How should I pitch my investment idea

How should I pitch my investment idea?

Pitching and keeping an investment diary are as important as they are similar

Can you summarize and present your investment idea clearly, concisely and convincingly?

Are you aware of the following five key points in your investment case?

POTENTIAL

Annualized potential return, e.g. 18% appreciation per year for 4 years, in order to reach normalized profit margins and earnings multiples. Don’t forget to add the dividend yield to reach the actual Total Return number that is the basis for comparing different investments.

BUSINESS

What are the value drivers, e.g. patents, scale, cost advantage, brand.

The value drivers are found in the basics of running any commercial operation: in acquiring and securing inputs; in working on those inputs with skilled workers and designers, great tools and software; and in marketing and distributing the products to the company’s customers.

KEY ASSUMPTIONS

What is the (sales) growth rate, margin level and trajectory, proprietary technology, macroeconomic and political environment, competition, costs, customers?

VALUATION AND RISK

Information gaps, bad luck, forecast uncertainty, fraud, Ponzi

OTHER

Owner, management (track record, competency), legislation, ESG considerations

Pitching and keeping an investment diary are as important concepts as they are similar

If you know how to summarize the key points in an investment case to yourself, something all investors need to do in order to be able to evaluate their trades and improve over time, then you have a strong beginning for a convincing pitch to somebody else, e.g., a professional portfolio manager.

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