How to Create a Detailed Investment Research Report (22 Page Template Attached)

Chris Haroun
A free video tutorial from Chris Haroun
Award Winning MBA Professor, Venture Capitalist and Author.
4.5 instructor rating • 34 courses • 837,051 students

Lecture description

  1. What is a Sell Side initiation report?
  2. Where do I get information for the initiation report?
  3. What should I include in an initiation report? 

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The Complete Financial Analyst Training & Investing Course

Succeed as a Financial Analyst &Investor by Award Winning MBA Prof who worked @Goldman, in Hedge Funds & Venture Capital

22:31:28 of on-demand video • Updated April 2020

  • 22+ hour complete financial analyst course!
  • #1 Best Selling Investing Course on Udemy!
  • How to pick stocks.
  • Become an expert in Excel for financial analysts (no prior Excel knowledge is required).
  • How to manage a portfolio.
  • How an IPO works.
  • How to build financial models.
  • How to get hired and promoted as a financial analyst.
  • How risk management works.
  • How to use technical analysis.
  • How to value companies.
  • Use and create Excel based templates developed by Chris to help you create financial statements from scratch (meaning income statements, balance sheets, cash flow statements and more).
  • Use and create Excel based templates developed by Chris to help you value companies using several different valuation methodologies, including P/E, P/R and Discounted Cash Flow (DCF).
  • Use and create Excel based templates developed by Chris to help you manage a portfolio.
  • How Monetary Policy works.
  • How Fiscal Policy works.
  • How interest rates are changed and why this is crucial to understand for successful financial analysts.
  • How to pitch long and short ideas to portfolio managers.
  • How to find great venture capital investment ideas.
  • How to come up with mutual fund investment ideas (longs - meaning buys) using an easy to understand top down and bottoms up research process.
  • How to come up with hedge fund investment ideas (longs and shorts) using an easy to understand top down and bottoms up research process.
  • Identify crucial catalysts (timed events) in order to know when the optimal time is to buy or short a stock.
  • Understand how investment banks (the 'Sell Side') can help you be more successful in a hedge fund or mutual fund career.
  • Analyze and understand an income statement (even if you have no experience with income statements).
  • Analyze and understand a balance sheet (even if you have no experience with balance sheets).
  • Analyze and understand a cash flow statement (even if you have no experience with cash flow statements).
  • Understand and use modeling best practices so you can create financial models.
  • Know where to get data in order to build a financial model (in depth understanding of identifying and using/navigating the best free websites and sources to build your financial model)!
  • Create a financial model (projecting the future) for an income statement.
  • Other valuation methodologies, including EV/Sales, EV/EBITDA, P/B, EV/FCF, etc.
  • Create a financial model (projecting the future) for a balance sheet.
  • Create a financial model (projecting the future) for a cash flow statement.
  • Understand valuation best practices so you can create target prices based on your financial models.
  • How to use Discounted Cash Flow (DCF) and how to create the Weighted Average Cost of Capital and Terminal values in order to pick target prices.
  • How to use P/E in order to pick target prices.
  • How to use P/R in order to pick target prices.
  • Come up with a target price based on an average of several different valuation methodologies.
  • Learn about 14 different Financial Analyst jobs and how they overlap and work together (including Investment Banking, Venture Capital, Private Equity, Private Wealth Management etc.).
  • Investment Banking: Understand from a high level perspective what an Investment Bank is as well as what the role/job is of an Investment Banking Financial Analyst, including the pros and cons.
  • Venture Capital: Understand from a high level perspective what a Venture Capital firm is as well as what the role/job is of a Venture Capital Financial Analyst, including the pros and cons.
  • Private Equity: Understand from a high level perspective what a Private Equity firm is as well as what the role/job is of a Private Equity Financial Analyst, including the pros and cons.
  • Private Wealth Management: Understand from a high level perspective what a Private Wealth Management firm is as well as what the role/job is of a Private Wealth Management Financial Analyst, including the pros and cons.
  • Sell Side Research Analyst: Understand from a high level perspective what a Sell Side Research Analyst’s firm is as well as what the role/job is of a Sell Side Research Financial Analyst, including the pros and cons.
  • Sales Trader: Understand from a high level perspective what a Sales Trader’s firm is as well as what the role/job is of a Sales Trader Financial Analyst, including the pros and cons.
  • Buy Side Trader: Understand from a high level perspective what a Buy Side Trader’s firm is as well as what the role/job is of a Buy Side Trader Financial Analyst, including the pros and cons.
