what materials are attached, maybe a paragraph in length.

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Jul 11, 2019

Thanks for the input!
I know whatever is in the report is relevant but is the quality/presentation relevant to your team?

I'm asking because I'm wondering if you need to submit this report to a risk committee so they can review it or no one cares as long as the idea makes sense?

Jul 11, 2019

No risk committee or anything like that, we just debate it for a while and do like a Q&A around the table until we either support or reject the recommendation. A condensed version of the report gets included as an appendix in our quarterly letter to our board of directors if the recommendation was executed. The condensed version only includes the stats at the top, business description, and then a couple sentences detailing the recommendation. The whole thing only takes up maybe a third of a page.

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Jul 11, 2019

Ok that makes sense! Thanks @Secyh62

Jul 11, 2019
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