Brett Caughran

Brett Caughran



PITCH LIKE A PRO ✔️ Communicating your ideas succinctly & convincingly is one of the most important skills a buy-side analyst (or PM, for that matter!) can master And early in my career, I was AWFUL at this. I fell into the "book report" trap - doing 3 weeks of research

and reporting back on every part of the research. I fell into the "rambling, incoherent pitch" trap, talking and talking and not getting into the point. And I also fell into the "I'm so nervous, I'm going to read from a script" trap.

I'll tell you an embarrassing story. 12 years ago when I was an an analyst at a Tiger Cub, I uncovered a very interesting, wide-spread short thesis on Chinese reverse mergers. I was tapped to pitch this thesis to our investors at the annual meeting. And I was SO NERVOUS.

I spent weeks preparing. My slides were overloaded with every data point I could add (to the point of being illegible from the audience), and I was so scared I would lose my train of thought that I wrote a script for myself. Fast forward to 2 days before the event and we did an

internal run through in front of the entire firm. It was an epic disaster. So bad, in fact, that the CIO had to pull my sector head aside and mandate that he fixed my pitch, QUICKLY. So proud of my elaborate slides, I left the walk-through with my tail between my legs.

But it was a powerful lesson. Pitching is a skill distinct from being a good analyst. Pitching is about being a good story-teller. Listen to Anthony Bozza from Lakewood, David Einhorn in his heyday, or even Bill Ackman at times, and you are listening to a master story-teller

distill analysis into story. A story touches your emotions, and a good pitch leaves you foaming at the mouth. And as an analyst, if you can't pitch well you won't get many ideas in the book. As a PM, if you can't get your LPs excited about your positions, you might not survive.

So while I'm far from Anthony Bozza, I've learned a lot from 10+ years of pitching ideas up to some of the most respected CIOs in the game, being embarrassed by their exacting Q&A, and getting stronger for it. Here's what I've learned:

A GOOD PITCH HAS TWO ELEMENTS: 1) A GOOD STORY. Some qualitative element that hits the emotions. Levered to an exciting theme, a believable vision of the future, a compelling catalyst path, a great narrative, qualitative attributes of being a great business.

2) COMPELLING MATH. A story is not enough. PMs/LPs are analytical people and want to see the numbers. Walk me through how I make money. What is the upside case. Can I double my money in 2-3 years? How? What is the asymmetry / R/R. What is our EPS variance vs. the street?

How under-valued is the situation? If you don't have both a GOOD STORY and COMPELLING MATH, you don't have a pitch, you have a book report. When PMs will be dissecting your pitch, there will be 3 things that will really make them jump and line up behind your pitch.

1) ASSYMETRY. If you can weave a story, backed by numbers, how if you are basically wrong, you won't lose much money, but if you are right you will make a bundle, you've nailed it. A R/R ratio of 2:1 or 3:1 (will walk through how to calc in the future). Often, the PM doesn't need

to know much more than this, if the PM trusts your judgement. When I had a trusted deputy running a biotech sleeve for me, all he needed to tell me was "Brett I've got a 3:1 biotech play, can we start legging in?" The answer was always YES. I trusted his judgement to assess the

R/R accurately, and PMs 1) want to make money, 2) don't want to lose money. Flipping a coin where I make $3 on heads and lose $1 on tails is an obvious yes. 2) P&L POTENTIAL. Walk me directly and explicitly through how I make money on a trade. Don't say "this is a great company

, you should buy it". That is too vague. Show me the numbers, tell me the story, and let me know what the IRR and R/R is. Tell me where the stock can go in 3 years. Hit me directly in the amygdala and get me excited about how much money I'm going to make on this stock.

3) VARIANT PERCEPTION. I want to know where we are different. Boil it down the Key Drivers (KDs). If you see something materially different on the KDs from your research, and you can convince me that's the case, I'm more likely to leap.

COMMUNICATION & MENTALITY There are soft skills associated with being a good idea pitcher. Ackman is as smooth as any S&P 500 CEO. I was a really bad communicator, and in between jobs one time I wanted to get better. So I took a public speaking class at Own The Room.

Toastmasters offers similar courses. There are now virtual courses. So if you want to become more convincing in your pitches, work on the first order principles of communication. Fewer "umms", more connecting with your audience, etc will make you a more convincing pitcher.

Particularly for CIOs, connecting with your LPs and prospective LPs is mission critical. Build your muscle here. I'm still no Ackman, far from it, but it helped me a lot. On mentality, really the mentality shifts based on your setting. If you at at a firm with high openness,

a trusting environment, you don't need to put on your "pitch like Ackman" hat. But if you are pitching an idea in an interview or publicly, you want to be able to give a strong, compelling, convincing pitch. Think "cool confidence", stopping 2 degrees before arrogance, but you

don't want to show any vulnerability in your pitch. Open minded, give air-time to both sides, but ABP (always be pitching). HOW TO PITCH WELL I have 5 pragmatic pieces of advice on how to pitch well. 1) SUCCINCT DELIVERY. Don't speak for 5 minutes when 1 minute will do.