  • Mutual Fund: Understand from a high level perspective what a Mutual Fund is as well as what the role/job is of a Mutual Fund Financial Analyst, including the pros and cons.
  • Sell Side Trader: Understand from a high level perspective what a Sell Side Trader’s firm is as well as what the role/job is of a Sell Side Trader Financial Analyst, including the pros and cons.
  • Large Non Finance Company: Understand from a high level perspective what a Large Non Finance Company firm is as well as what the role/job is of a Large Non Finance Company Financial Analyst, including the pros and cons.
  • Equity Capital Markets: Understand from a high level perspective what an Equity Capital Markets’ firm is as well as what the role/job is of a Equity Capital Markets Financial Analyst, including the pros and cons.
  • Hedge Fund: Understand from a high level perspective what a Hedge Fund is as well as what the role/job is of a Hedge Fund Financial Analyst, including the pros and cons.
  • Equity Sales: Understand from a high level perspective what an Equity Sales’ firm is as well as what the role/job is of an Equity Sales Financial Analyst, including the pros and cons.
  • Tech / Artificial Intelligence: Understand from a high level perspective what a Tech / Artificial Intelligence’s firm is as well as what the role/job is of a Tech / Artificial Intelligence Financial Analyst, including the pros and cons.
  • Learn what finance role you are most passionate about pursuing.
English [Auto] How do you write an amazing sell side initiation report. Well there's many steps to follow and many sources. One of the best ones is as the dot gov. OK that's where you get the 10 k or the 10. Q From. And the is amazing because it tells you every single risk that matters for the company. OK lawyers have to write in all the risks and so that you and I as investors understand and can make informed investment decisions. There's a ton of detail in there including commentary on the management team. Ok the same thing that 10-Qs You can also go to talk of. And if the company went public in the last couple of years or so you could find the one document which from our investment banking section we know is that prospectus meaning everything you need to know about a company before deciding to invest in it and it's a little bit different from the 10-K the one that is then you know the FCC doesn't get a case and these are just press releases. So whenever the company releases earnings or says something material they issue a press release on their Web sites and also on the government's Web site. And again the government is trying to protect us here and you can always go to Investor Relations and you can talk to independent companies and publications and do indirect channel checks. And I say indirect on purpose because you don't want to talk to people that work at that publicly traded company. That's that's that's could get you into trouble. It's very debatable what you can and can't do. There's something called the mosaic theory which some people believe that if you talk to people at a company and get less than 2 percent of revenue figure it out by talking them that that's OK. I say it's not just DON'T. Don't talk to anybody it's not worth it. Whenever do indirect checks right. So if you're doing research on Apple computer for example and you're launching coverage on a company don't talk to Apple employees. I mean you can talk to Apple's investor relations person or sea level executives with our president because they they've been trained on compliance stuff but and don't call the Apple store and ask those people questions what you do is just maybe go to Best Buy and kind of look to see how Apple products are selling there that sort of thing. Just be really careful and you know what if you're unsure how many of you will be at some point in your career. Just talk to compliance because again I want you to protect your family and yourself. OK. So you can also talk to competing companies and you can talk to competing companies and ask them what they believe the risks are or where the biggest weaknesses of the company are doing research on it. They let this hit outsource stuff. All right. And you can talk to to customers of the company again just make sure that you don't get a direct read on the company and that's why I want you to really think of yourselves as long term investors OK. You don't have to get bogged down in calling a corner which is just not the best way to invest. So you know you can ask yourself a basic question which is five years now is this company more relevant or less relevant than it is today to you can talk to suppliers the company partners the company that sort of thing. And if your and do employees again it's investor relations or sea level executives that have been trained on compliant stuff and you could talk to four employees but just be really careful. You know I would always like to err on the side of caution and always disclose to compliance at your firm no matter what kind of finance firm you work at everything you're doing. OK. They're trying to protect you don't see them as a nuisance. OK I don't see them as as as a thorn in your side. They're really trying to protect you. So just take that rule seriously respect them please. All right let's do it. So I provided a template for you. OK. It's it's attached here. And what I want you to do is if you're interviewing with a firm way to complete this template and bring it with you and show them and then you're in