J.P.

Morgan National Investment Competition Resources

Overview
In the SWS investment competition, you will conduct research on a potential investment and create a stock
pitch that you will present to a panel of judges. The stock pitch heavily focuses on an “investment thesis” or
why you think the company is a “buy”. It includes a summary of your qualitative and quantitative analysis of
the investment opportunity.

In this competition, the pitch will be used to convince the audience (the judges) to “buy” your team’s stock
pick. Formulating a pitch is a creative process. You can choose your own argument for recommending a
company and speak about what you believe matters most. Please note that this Investment Competition is
based on the concept of value investing, which means that the stock be long (a buy), with a 12 month
investment horizon. Also remember that your team’s company must be publicly traded on a US stock
exchange. Preparing for and giving a stock pitch might seem like an intimidating task if you have never done
one before. However, it can be exciting, fun and educational. This step-by-step guide will help you prepare for
the Investment Competition. If you ever have any additional questions or need extra help along, the
Investment Competition Director, Holly Toczko, is always available through email at het2110@columbia.edu.

This resources guide is divided into three key steps for preparing for an Investment Competition:
1. How to Find a Stock Idea
2. How to Research Your Stock Idea
3. How to Create a Stock Pitch

How to Find a Stock Idea

The most important part of a stock pitch is finding the right stock to pitch. Using the principles of value
investing, good stock picks are companies that are undervalued with easy-to-understand business models.
There are many reasons why a company may be undervalued. Oftentimes, these are smaller companies and/or
obscure companies. “Ugly” companies (like trash companies for example) are sometimes great opportunities
and can also be simply understood. We suggest that you come up with 2-3 ideas initially, as you may determine
through research that a stock isn’t as attractive as you originally thought. Remember to use your intuition along
with your research abilities for analyzing a company. You do not necessarily have to think up a purely original
idea; recycling and building on others’ ideas is also a successful way to find stocks to research. Just remember
to do your own analysis. To start thinking about an “under the radar stock”, use these idea generation
resources:
- www.valueinvestorsclub.com – Sign up for guest access to view ideas as well as analysis of them
from top investors of this exclusive members-only club. These ideas are often a great place to start.
- www.magicformulainvesting.com – Create a profile for access to the stock screener, which ranks
stocks by P/E (earnings yield) and ROIC (return on capital).
- www.oid.com/public/jazdocs/companyindex.jaz – This site provides a list of companies
mentioned in the subscription-based digest of Outstanding Investor’s Insight.
- www.gurufocus.com – This tracks the investment activity of some of the top value investors in the
world. It is completely acceptable to use their ideas as a starting point!
- www.gurufocus.com/52weeklow.php – This site lists companies categorized by industry that are at
or near 52-week lows, which can often be a good time to buy.
- www.valueinvestorinsight.com/sampleissue – On the right hand side of the page you can click any
of the past issues of subscription-based Value Investor’s Insight to view a list of featured companies.
 - www.valueline.com – This is a subscription-based website, but it is available through some public and
business school libraries for free. It can have great lists of stocks that might be interesting.
- http://classicvalueinvestors.com/i/index.php/resources/ – Blogs can also be valuable sources of
idea generation. Here is a list of value investor Mariusz Skonieczny’s favorites.
- http://blog.valueinvestingcongress.com This blog highlights key stock ideas of investors who have
presented at the annual Value Investing Congress, a worldwide forum for top value investors.
- Publications – You can come up with investment ideas by reading newspapers and magazines. Some
of our favorites are: The Economist, Wall Street Journal, Barron’s, Financial Times, BusinessWeek.

