Good analysts don’t just consume a lot of detail in an academic fashion. They build knowledge in a purposeful, strategic way... some of the things they do include:
- Identify critical biz drivers & pressure points / risks
- Weight the most important information correctly
- Understand how management think, what they want & what they are motivated by
- Always benchmark their views to the expectations they believe are discounted in the price
- Weight the most important information correctly
- Understand how management think, what they want & what they are motivated by
- Always benchmark their views to the expectations they believe are discounted in the price
- Form independent views from a variety of sources
- Are creative in how they think (both in how they think about research & how they think about a company or industry)
- Filter out ideas quickly (eg based on risk / downside, circle of competence or lack of an expectation gap)
- Are creative in how they think (both in how they think about research & how they think about a company or industry)
- Filter out ideas quickly (eg based on risk / downside, circle of competence or lack of an expectation gap)
- Come up with long term ideas where the upside is significant
- Are comfortable in saying ‘I don’t know’
- Always understand the short thesis on something they think is a buy
- Have identified, in advance, signposts that could indicate they are wrong
- Are comfortable in saying ‘I don’t know’
- Always understand the short thesis on something they think is a buy
- Have identified, in advance, signposts that could indicate they are wrong
- Understand time is a scarce resource and prioritise well
- Realise when they have come across a potentially unique or exceptional investment and drop everything to work on it
- Question / interview well: eg ask pertinent and short questions, use silence and do not interrupt
- Realise when they have come across a potentially unique or exceptional investment and drop everything to work on it
- Question / interview well: eg ask pertinent and short questions, use silence and do not interrupt
- Focus their work on areas that are likely to provide mispricings
- Develop mutually beneficial relationships with people who can help them
- Understand their biases & weaknesses
- Happy to change mind when they get new evidence
- Honesty when they think they have made a mistake
- Develop mutually beneficial relationships with people who can help them
- Understand their biases & weaknesses
- Happy to change mind when they get new evidence
- Honesty when they think they have made a mistake
- Carefully observe real world trends, eg they think about how consumer behaviour is shifting based on what they, their friends & family are doing... they seek opportunities on the right side of the big tailwinds
- Where possible, ask every business they are a customer of what services they use & what do they enjoy using, eg where do they advertise, who does payments, which productivity tools they use, who does website, who does payroll, who does banking etc... analysts are curious
- Dig deeper to seek to understand things that ‘don’t make sense’
https://twitter.com/areviewortwo1/status/1278821386564317184?s=21https://t.co/o9TBkbiB2b
- Look for win-win situations:
https://twitter.com/areviewortwo1/status/1278382005424730114?s=21https://t.co/YvWWbPRU9E
- Quickly identify red flags:
https://twitter.com/areviewortwo1/status/1170662548238163971?s=21https://t.co/4e9oR90T27
- Build a diverse set of primary information sources:
https://twitter.com/intrinsicinv/status/1214570726679695361?s=21https://t.co/7rchOiyEay
- Use checklists (appropriately and not at the expense of creativity):
https://twitter.com/areviewortwo1/status/1289188238331019265?s=21https://t.co/c0YZtyUhnZ
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