Tuesday, September 4, 2012

How to Pitch Your Stock in an Interview



As stated before, the most important part of an equity analyst interview is the stock recommendation (AKA the pitch). The flow of your interview pitch should go something like this:


  1. My first long (or short) is stock ABC. Ask the interviewing portfolio manager if he/she knows stock ABC – if not give a 1-2 minute overview of what they do. Sometimes the PM may not know the stock and ask you to pitch another stock. (see prior post about number of stock pitches to have).
  2. Explain what your differentiated view is on the stock (e.g., ABC should beat Street consensus EPS estimates by at least 20% over the next year because the Street is underestimating a product cycle).  Know your key stock drivers.
  3. Give a target price – Target price should rely predominantly on improving fundamentals (like EPS). Do not rely heavily on multiple expansion. That may come, but your recommendation should not rely on it.
After these three points, be ready for probing questions and push back from the portfolio manager.  Be ready to defend key assumptions.  Have your model available and be prepared to point our where your expectations are different from consensus expectations.  Expect to answer the question "where could you be wrong?"  (Even great analysts are wrong 1/3 of the time – the key is to make sure you recognize what can cause your stock call to go against you.)  The PM will try to poke holes in your pitch.  Your goal is to be as prepared as possible to make this difficult for the PM to do.



    Related posts:
    Tips for Preparing a Stock Recommendation

    Stand Out by Going the Extra Mile

    Know Your Audience’s Investment Time Frame

    Know the 3 Key “What Counts” Factors for Your Stock Picks

    Don’t Live in the Past


    Image credit: iqoncept / 123RF Stock Photo

    Copyright © 2012 Kingdom Ridge Capital, LLC. All Rights Reserved. Not a Public Solicitation.


    Kingdom Ridge Web Site

    No comments:

    Post a Comment

    Note: Only a member of this blog may post a comment.