How to Research Your Stock Idea

After you select a company that you think has high potential, you might want to do a quick check to see if it
will be a good company to research. Before diving into detailed research, below is a short checklist that can
help make you confident and secure with your stock pick. Your company doesn’t have to fit all of these points,
but knowing that it fits at least 2-3 is a great place to start.
- Your company is a cheap stock that is undervalued
- Its business model is strong and can hold up long term
- It is a small company or does not have many people on Wall Street following it
- Ahead of the curve on any industry trends
- Stands out among its competitors
- Strong leadership and management company
- Little debt

When you are pretty sure that you have a good pick to start, it is time to start the deeper dive into researching
the company and industry. Check out the various sections you’ll want to learn more about by looking at the
Investment Competition Template document. You’ll need to collect both qualitative research, as well as
financial information. Start by gathering the most important qualitative information listed below that pertains
to your company. Keep track of this information as notes, as they’ll help you build your presentation. This
information will not only help you learn about the company, but also the industry, which is important. Use the
following questions to get you started:

Company Analysis – Understanding the basics of the company and its business operations are critical. Here
are a few areas and questions to get you started:
- Firm Overview
o What is the age of the firm?
o Where is it in its economic life cycle (start up, growth, mature, decline)?
o Where is it headquartered?
o What is the company history?
- Key Lines of Business
o How many lines of business are there?
o Is the company diversified?
- Major Products and Services
o What are the characteristics of the products or services?
 Commodity?
 Specialized, quality?
- Primary Markets
o How do sales break down geographically?
 o How many major customers does it have?
o Is it dependent on a few customers?
o Are the markets diversified?
- Current Operating Strategy
o Is the company growing organically (from within)? --Google (GOOG)
o Or is it growing through acquisition (buying other companies)?
o Is the company restructuring or in a turnaround situation? --Ford (F)
o Is the company in decline or downsizing? --NYTimes (NYT)
o Or is the company mature and in steady state? --McDonalds (MCD)
- Management
o What is the quality of the management?
o What are their strengths and track record?
o How long have they been with the company or in the industry?
o What is their relevant experience?
o What is their reputation?
- Corporate Governance
o What is the quality of the governance?
o Who is on the Board of Directors and how do they oversee the business?
o Are there any major red flags?

Industry Analysis – Understanding the industry that a company is in is also critical. A good model of industry
analysis is Porter’s Five Forces, which provides an overview of how to think about industry dynamics. Learn
more at www.quickmba.com/strategy/porter.shtml and here are areas and questions to get you started:
- Competitors and Market Share
o Who are the competitors in the industry?
o What is the market share for each of them?
o Are any competitors taking or losing share? Why?
- Competitiveness Level
o Is the competition domestic, foreign or both?
o What are the characteristics (strengths, weaknesses, strategies) of the major competitors?
- Production Profile
o Is it a labor or capital intensive industry?
o Is it a unionized industry?
o Are there any constraints on raw materials, labor, or other inputs?
- Business Drivers
o What drives success in the industry?
o What drives returns of companies in the industry?
- Growth Profile
o What are the historical, current, and projected rates of growth?
- Seasonal or Cyclical Patterns
o How sensitive is the industry to the business cycle?
o Is it a cyclical (goes up and down with the economy) business or defensive (stays relative stable
despite the economy?
- Regulatory Environment
o Is it a regulated industry? If so, who regulates it?
 o What are the future outlooks for regulation?
- Macro Conditions
o How sensitive is the industry to macro conditions (interest rates, inflation, consumer
confidence, oil prices, etc)?
o What is the market share for each of them?
o Are any competitors taking or losing share? Why?
- Technological Change
o Is there a lot of innovation in the industry?
o Is that a positive or negative thing for the company?
o How have they reacted in the past?

Where to Research – Understanding all of this information is very important, but where do you find it all?
Here are some resources to get you started:

For the Company Analysis, use these resources:

- Read the company’s annual report
o There is great info in the Management’s Discussion and Analysis section
- Read any publicly available reports on the company
o See if you can find some online reports or reach out to an analyst at a bank to see if they’ll send
you theirs.
- Talk to customers, competitors, investors, analysts, etc.
o There is nothing better than trying to talk to people who have interactions with the company
- Read company presentations
o In the Investors Relations section of the website, there are often recent company presentations
(some presentations are only online for a few weeks, so save a copy before they’re gone)
- Attend an investors conference or watch a presentation
o There are lots of conferences hosted by investment banks on particularly companies.
o Look on the company’s website for upcoming events.
o Contact an analyst to see if you can attend or if that’s not an option, see if a webcast or a video
presentation is on the company’s website.
- Listen to an earnings call
o Most companies host a quarterly earnings call for investors
o You can call in and listen to the call and get an update on what is happening
o It’s a great way to see what is going on now
- Do your own work
o Looking at a restaurant company, go check out the local franchise and kick the tires
o If it’s a small company, see if you can’t call the Investors Relations contact. You never know,
they might be willing to talk to a student!