you're going to press got them right because not many people are going to do that. So you always going to do it no one else is going to do go above and beyond and what you can do is. After the interview is over you send a nice thank you e-mail to the person you interviewed with saying thank you very much for your time semi-colon and I really enjoyed our conversation. Please find attached PTF of a research report that I wrote and I attached to Microsoft Word format. You could probably open that in different file formats but just save it as a PBF. And when you send it on to the underline copy that you interviewed with. So here's the template of the document that give you. It's two pages long it's blank. I'll show you put your company's logo here and that's in the head or if you double click in the cover of your coverage on here and then put your name here your company name your phone number your email address. And if you're working on a team put their names as well. Whoever's the most senior analyst or name goes first That's just the way it works. And then you put the logo of the company your lunch and coverage on the date here the title your initiation report. Make it something fun ok. Like here what you do is you you say buy rating on Amazon with the target price of 500 bucks whatever it is like this but try to make it a little bit more punchy than what I showed. OK. Make it entertaining without being a little bit cheesy. MAKE IT sales oriented because your research sales your research sales analysts. And here's a quick two sentence summary of this initiation report. You know something on lines of coverage on X company with my rating and a $500 target price which is based on 20 times are out your earnings estimates upcoming catalysts for the company includes the release of their new product called x. That's what's going to happen is a lot of portfolio managers who are your clients of course thoroughly read the first page and they're not going to read the rest of it. In fact most people want now the buy side analysts might read it though. So anyway you don't have a lot of detail there so let's keep going down here that the front page here will be the title of your first bullet. If by reading reason to buy the stock. OK. And then two sentences mentioned growth here. Some of that's going to justify your buy reading. How do you justify your growth target price for example. Tyrer price is based on 20 times 717 earnings. Here is the title of your second bullish reason about the stock OK mentioned the TAM here. Talk about competition management. Third reason about the stock and catalysts upcoming stuff happening like a new version of a software product and then you got to list a risk always to sense risk right here and don't make it a straw dummy meaning a weak argument you can beat up make it a real risk. OK. And then here you'll have some sort of cool looking charts maybe how the stock is done or your analysis of revenue deceleration or margin expansion. And then a couple of cool metrics here like the stock price ticker whenever and then here the lawyers love this tech check their compliance part first always. You can mention that you've got more disclosures on page whatever. And it's usually at the very end. All right. Here we go. And this is just the contents here. You start off with discussing that first bullet point you had here this guy and this guy and this guy came a couple of different pages going in more detail. Remember you got to cover qualitative and quantitative stuff which we've discussed in this course. So the qualitative stuff is here you can apply a SWAT analysis Boston consulting route matrix or whatever you've learned in school or learned from this course or other courses whatever port of five forces product lifecycle in that sort of thing. And then the quantum analysis and of course in the quantum analysis you get a copy and paste special your Excel model the balance sheet you list here you show your cash flow statement. Pay special debt that way you don't have to paste it with automatic link just an image is easier then different valuation methodology. And again although I'm showing you price earnings press revenue and DCF use whenever you want you know put in values or whatever makes most sense to you. If it's a value stock then don't value it like a growth company and vice versa. So but List as many of these as you can because you want to cast your own is why is possible. Because tons of different types of investors will be reading this report hopefully they take an average of all three. I wish Saros or however you use our many years just you can again minimize your probability of error and then you can give some sort of sensitivity analysis if you're bullish bearish or neutral on the company or the economy. You also want to list the competition's valuation versus the company we're launching on and then additional disclosures here or any additional data provided by the company in the appendix here from the FCC filings or their analysts days etc.. So. Oh yeah. When you when you look at the management team Ghatak last word com and just cite where you get all your information from. Course that's sort of cool stuff. Anyway enjoy the process though. I love making these things and even if you don't work on a cell site firm if you work at an investment bank an investment banking or a buyside firm in a mutual fund or a hedge fund you can create these things.