A stock pitch

Practice

Answer out loud first, then check. Mark each card; the ones to review come back first next time.

1. Pitch me a stock.

   Lead with the call: I would buy the company at its current price with a 12-month target, giving a stated upside. Then the thesis in two or three points, each saying what the market believes and why I think it is wrong.

   Then the valuation behind the target, the catalysts that should close the gap and their timing, and the main risks, with what would make me change my mind. Stop at about two minutes and let the interviewer pick a thread.

   Likely follow-up: Why has the market not seen this already?

2. How did you choose this stock?

   Give the real process: where the idea came from, such as a screen, a results release or an industry you follow, and why you went deeper. Then show the work: the filings, results calls and competitor reports you read. A good answer shows a repeatable way of finding ideas, not luck.

   Likely follow-up: What other ideas did you reject, and why?

3. How did you get to your price target?

   Say the method and the inputs: for example, my estimate of next year's earnings per share times a multiple, with a reason for each. Explain why my earnings estimate differs from consensus, or why the multiple should change, and how the target looks against a DCF or the stock's own trading history. Then give a downside case, so the risk to reward is clear.

   Likely follow-up: What multiple do peers trade on, and why should this company trade differently?

4. What is the market missing?

   This is the core of the pitch. Answer in one sentence: the market thinks X, I think Y, because of evidence Z. Point to something specific and checkable, such as a change in business mix, a cost programme, a mispriced segment or a consensus estimate that ignores a known event. If the answer is only that the company is good, the pitch is weak.

   Likely follow-up: What evidence would prove you wrong in the next six months?

5. What are the catalysts?

   Events with a date or a window that should make the market change its view: results, an investor day, a product launch, the end of a restructuring, a regulatory decision or a change in capital return. Without a catalyst, an undervalued stock can stay undervalued for years. Say which catalyst matters most and roughly when.

   Likely follow-up: What if the catalyst comes and the shares do not move?

6. What are the main risks, and what would change your mind?

   Name the two or three risks that would actually break the thesis, not generic ones such as a recession unless the company is unusually exposed. For each, say how you would spot it early and what the downside would be. Then name the specific evidence that would make you sell: it shows discipline, which is what investors look for.

   Likely follow-up: What is your downside price if you are wrong?

7. What is the bear case?

   Give the strongest version of the other side, the one a smart investor who disagrees would make, and then explain why you think it is wrong or already in the price. Interviewers trust a candidate who can argue against their own idea far more than one who has no answer.

   Likely follow-up: Which part of the bear case worries you most?

8. Who are the main competitors, and how does the company compare?

   Name two or three and compare them on what matters for the thesis: growth, margins, market share, balance sheet and valuation. Explain the company's competitive advantage, if it has one, and how durable it is. Knowing the peers is also how you defend the multiple you use.

   Likely follow-up: Why not buy the competitor instead?

9. Pitch me a short.

   Same structure, with a sharper edge: why the shares should fall, by how much and by when. Good short theses rest on earnings estimates that are too high, a business in structural decline, aggressive accounting, or a valuation that assumes too much.

   Address the short-specific risks: the cost and availability of the borrow, the risk of a squeeze if many investors are short, and the fact that the loss on a short is in theory unlimited. That is why the catalyst and the stop matter more than on a long.

   Likely follow-up: How would you size a short compared with a long?

10. What is the difference between pitching a long and a short?

    A long can be patient: the market tends to rise over time, the most you can lose is what you invested, and dividends work in your favour. A short works against all three: unlimited theoretical loss, the borrow cost and any dividends paid to the lender, and a market that drifts up. So a short needs a clearer catalyst, a tighter timeline and smaller sizing, and you must know who owns the stock and how crowded the short is.

    Likely follow-up: What does it mean if a stock is hard to borrow?

11. The stock falls 20% tomorrow. What do you do?

    First find out why. If the fall comes from news that breaks the thesis, sell, whatever the loss. If it is market-wide or unrelated to the thesis, and the case still holds, the shares are now cheaper and the risk to reward is better, so you might add, within risk limits. The answer the interviewer wants is that the decision depends on the thesis, not on the price you paid.

    Likely follow-up: What if you cannot find the reason?

12. How would your pitch differ for an equity research, a long-only and a hedge fund interview?

    Equity research cares about the depth of the model, the earnings estimates against consensus and the industry knowledge. A long-only fund cares about the business quality and the value over several years. A hedge fund cares about the catalyst, the timing, the risk to reward and how you would size and hedge the position, and may want a short. The core thesis can stay the same; the emphasis changes.

    Likely follow-up: How would you hedge the market risk in your long?