For the Industry Analysis, use these resources:

- Read industry reports
o Look online for reports on the industry – you can often find some great ones on various
components of it.
- Find out as much as you can about the industry online
 o Look online to see if you can learn more about the history, trends, growth, market share, etc.
o You’d be surprised at how much is available online and with the use of Google.
- Talk to investors, analysts, or others in the field
o See if you can’t tap the brain of someone who works or invests in the industry.
o The insight they’ll have can be invaluable.
- See if there are industry publications
o You can often find trade magazines or journals that can be helpful.
- Attend an industry conference
o Most industries have conferences for people in the business.
o See if you can attend or watch a presentation online – they’re great for learning.

Financial Analysis
The qualitative research you’ve done above is a great deal of the work and it helps you understand the
company’s story and business model, as well as the industry dynamics. Additionally, you also want to
understand the financial position of the company and its valuation. Focus on key metrics for the company and
industry such as return on invested capital or profit margins. Also, don’t forget to discuss valuation – explain
why the stock is cheap. For more information on financial statement analysis and valuation, revisit SWS
presentations from the Seminar Series at http://www.smartwomansecurities.com/tour.html#seminar.

Here is a list of websites that may be helpful for you as you conduct your financial research:
- company investor relations website – Use your company’s investor relations page on their website to gain
specific details about the company, including descriptions, press releases, new products, or dial-in
information for conference calls.
- www.sec.gov/edgar.shtml - You can find company filings here such as the 10K and 10Q for all
publicly traded company.
- http://finance.yahoo.com – Yahoo finance provides more details about the company and industry
such as a description, senior management information, news articles and a variety of other details.
- http://finance.google.com – Google finance provides further information such as details on
competitors, key ratios, and the financial statements of the company.
- www.bigcharts.com – Use this website to view financial charts of the companies, specifically in
regards to price charts.
- www.marketwatch.com – Find information about the company such as the 50-day or 200-day
averages, in addition to other company details.
- www.earnings.com – Provides updated information on company conference calls. Check here to see
when your company is reporting next. Get a dial-in number from this website or the company’s site.
- www.investorwords.com or www.investopedia.com – Don’t understand a financial word or jargon?
Check one of these websites for an explanation.
- www.motleyfool.com – Provides daily articles on companies and stocks in an easy to read format and
provides good introductory explanations.
- www.wsj.com (subscription required) – Check out the online version of the Wall Street Journal or
grab a copy in your dining hall.
- www.bloomberg.com – Get the most updated news headlines here.
- www.reuters.com – More updates on news can be found here.
- Check your university’s business school library databases or your public library to access the following
subscription databases: Value Line, Capital IQ, FactSet, StockVal/Baseline (Thomson), etc.
How to Create a Stock Pitch
Preparing the Stock Pitch Presentation
You first want to organize all your information and analysis after your research has been completed. Try to
summarize the key points and formulate them in a concise and easy to understand manner. Keep the details
straight forward and to the point and try to explain why this is a good investment to someone who has no prior
knowledge about the company.

