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

How do you write an amazing cell side initiation report? Well, there's many steps to follow and many sources. One of the best ones is sec.gov. That's where you get the 10-K or the 10-Q from. And the 10-K is amazing because it tells you every single risk that matters for the company. 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. And the same thing in the 10-Q. You can also go to sec.gov. And if the company went public in the last couple of years or so, you can find the S-1 document, which from our investment banking section we know is the 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 can go to sec.gov and get 8-K, and these are just press releases. So whenever the company releases earnings or says something material, they issue a press release on their website and also on the government's website, sec.gov. 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% of revenue figured out by talking to them that that's okay. I say it's not just don't don't talk to anybody. It's just not worth it. Whatever. Do indirect checks, right? So if you're doing research on Apple Computer, for example, and you're launching coverage on the company, don't talk to Apple employees. I mean, you can talk to Apple's investor relations person or C-level executives with IRA present because they've been trained on compliance stuff. But and don't go to the Apple store and ask those people questions. What you do is just maybe go to BestBuy and kind of look to see how Apple products are selling there, that sort of thing. Just just be really careful. And you know what? If you're unsure if any 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. 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 or the the biggest weaknesses of the company you're doing research on. They love to say that sort of stuff. All right. You can talk to the 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 so you don't have to get bogged down in calling a quarter, which is just not the best way to invest. So you can ask yourself a basic question, which is five years from now, is this company more relevant or less relevant than it is today? You can talk to suppliers of the company, partners to the company, that sort of thing. And if you're going to do employees again, it's investor relations or C-level executives that have been trained on compliance stuff. And you could talk to former 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, they're trying to protect you. Don't see them as a nuisance. Don't see them as as as a thorn in your side. They're really trying to protect you. So just take that role seriously. Respect them, please. All right, let's do it. So I provided a template for you. It's attached here. And what I want you to do is if you're interviewing with a firm, I want to complete this template and bring it with you and show them. And then in your it's going to press the heck out of them. Right, because not many people are going to do this. So you always want to do what no one else is going to do, go above and beyond. And what you can do is after your interview's over, you send a nice thank you email to the person you interviewed with saying Thank you very much for your time semicolon. I really enjoyed our conversation. Please find attached PDF of 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 as a PDF when you send it on to the underlying company that you interviewed with. So here's the template of the document I'm going to give you. It's it's 22 pages. A lot of it's blank. I'll show you. You put your company's logo here and that's in the header. If you double click and the company you're launching coverage on here and then put your name here, your, your, 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, their name goes first. That's just the way it works. And then you put the logo of the company, you're launching coverage on the date here, the title of your initiation report, Make it something fun. Like here. What you do is you you say buy rating on Amazon with a target price of 500 bucks or whatever it is like this. But try and make it a little bit more punchy than what I showed. Make it entertaining without being a little bit cheesy, make it sales oriented because you're in research sales, your research sales analyst. And here's a quick two sentence summary of this initiation report. You know, something along the lines of we're launching coverage on X company with a buy rating and a $500 target price, which is based on 20 times our year earnings estimates. Upcoming catalysts for the company includes the release of their new product called X, that sort of thing. What's going to happen is a lot of portfolio managers who are your clients, of course, they're all going to 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 want to 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 bullish if buy rating reason to buy the stock. And then two sentences mention growth here, something that's going to justify your buy rating. How do you justify your growth or your target price? For example, target price is based on 20 times 2017 earnings. Here is the title of your second bullish reason to buy the stock mentioned the TAM here. Talk about competition in the management. Third reason to buy the stock mentioned catalysts. Upcoming stuff happening like a new version of a software product. And then you've got a list of risk. Always two sentence risk right here and don't make it a straw dummy, meaning a weak argument you can beat up, make it a real risk. 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, the ticker, whatever. And then here are the lawyers love this tech check with your compliance department 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 bullish point you had here, this guy, then this guy, then this guy on a couple of different pages go into more detail. Remember, you ought to cover qualitative and quantitative stuff, which we've discussed in this course. So the qualitative stuff is here you can apply a SWOT analysis, Boston consultant matrix or whatever you've learned in school or learned from this course or other courses, whatever. Porter's five Forces product lifecycle in that sort of thing, and then a quantitative analysis. And of course, in the quantitative analysis, you're going to copy and paste special your Excel model balance sheet. You list here, you show your cash flow statement. Pay special. Yeah. That way you don't have to paste it with automatic link. Just an image is easier then different valuation methodologies. And again, although I'm showing you price earnings, price revenue and DCF use whatever you want, put in EBIT, the values or whatever makes the most sense to you. And 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 net as wide as possible because tons of different types of investors will be reading this report, hopefully. And then you take an average of all three valuation scenarios or however you use how many years, just you can again minimize your probability of error. Then you can give some sort of sensitivity analysis if you're bullish or 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 SEC filings or their analyst days, etc.. So oh yeah. When you when you're looking at the management team go to Glassdoor dot com and just cite where you get all your information from, of course, that sort of cool stuff. Anyway, enjoy the process though. I love making these things. And even if you don't work at a sell side firm, if you work at an investment bank, an investment banking or a buy side firm in a mutual fund or a hedge fund, you can create these things.