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Hedge Fund Interview Pitch September 1

This webinar covers preparing for a hedge fund interview by focusing on their investment philosophy and presenting an original long and short stock pitch. It recommends researching the fund's strategy, website, SEC filings and personnel. For the pitch, know key metrics, have a thoughtful thesis aligned with their views, and analyze potential catalysts, valuation and risks. An example short pitch on Biogen is provided, analyzing deteriorating fundamentals from quarterly results missing estimates and guidance cuts. Questions from the audience are taken at the end.

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dorowsj
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527 views14 pages

Hedge Fund Interview Pitch September 1

This webinar covers preparing for a hedge fund interview by focusing on their investment philosophy and presenting an original long and short stock pitch. It recommends researching the fund's strategy, website, SEC filings and personnel. For the pitch, know key metrics, have a thoughtful thesis aligned with their views, and analyze potential catalysts, valuation and risks. An example short pitch on Biogen is provided, analyzing deteriorating fundamentals from quarterly results missing estimates and guidance cuts. Questions from the audience are taken at the end.

Uploaded by

dorowsj
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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WALL STREET OASIS

WEBINAR
HEDGE FUND INTERVIEW PITCH + WALKING THROUGH INVESTMENT
SELECTION AND RESEARCH
WHAT WE WILL COVER TODAY

• CONGRATULATIONS, YOU SCORED AN INTERVIEW AT A HF. HOW DO YOU


PREPARE?
• WHAT MAKES A GOOD PITCH
• STOCK PITCH EXAMPLE
• QUESTION & ANSWERS FROM THE AUDIENCE
STEP 1

• GET INFO ON THE HF, ITS INVESTMENT PERSONNEL, BACKGROUND AND


ITS STRATEGY
• WHERE - HF WEBSITE, 13G AND 13D SEC FILINGS, PUBLIC INTERVIEWS AND
PRESENTATIONS, INVESTOR LETTERS
• IF U HAVE A CONNECTION AT PRIME BROKAGE OR EX-EMPLOYEES, CALL
THEM UP
STEP 2

• FOCUS ON THEIR INVESTMENT PHILOSOPHY/STYLE.


• IS IT AN ACTIVIST FUND, AN EVENT DRIVEN FUND, EQUITY FOCUSED FUND
OR ACROSS CAPITAL STRUCTURE FUND. VALUE, LONG ORIENTED, MID TO
SMALL CAP, ETC.
STEP 3

• IMAGINE YOU ARE ALREADY WORKING FOR THEM AND COME UP WITH ONE
LONG AND ONE SHORT IDEAS THAT MIGHT MAKE IT TO THE PORTFOLIO.
• BE ABLE TO EXPLAIN WHY YOU SELECTED THESE STOCKS, AND WHAT THE
PROCESS WAS.
• 80% OF THE INTERVIEW AT A HEDGE FUND WOULD BE FOCUSED ON YOUR
STOCK PITCH
STEP 4

WORKING ON YOUR STOCK IDEA –

• COLLECT INFO - WEBSITE, 10K, AND 10Q, THE LAST 4 CONF CALL TRANSCRIPTS
• AN BROKER INITIATION REPORT IF YOU CAN GET ONE
• DO A BASIC MODEL
• YOUR INVESTMENT THESIS
• KEY DRIVERS
• CATALYSTS
• VALUATION
• RISKS
WHAT MAKES A GOOD PITCH

• THOUGHTFUL, ORIGINAL AND FOCUSED ON 2-3 DRIVERS


• QUANTITATIVE - KNOW WHAT THEY ARE GOING TO MAKE IN EPS THIS YEAR, WHAT THEIR
DEBT LEVEL, CASH FLOW GENERATION, SHARE BUYBACK
• COHERENT WITH THEIR INVESTMENT PHILOSOPHY
• BEING DIFFERENT FROM CONSENSUS
• SHORT IDEAS FOCUSED ON BALANCE SHEET AND CFS- EX NUS (NU SKIN) HAD
THEIR DSIS (DAYS SALES OF INVENTORY) JUMPED IN Q1'14. COMPANY MISSED Q2 AND
GUIDED DOWN THE REST OF THE YEAR. GILD WILL GENERATE CASH THAT WILL BE 25% OF
ITS MARKET CAP.
WHAT MAKES A GOOD PITCH (CON.)

