On great analysts / research
- Finding and analyzing what is asked for is table stakes
- Having a nose for what is most important and where/how to get it stands out
- e.g. get information from private market competitors (since they're not under RegFD)
- e.g. read all K's and Q's to sense shift in language and/or reporting to understand if these are good/bad signals for the business
On great pitches
- Narrative: Story about where the world is currently placing the company
- Numbers: Step back from narrative and convert story into math
- Conviction: own it - convey conviction to audience
On great hedge funds
- Quality of ideas (expressed through stock selection)
- Quality of portfolio management (position sizing)
- Quality of internal relationships (recruiting, talent management, etc.)
- Quality of external relationships (LPs, etc.)
Funds are the Tour de France — a constant series of one-year sprints — if you gave a equity long/short strategy, as leveraged alpha (spread) is your value-add.
Bat signals for EM success
- Screen for history of getting lots of information and analyzing it amidst uncertainty
- "Issue spotting" (similar to IBPS e.g. start with conclusion, and work backwards to what supports the conclusion) — ability to (a) see what others don't and (b) make the bet
- Sell side = do the analysis, have an opinion, but don't take the risk (revenue driver)
- Buy side = all of the above but able/willing (want to) to take the risk (profit center)
Mentors and portfolio managers are the single most important decision in early jobs (think who you want to work for, not where you want to work) as this will set the table and color entire career.
Current businesses
- There are more interesting businesses today than there were 10 years ago, and this will continue
- Many will be in life sciences — need to expand capabilities there so that the world does not move away from you
Current market
- So much market volume occurs in dark pools
- So much trading is passive
- Creates whipping around and systemic risk (liquidity pockets + leverage)
Not overly concerned about valuations etc. "If you're not selling the businesses, you're buying the businesses."
Same formula for analyzing every business
- Start at the top of the income statement and work your way down... (revenue, cost structures etc.)
- Then step back, and do the same thing for all competitors, and rank best > worst
- Then find experts and how they think about it (e.g. deep web research) to get to an industry/sector view
- The turn sector view back to ranking to refine and assess who the winners will be
Telecom is interesting because
- The internet is only a distribution mechanism, utility-like in its function, but the most vital infrastructure in the world
- More risk to disruption in the electrical grid than comms infrastructure
- On mobile: 4G to 5G will be huge; T-mobile can spend less capex to get more capacity which gives them the opportunity to offer better service
- Bottleneck is on/off ramps e.g. from cell phone to/from tower (but may not be a huge investable theme)
Stay in growth and abundance mindsets
Go do new things for what they are, not for what your present situation is not