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Investment Management Club

Investment Management Club. Stock Pitching 101. The Template. Agenda. Industry Company Management Financials Stock Drivers Valuation. Industry. How attractive is the industry Margins Growth rate Industry structure (Porter’s 5 forces)

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Investment Management Club

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  1. Investment Management Club Stock Pitching 101

  2. The Template

  3. Agenda • Industry • Company • Management • Financials • Stock Drivers • Valuation

  4. Industry • How attractive is the industry • Margins • Growth rate • Industry structure (Porter’s 5 forces) • Key drivers of the industry? Is the industry cyclical or secular? • Outlook for the sector

  5. Company • Who owns the company • How does your company make money? (What, how, who) • What is unique about your company / Competitive advantage • Cost advantage vs. Differentiation advantage • … • Company performance and comparison with the sector • Outlook for the company

  6. Management • Is the business well managed? • Track record • Corporate governance • … • If not? What is changing

  7. Financials Modelling cash flows help to put thoughts in writing and check assumptions • Industry growth rate – why? • Company growth rate – why? • Volume drivers • Price drivers • Profit growth – why? • Cost drivers • How capex intensive is the company? Pay attention to the “why” – don’t just use a big growth rate, Support any number you use with reasoning..

  8. Stock Drivers • What drives the stock performance? (can be hard to figure out) • Where is it listed? What is the free float? • Who owns the company? • Street expectations vs. your expectations, why the difference?

  9. Valuation • How does the street value these stocks? • How has the market valued these companies in the past? • Key valuation ratios? • Implied DCF valuation. What does the stock price imply? • Upside and downside

  10. Finally….Remember Anthony B’s 3 Golden Rules!!! • Always back up your main points with data • Do a sensitivity around your valuation assumptions e.g. wacc, multipliers • Recognise the 1 or 2 risks that may cause your investment to under perform…..address these!

  11. Selecting A Stock • Approach – Top Down and Bottom Up • Country – attractiveness, GDP upgrades, theme, point in cycle, structural change. • Sector – strong growth drivers, apply 5 forces • Stock – relative to global peer group • Even a bottom up approach can address the industry and the economy, but the focus lies on the company.

  12. Few final tips…… • Small cap often more interesting than large cap. More inefficiencies. • Easier to talk about and listen to an easy business model • Stocks should have significant upside, at least 30-40% in 2-3 years or so • Try to have a story i.e. Nike of China, Tropicana of Brasil etc

  13. Stock Pitching: Rules • One pager + valuation – using the template • Deadline Oct 18, submit to Hugh Chisholm, hchisholm.mba2007@london.edu • The finalists will know at least one week in advance that they will be presenting. All submission will be part of a shadow portfolio, to be presented at the next stock pitch in March. • Stock Pitch event on Nov 1st around 18 o’clock (more info to follow). • Pitching gives priority for Alpha Challenge etc.

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