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SCM Mock Investment Proposal

John SmithFebruary 24th 2014

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Action

• Long/short company/ETF/Index (name) for half/full position

• Company/ETF/Index overview– What are we buying/selling?

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Thesis

• I believe (name) represent a good opportunity to buy/sell because … (concise!)

• How is your opinion different from that of the market?

• Why is your opinion correct?– Think comparative advantage (e.g. small cap,

emerging market, student-particular insights, etc.)

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Industry Overview

• Concise, to-the-point• Fact followed by why it matters

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Industry Comparables

• If you have a macro thesis, then give the financial overview of relevant companies

• For a company-specific thesis, research how it’s competitors are doing (explain why there is a valuation difference)– Valuation convergence (graph multiple security on

one chart)– Event studies– Use table to compare P/E, PEG, EV/EBITDA, etc.

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Company financial overview• Must have this slide if your thesis involves buying/selling

individual equities• Nice, easy to look charts--Don’t just take screenshot• Revenue, Operating Income, Net Income, P/E, PEG,

EV/EBITDA (quick intro to FSA)• Leverage? (quick intro to balance sheet)• Beta• Stock charts

• (The Merrill Lynch Guide to Understanding Financial Report)

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Company valuation (optional)

• Include a DCF (see scm.pomona.edu recourses page for a DCF handout)

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Risks• Please acknowledge what could go wrong in your

thesis. It will increase the strength of your presentation.• Try to guess at questions which members will ask in the

Q/A• Try to quantify the downside• Try to come up with means of mitigating this

downside/risk• All investment theses carry risks

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Conclusion

• Time line for the investment• Any questions?

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Dos and Don’ts• Do…

– Speak loudly and clearly– Cite your sources– Solicit input from your group leaders before presenting

• Don’t…– Read off the slides– Include paragraphs of text in your slides– Be afraid to respond with “I don’t know the answer”– Get discouraged! Our process is very demanding, but your

analytical and presentation skills will improve dramatically with each presentation you give.