Company Name(Stock exchange: ticker)

(Insert company logo here)

EQUITY ANALYSIS: Ticker RecommendationRIVANNA INVESTMENTS

Date

Partner: Name, email address

I. Company Overview

Give a brief overview of what the company does. After reading this section one should have a basic understanding of how the company makes money and the firm’s current financial situation.

Three to four sentences may be sufficient.

II. Thesis

Give a concise summary of your investment thesis – an elevator pitch so to speak. The reader should very quickly and easily understand your thesis. Need to frame the story: is this a turnaround, a value, growth or a momentum story. What doesn’t the market know/understand which will help the stock out/underperform?

Three to four sentences may be sufficient.

III. Variant Perception

How are you different from street expectations? Variant perceptions tend to come in 3 varieties:

Informational (superior information): The market believes X, and you’ve done research that indicate that in reality it is Y that is occurring. These are tough to come by, but extremely powerful when found.

Analytical (superior understanding): You’re not asserting that you have any better information than the market; you’re just interpreting it differently than the market is. The common pitfall in these types of investments is hubris – there are many smart people looking at this data who have probably been looking at it far longer than you, so you want to be extra sure you know why consensus is misinterpreting it.

Behavioral (superior reaction): You draw from the field of behavioral finance, which is a guide to reacting rationally and unemotionally to new information or stock price changes and overcoming other biases. For example, often investors will not or cannot buy a security due to institutional constraints (i.e. most investment houses offer daily/monthly/quarterly liquidity so they can’t buy a long-term thesis); or recency bias (i.e. they extrapolate a recent data point to perpetuity); etc.

Three to four sentences may be sufficient.

IV. Positives

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Partner: Name, email address

Positives (This section should be three to five bullet points. Each bullet point should be no more than three to four sentences.)

In the near and long term, what are positives for the stocks? What factors did you identify in your analysis that leads you to believe the security is going to move one way or another?

The purpose of this section is to explain in more detail the drivers of your thesis. What is the opportunity that the market is missing?

This is the section in which you can elaborate on potential catalysts (relevant to the company or the industry).

Try and give the reader a strong understanding of the competitive landscape in which the company operates.

Some examples of what is often included in the positives section are:

Identifying “best of breed”. Compare operating and financial metrics versus compso Sales / earnings growtho Profitability (gross margin, EBITDA margin)o Free Cash Flow (and how it’s used by the companies)o Relevant valuation multiples (P/E, EV/EBITDA, PEG, etc)

Management teamo Track recordo Incentive structure. Why this structure is better than comps and how will it drive

performance

Capital allocationo Capex vs dividends vs share repurchaseso Returns analysis - ROE, ROIC, ROA depending on what kind of business you

are looking at

Highlighting an attractive valuation or an under-earning asset

V. Risks

This section should be three to four bullet points. Each bullet point should be no more than three to four sentences.

Here you should explain the implications of your assumptions going wrong. You should also highlight any inherent risks in the business model of the company or the risks associated

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Partner: Name, email addresswith the industry it is operating in. For example, if oil prices go down five dollars this stock should go down XX%.

VI. Legal Analysis

The legal analysis section may vary considerably depending on the company. Here are some potential areas to discuss:

Does the company have any pending litigation? Has the company reserved an amount for it?

Are there any notable environmental liabilities? Does the company have any issues with regulatory agencies? Is the company making a large acquisition, contemplating a merger, or in talks to be

purchased? Are there antitrust concerns? Are there cyber security issues? Has the company discussed them?

Valuation

Here is where you can explain your valuation in depth. Depending on what methods you used it may be appropriate here to insert a table of

potential target prices. It is appropriate to discuss the assumptions you made as you valued the firm If there are distinct segments of the business with different revenue and cost

assumptions, it is advisable to use Sum-of-the-parts valuation At what price would the security be fairly valued? Your valuation should also include an analysis of comparable firms – is the stock you

are pitching cheap or expensive in comparison to its competitors? Why? Show whether the stock is trading at a discount/premium to its historical valuation. If

yes, what is the rationale for it? If so, do you think it will revert to historical norms? Why or why not?

Use charts, tables, graphs and models to illustrate your analysis. Be sure to show the historical valuation of the security

Check what metrics analysts use in particular sectors and be familiar with sector terminology. (e.g. for financials, explain tangible book value)

Sensitivity analysis and/ or scenario analysis

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