• SCENARIO ANALYSIS - WHAT IS THE STK WORTH IF X-HAPPENS. WHAT IS MY


POTENTIAL UPSIDE/DOWNSIDE UNDER THIS SCENARIO
• WHAT MAKES A GOOD SHORT – (1) A PRICE DISLOCATION FROM REALITY, (2)
IMPROVING OR DETERIORATING FUNDAMENTALS. HOW DO U GET TO THE
CONCLUSION THAT THE FUNDAMENTALS ARE DETERIORATING. IT CAN BE
EITHER CONCEPTUAL – APPLE WATCHES WILL TAKE MARKET SHARE AND
SALES FROM WATCHES OF SIMILAR PRICE POINTS. OR U CAN DERIVE THE
CONCLUSION THROUGH NUMBER CRUNCHING.
STOCK PITCH EXAMPLE

HERE IS AN EXAMPLE OF DETERIORATING FUNDAMENTALS:


• SHORT BIOGEN (BIIB) AT $400
• CATALYST Q2 RESULTS
STOCK PITCH EXAMPLE (CON.)

• BIOGEN IS A COMMERCIAL STAGE $70BN BIOTECH COMPANY WITH MOST OF


ITS REVENUE COMING FROM THREE NEUROLOGY DRUGS (TO TREAT
MULTIPLE SCLEROSIS) – AVONEX, TYSABRI AND TECFIDERA. TECFIDERA IS
THE SINGLE MOST IMPORTANT GROWTH DRIVER AT BIIB.
STOCK PITCH EXAMPLE (CON.)
• WE START FROM LOOKING AND ANALYZING Q1 DATA. Q1 SALES WERE $825M,
MISSING ESTIMATES BY $100 SITING PRICE PRESSURE IN EU. AND BEING DOWN
SEQUENTIALLY BY 10% FROM Q4. NOW WE START LOOKING AT THE
EXPECTATIONS FOR Q2. TECFIDERA IS EXPECTED TO GROW BY +13% Q2/Q1. SO
THAT’S A RED FLAG. HOW DO WE JUMP FROM BEING DOWN 10% SEQUENTIALLY
WITH WHAT SEEMS TO BE A PERMANT PROBLEM – LOWER PRICE POINTS IN EU, TO
+13%. WE INVESTIGATE FURTHER. IMS PUBLISHES WEEKLY SCRIPT DATA FOR
MOST OF BIOTECH DRUGS. WHILE NOT EASY TO GET, CAN LOOK THROUGH
TWITTER AND FINANCIAL BLOG OF OTHER INVESTORS QUOTING SELL SIDE
ANALYSTS AND NUMBERS. IMS WAS SHOWING MID-SINGLE DIGIT SEQUENTIAL
GROWTH. WELL, THAT’S SHORT OF +13% EXPECTED.
STOCK PITCH EXAMPLE (CON.)
STOCK PITCH EXAMPLE (CON.)

• RESULT – Q2 MISSED TECFIDERA SALES BY $50M, I.E. 6% SHORT FALL. AND CUT
2015 EPS GUIDANCE FROM $16.5-17.0 TO $15.5-15.95 (7% MIDPOINT) AND SALES
GUIDANCE FROM 14-16% GROWTH TO 6%-8%. STOCK IS DOWN BY 25% ON THE
DAY AND 30% BY NOW.
QUESTIONS & ANSWERS
• LIVE Q&A SESSION, ANY QUESTIONS?
• WANT A 1 ON 1 MENTOR SESSION WITH THE PRESENTER?
• USE “MENTOR50”DISCOUNT CODE IN NEXT 24 HOURS TO GET $50 OFF OUR FIRST
HOUR TOGETHER (CLICK ON THE MENTORS LINK AT TOP OF THE
WALLSTREETOASIS.COM HOMEPAGE AND CLICK THE GREEN “GET STARTED!”
BUTTON)

• EMAIL [email protected] WITH ANY QUESTIONS ABOUT OUR


MENTOR PROGRAM
• A FREE REPLAY OF THE PRESENTATION WILL BE ON THE WSO HOMEPAGE IN
EXACTLY ONE MONTH

THANKS FOR JOINING!

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