If you are preparing for hedge fund interviews, I know the level of exhaustion and stress that you are going through. There are many technical questions to prepare for. Developing and presenting an investment pitch is time-consuming. On top of that, there’s a constant self-doubt of whether you are on the right track with your pitch. But first things first. Before you start your investment pitch, here’s a critical question for you to answer: what’s your investment style?
Pitching a stock is the most important part of the interview process for hedge funds and asset management. After you’ve submitted a polished resume and telling your story in your first round interview, you’ve been asked to pitch a stock. Now what? How do you find a great stock pitch idea?
Your first instinct might be to go on a research portal like SeekingAlpha and SumZero to get inspirations.
The issue is, reading reports is a great way to get other people’s opinions on a stock. But that shouldn’t be your starting point.
Let’s face it. When it comes to learning how to invest, most college and business school textbooks just aren’t cutting it. We need to build our own collection of the best investing books to hone the craft.
Academic classes teach you how to put together an income statement or how to run multi-variable regressions in Stata. Those are important skills to have, but they don’t give you the full picture on how to invest. I know, because I’ve taken a lot of them.
Investing takes a tremendous amount of self-learning. It takes an entrepreneurial effort to research and discover the best books on investing, and then extract golden nuggets of knowledge from a pile of regurgitated nonsense.
This is why every hedge fund interviewer would ask you what books have you read and why.
They want to see how much time you’ve spent on self-learning and hear what you’ve learned from it.
Pokemon Go’s popularity exploded like a firestorm. The mobile hit leapfrogged Twitter in active users in just days after launch, and Nintendo’s stock price has risen 57% since. Expectations of further monetizing Nintendo characters are high. But let’s think about the reverse – could Nintendo be a prime example of how to short a stock?
Are the lofty expectations for Nintendo realistic, or is there irrational exuberance?
Pokemon Go is certainly not the first mobile game with high expectations, and it won’t be the last either. In 2013, a Japanese game developer called Gungho Entertainment released Dungeons and Dragons, wich monopolized mobile usage among Japanese teenagers. Gungho’s stock skyrocketed 2100% in just 5 months.
But as the game waned, Gungho’s stock price has dropped 80% since. And before Dungeons and Dragons, there was Farmville. A similar story played out with its developer Zynga.
Each case is different. Whether history would repeat itself in Pokemon Go is up for debate. But irrational exuberance is certainly one of the central themes in developing a short stock pitch.
Good advice on how to short a stock is notoriously difficult to find. There are a plethora of volumes written on finding undervalued investments to go long. But what would make a good short stock idea? Is identifying unrealistic hype simply enough?
I’ve written over 30,000 words detailing what it’s like to have an investing career. I’ve laid out the step-by-step process to get a hedge fund job for both experienced professionals and MBAs. What’s the one key takeaway from these guides? Having a killer stock pitch is what matters the most.
Making a strong stock pitch is the way to get your foot in the investment industry. It’s how you can become a professional investor.
Let’s go into the stock pitching process in detail.
This is a deep dive into analyzing and pitching stocks. We’ll go over how to screen for stocks, develop an investment thesis, analyze the company and industry, value the business, and assess the catalysts and risks.
A lot is taught on investing theories and frameworks in school. But little is said about how investment analysts actually pitch a stock.
If you’ve ever taken a finance class, you’ve probably left wondering: how do I actually put together a stock pitch the way professional investors do?