Review My Stock Pitch

Hello,

I recently put together a few stock pitches and wanted to get some feedback since I am using these for job applications. I made them relatively simple and straightforward, with not much financials included besides a valuation and segment projection. It would be helpful to get your perspective on 1) Content/Argument of my investment thesis and other points 2) Overall presentation (financials, graphs, style, font, etc).
Thank you for the help.

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Comments on the writeup:

  • Firstly, I'd be slightly apprehensive about writing up such a huge name in the chipmaker space. If you are indeed pitching this to people for interviews, then there's a chance the person could actually understand the name. At first glance, the research doesn't seem super in-depth, so you could be shooting yourself in the foot here
  • Avoid using vague adjectives like "very favorable growth outlooks" and "the upside is very bright" without providing empirical evidence to back them. These are littered throughout the writeup, and it makes it difficult to believe the thesis points when someone feels like they need to just take your word for the qualitatives
  • Reads like a somewhat basic sell side report. If ER is what you're going for, I think that's fine. Might want to be more rigorous if looking at buyside
  • Being less in-depth than initiating coverage isn't necessarily a bad thing, but the qualitatives lose potency with corresponding data
  • Where is the discussion on competitors? Who else is in the space?
  • Where is the discussion of the business model as it pertains to financials? Now I'm no expert, but it's to my understanding that semis are high capex as a function of Moore's Law (number of transistors in an integrated circuit doubles every two years). Would be helpful to see a discussion on the actual operating characteristics of the business

Comments on aesthetics:

  • Margins on the sides and top are too wide
  • Try justifying the alignment instead of aligning text to the left
  • Don't stretch out snapshots from your model, and make sure the formatting is more consistent (why is there so much space in the 2016 column for operating segments? You can just hide the extra column if there is one)
  • Remove the green error triangles in the cells of your model. Always looks weird when it's printed onto a report

Overall, your discussion in the writeup feels very broad/vague, as if there is a lack of fundamental understanding of the technology. I might be totally wrong on that, but that's the impression I'm getting. Take it all with a grain of salt; other than that, I think it's looking fine. It really depends on what type of investor you're trying to convince here. Some prefer brevity, some prefer depth. You just need to figure out who the reader is.

 

Thank you for the help. I definitely lack adequate understanding of the company/industry and violated one of my principles of only looking at companies that I truly understand. I only did it because the company had really strong financials/industry role, and the sharp decline in the market price sparked my interest.

I also didn't know how in depth to make the report since I was aiming for something basic (2-4 pages). I concentrated on the main points, but I will incorporate competitors and the business model as well.

Thank you for all the pointers, I'll work on them.

 
Most Helpful

agree on it being a bit brief. also, be more honest with your bear case, a 40% profit in 12 months is not bearish. bear cases assume the company fails to execute, something macro happens, or their multiple gets re rated, that doesn't usually add up to a 40% profit.

for good examples of student written reports, check out columbia's GSB newsletters: https://www8.gsb.columbia.edu/sites/valueinvesting/files/Graham%20%26%2…

NVDA is an interesting one, because looking at the financials, it deserves every bit of price growth, but it's also had a PE expansion up until the price declines of late. if I'm reading a report on a stock that's down over 50% from its 52 week high, I want you to address that more thoroughly. did the market give it too high a PE and take the price well beyond fair value? did the company have a temporary sales bump that won't repeat itself? did their major capex in 2018 send the wrong signals? look more under the hood.

also, don't use the AI/autonomous driving thesis. the companies making those products admit that they're still a ways away. Or, maybe I'm wrong and they're closer than expected. address this. "Waymo (GOOGL's autonomous vehicle division) estimates that spending on semiconductors will grow by 30% more yoy beginning in 2020, as the average AV needs 100x the number of semiconductors as a ford focus. NVDA's pre-existing relationships with these vendors puts them in a unique position of being an early mover with the manufacturing capacity, quality, and buyer relationships to take advantage of the coming mobility revolution." that was totally made up, but that's better than just saying they have partnerships. tell me about WHY that matters. how many more chips does that mean they can sell? how are those deals structured? do they get 1/3 of the chip allocation or is it all-or-nothing?

tldr: good start, needs more meat and some polish. pls fix thx

 

Thanks bro. My bear case was that their growth will slow down because it has been so high. I didn't see how their profit would be negative though since their margins are so high. It is not 40% though, you probably misread.

Good point on the high PE valuation (the company might have been overvalued in the first place). From what I have researched so far, nothing has changed in the company besides the downfall of crypto (which should not make the price drop by 50%), and everything else looks favorable.

I agree that the AI thesis point is weak and I considered not including it since there is not much data to back it up and my understanding is limited. I will research further or exclude it altogether.

Thanks for the help.

 

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