Now that you have completed the most time consuming part of the project, the rest of the preparation
encompasses summarization and practice. To prepare for the stock pitch, you must pull out key points from
the analysis you’ve done. There are two parts to the stock pitch: the PowerPoint and verbal delivery of the
pitch. The Investment Competition Template provides specific guidance on how to structure your pitch.
Remember to keep your slides visually clean, with no more than 4-5 points per slide. Less is more and it is
better to read additional information from note cards if necessary. Here is a quick and dirty outline for your
pitch:

Topic Description Content Time

Key stock information (company name, ticker, price, etc),
Intro Tell them what you want to tell them 2-3 minutes
your recommendation, and 3 reasons why the stock is a buy

Company/Industry Snapshot Tell them a little about the company Brief description of the company and/or industry 2-3 minutes

Explain the 3 reasons why the stock is a buy in detail and

Meat Tell them what you have to say 8-10 minutes
don't forget to discuss valuation

Repeat your recommendation and your 3 reasons why the

Conclusion Tell them what you told them 1-2 minutes
stock is a buy

Q&A Tell them what they want to know Answer questions from the judges 10 minutes

Total Time 25 minutes

The general form of a good stock pitch can be compared to a sandwich: Your opening statement should
include a thesis and three reasons to buy the stock; in the middle is the meat, details about the company and
explanation of your three reasons; in the end, a reiteration of your thesis and 3 points of evidence. Here is a list
of what you should include in each section:
- Intro: Start by introducing your company, what it is and does; why it is undervalued, target price, and
how they relate. For three points, some of them should be qualitative and some should be quantitative.
For example, you could talk about industry trends, the market, and certain valuation metrics if those
pertain best as to why your stock is undervalued.
- Meat: Give a company overview, discuss competitors, performance history, etc. Make sure that your
information is logically organized. You do not necessarily have to include every single point from your
research, only those that back up your beginning “thesis”. Make sure you elaborate more on your three
reasons here. Go into detail – give the judges the “meat”. Explain why this is a good company, why the
stock is a buy, and why it is cheap.
- Conclusion Reiterate the beginning summary and points, without introducing the company again.
- Graphs/Charts: Use graphs and charts throughout your presentation to demonstrate your points and
to graphically show your argument.
Delivering the Stock Pitch
Your verbal delivery is also very important as you want to be able to convince your audience that your stock is
a great “buy” by communicating your pitch with conviction, confidence, and enthusiasm. Here are some
general stock pitch communication tips:
- Intro – The intro should be quick and to the point with your thesis and three reasons. Don’t spend too
much time talking about your company’s description and background.
- Meat – Start with the company and industry overview. Stick only with the important information that
is critical to understanding the company and/or industry. Spend the bulk of your time delivering the
evidence you’ve come up with for your thesis. You want to elaborate on the three reasons you outlined
in your intro. In these sections, you will probably need to read additional notes that are not on your
PowerPoint slides.
- Conclusion – Here you want to reiterate the key points: your thesis and three reasons why the stock is
a buy. Be persuasively. Reiterate why you think the stock is a buy.
- Q&A – To prepare for the Q&A Session, you should thoroughly understand key content regarding
your company. You will most likely need to draw on additional information from your research about
fundamentals. To prepare for more complex questions, try to understand any assumptions you’ve made
& further connections between your 3 main points.
- Graphs and Charts – These are great additions to your PowerPoint and are mainly to visually show a
point you just made, so try not to spend too much extra time doling on about the technicalities of your
graphs/charts.
- Delivery – As with any presentation, you should not read your PowerPoint slides word-for-word and
should make eye contact with your audience frequently. It is suggested that you memorize key lines.
The most important points from each slide should be verbally delivered. Since you are using slides to
assist your pitch, let the audience read the less important points on their own.
- Examples – It is recommended that you watch these two stock pitches (both are “buys”) from the
Annual MBA Stock Pitch Competition video: Brinker International (20 minute mark), Yum Brands (36
minute mark). From these you can get an idea about how a PowerPoint is used in conjunction with
verbal deliver of the stock pitch:
www.johnson.cornell.edu/parkercenter/stockpitch/video2009.html.

Sources:
http://www.gurufocus.com/news.php?id=87863
http://www.gurufocus.com/news.php?id=70476
http://www.kellogg.northwestern.edu/student/club/imc/Downloads/Stock%20pitch%20primer%20(Nov%202007).pdf
http://www.docstoc.com/docs/2569489/How-to-Pitch-a-Stock