Work on your rambling and your "umms". 2) DISPLAY STRUCTURED THINKING. Great story-tellers like Bozza take you on a winding, fabulous journey in their pitches. We aren't Bozza. Use a structured pitch so you are easy to follow. 3) ADDRESS BOTH SIDES OF THE STORY. In virtually

every stock idea out there, there is a risk case or a weakness. If the listener points that out, there's an awkward "gotcha" moment that puts you on your heels. Don't let that happen. Address the weakness head on, then discuss mitigants. This pre-empts the "gotcha" moment, and

shows that you are a thoughtful, open minded analyst that has considered both sides, and builds trust with your PM (when the biotech junior PM on my team told me the risk case, I trusted him). 4) MAKE A CLEAR, DATA-SUPPORTED CALL. Tell the story but bring in the numbers.

Cite valuation, EPS variance, EPS algorithm, etc. Don't make this some fanciful story about flying cars. Tell the story with numbers. 5) BALANCE HUMILITY W/ CONVICTION. "I may be wrong, but here are 7 reasons I believe I am wright" is the vibe. NEXT: MY PITCH STRUCTURE

MY PITCH STRUCTURE To be clear, there is no pure standard pitch structure floating out there. Ever analyst and every firm is a bit different. I will give you MY pitch structure now. And the pitch structure also differs based on your setting.

@pmje73 beautifully captured this here with his "3 types of pitches" - the 20 second, 3 minute and 20 minute pitch, and I highly endorse this sort of flexible approach.

30 SEC PITCH: If you are only prepared to do a 20 minute pitch and your CIO asks you for a 30 second pitch in the lunch room, you have to be ready! The Mark Twain quote "I didn't have time to write a short letter, so I wrote a long one instead" captures the challenge of

distillation. From "A Tiger in The Land of Bulls & Bears: "A key part of the [Tiger] research model was the firm's Friday lunch meetings, where ideas were presented...Robertson liked hearing ideas presented quickly & efficiently. Get to the point or don't bother...Analysts

were expected to sum up their investment ideas in four sentences". So even if you develop a 20 minute pitch, distill, distill, distill. As Paul notes in his deck, if you can't pitch an idea in 30 seconds it's likely not a great idea. Work to identify the key elements of

the thesis, and communicate those succinctly. When I'm pitching an idea, I like to always start with the 30 second pitch. It tells the core thesis and, if done well, leaves the listener wanting more.

3 MINUTE PITCH: The 30 second ("give it to me quick") pitch is very high level. And the 20 minute ("walk me through the deck") pitch is very detailed. Be prepared for a happy medium. The 30 second pitch can turn into a 3-minute pitch w/ Q&A, so take the 30 second one step

further. Structure of a 3 minute pitch. - 30 second pitch summary - 3 key thesis points - 2 key risks, with mitigants - 3 year IRR - Upside downside - Key Drivers & Variant Perception - why you're different - Next catalyst/ view on earnings This obviously differs based on

your fund / duration. Longer term oriented funds care about different things than trading-oriented. So distill what matters in each scenario. I will generally bring a 1-page write in Word up for a 3-minute pitch with these areas covered. 20 MINUTE PITCH. For a 20-minute pitch

I will prepare a full 15-30 page deck. I don't always need every page, but my rule is I want to have a page for every possible question, to show I've done the work. When I am pitching a stock like this, I will send the 30 page deck and the excel model to the group. My outline:

1) Summarize the pitch (put bullet points to your 30 second pitch) and tell us what the company does (with a picture). Here's an example from my class slides from 2020 (NOTE - NOT A RECOMMENDATION). I love pictures personally since they tell the story.

2) Business Overview, Cap Table & Summary Tab from Model. In my models, I will have a detailed model build, then I will pull annual forecasts into a SUM tab where I have my R/R, buy-prices, etc. The listener will have my full model, but this summarizes my estimates.

(note that I was pretty close on DXCM revenues but wildly off on margins. This wasn't an investment, it was just a sample idea for class). 3) Stock chart & set-up. Show the stock chart and explain how the price got to where we are today. 4) 3 key thesis points (rule of 3).

5) 2 key risks, with mitigants (in spirit of addressing weaknesses of the pitch head on) 6) Why the opportunity exists 7) Valuation chart - disaggregating price movement to EPS revisions and valuation - has stock been weak because missing & lowering? Or beating & raising and

valuation has become more attractive? 8) Price target, R/R & tactical considerations 9) Stock checklist. These are actually, in my experience, not that common in real HF pitches. But for my ASU students mostly pitching to get buy-side jobs, it shows a structured process.

Slides 10-14) Supporting charts, data, research on both thesis points and risk mitigants. For every possible question & push back, there should be a slide. 15) Estimates vs. consensus, and depending on the format I will put a summary of the pitch as last page.

So that is my pitch structure! In Academy, we will walk through the entire buy-side process from Idea Generation to Pitch Like a Pro to Idea Monitoring. Every semester in class this is what we do, and I'm bulking up that baseload meaningfully to prepare junior analysts at

buy-side shops to go from PM asking "hey look at XYZ stock" to analyst replying "here's my A+ model & my fully vetted, structured you have 20 minutes to chat?" I'm 100% sure I CANNOT teach you to make money in stocks in 6 weeks, but I'm 100% sure I can teach most

junior analysts how to do a better job of structuring the research process & communicating their findings in a more coherent manner. On Twitter, stay tune for more threads on this topic including "handling pitch Q&A" and "poking holes in an idea" for when someone is pitching you

But for now, it's Labor Day, and I've done enough Labor for the day. Enjoy what's left of your weekend and stay tuned for more.

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