Understanding risk/factors as a senior analyst

Phoenix Learning Long/Short Equity

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MODELING (WRITE-UPS REPOSITORY)

Long/Short Equity and Idea Generation

Long/Short Equity Core Components
Long-term vs Short-term Idea Generation
What moves stock prices? Variant views and L/S Idea Generation

Consumer: From 0 to 1: Business Fundamentals, Modeling, Idea Generation

Understanding the business - Retail example
Revenue and margin build - Excel file
Pattern recognition in business fundamentals and modeling
The core of idea generation in mature retailers
Long TGT - thesis
The core of idea generation in growing retailers - FIVE
Idea generation on the margin side
Modeling margins
Forecasting in Fundamental L/S Equity

TMT: From 0 to 1: Business Fundamentals, Modeling, Idea Generation (TBA)

How a Long/Short Analyst Would Model Spotify (From Scratch)
Modeling Spotify (SPOT): Excel File 1
Deeper Modeling for a Variant View
Modeling Spotify (SPOT): Excel File 2
The Process Top L/S Analysts Use to Turn Models Into Ideas
How to Build a Scalable L/S Idea Generation Process
The L/S Event Path: How Top PMs Monetize Ideas

(Allen W.) Investment Process Overview and Philosophy

READ BEFORE YOU START
Before you watch the videos in this section
Contrarian approach (1:05)
Drilling into the factors (0:59)
Differentiated view on the factor (0:49)
Justification for the factor (0:47)
Risk framework - tighter book, unhedged risks (2:26)
Adding to the position as it goes against you – risk/reward (1:07)
Multi-manager world – looking beyond the next data point (0:53)
Catalysts, time horizon, near-term momentum (1:54)

(Allen W.) Long DPZ / Short YUM: case study introduction and setup

Before you watch the videos in this section
Introduction (2:12)
Trade chart and events (2:06)
Spreadsheet model overview (1:00)
Relative stock performance (0:20)
Valuation comparison (0:58)
Bloomberg 3yr graph overview – P/E (1:07)
Relative value versus historical range (1:04)

(Allen W.) DPZ & YUM fundamentals and business models

Intro
DPZ: breakdown, EBIT, franchise business (1:28)
DPZ: master franchise license model (1:08)
Supply chain model and 3-5 year outlook (1:31)
YUM: brands, EBIT breakdown (1:06)
YUM: operating multiple brands pros and cons (1:07)
YUM: emerging market exposure (0:50)
DPZ vs YUM: delivery versus dine-in (0:56)
DPZ vs YUM unit growth, DPZ healthy franchise economics (1:40)
DPZ dependency on unit growth (1:17)

(Allen W.) DPZ same-store sales deep dive

Before you watch the videos in this section
Same-store sales (SSS) 1997-2018 (1:17)
Technology, rebrand, high SSS numbers (1:04)
Successful “fortressing strategy” (1:10)
Sustainable initiatives to drive SSS (0:46)
Unsustainable SSS numbers (0:55)
Comps: tougher comparisons (0:46)
SSS overview and slowdown in 2019 (0:21)
Aggregators’ issue – Q1 2019 (0:31)
Leading indicator of SSS (0:28)
Stock inflection in Q3 2019 (0:44)

(Allen W.) Long DPZ: why the opportunity existed

Why the opportunity has been created - DPZ (1:13)
Aggregators – business models, subsidies, impact (1:32)
Aggregators’ impact on all parties involved (3:01)
Understanding the risk from the aggregators for DPZ (1:29)
The rise of the aggregators – timeline (0:45)
The driver of DPZ’s underperformance (1:33)
Allen’s previous bet against DPZ due to the aggregators (2:03)
How did the bet materialize? (1:04)
The sole factor for DPZ’s underperformance (0:25)
Gaining conviction in the trade – thought process (2:36)
DPZ strong fundamentals and narrative shift (0:41)

(Allen W.) Short YUM: why the opportunity existed

YUM stock setup (2:13)
Lowering expectations (0:33)
The market’s reaction (1:01)
YUM as a hedge (0:32)

(Allen W.) Long DPZ / Short YUM: trade deep dive

Before you watch the videos in this section
Why the opportunity existed – summary (0:44)
Risk/reward of the trade (1:34)
DPZ inflection point (1:05)
Catalyst (0:48)
Quantifying the bet (0:19)
Sizing up the trade as it was going down (0:54)
When the trade started working after Q3 2019 earnings (0:21)
Position management - 1 (0:38)
Lowering the position (0:20)
Stock inflection vs SSS inflection (0:35)
How risk/reward changes (0:44)
Position management - 2 (0:22)
Target upside (0:32)
DPZ Q3 2019 earnings (1:04)

(Allen W.) Case study: thesis summary, defining the bet, resolution

Case study thesis summary (2:02)
Defining the bet (0:41)
Did SSS inflect later than you thought? (0:38)
Impact of aggregators on the inflection of SSS for DPZ (3:17)

(Allen W.) Case study: risk/reward, targets, comps, extras

Parity and risk/reward (1:26)
Potential upside at parity (0:19)
Risk (0:46)
Risk/reward dynamics during a trade down (0:45)
Stabilization of the aggregators’ impact (1:17)
Comps – using 2yr, 3yr trajectory to estimate forward quarter 1yr SSS (1:58)
Use 3yr comp to double check (1:19)
DPZ positive: levers to engineer better results – G&A and Capex spend (1:57)
Consumer names – SSS discussion (0:48)
DPZ inclusion in the S&P 500 (2:08)
Stock reaction pre and post inclusion in the S&P 500 (1:09)

(Allen W.) Case study extension: DPZ & YUM since the trade, stock moves explained, key factors and debatesNew section

DPZ stock and the aggregators space since the trade (4:27)
DPZ and Uber Eats partnership (2:14)
DPZ buffer and pricing power (2:21)
An interesting point about the aggregators (1:37)
Unit growth, SSS and margins – key factors for DPZ today (1:22)
Buffet’s Berkshire’s position in DPZ (1:02)
How did YUM’s thesis play out and how has the stock performed since? (2:25)
The aggregators as an opportunity for YUM (1:47)
DPZ stock movement explained (2020-2024) (2:32)

(Allen W.) Case study closing thoughts

Before you watch the videos in this section
Case study quick intro (1:41)
The alternative – shorting DPZ (0:30)
DPZ firing on all cylinders (0:25)

(Allen W.) Investment process deep dive 1 (example walkthrough): idea/trade sheet, valuation vs earnings change, R/R, targets and more

Before you watch the videos in this section
MCD/SBUX introduction (1:50)
Portfolio made up of pairs (0:43)
Summary sheet introduction (2:14)
Valuation downside (0:42)
Valuation versus fundamental story (0:37)
Assumption (2:10)
Impact of new SBUX CEO announcement (0:19)
Market dynamics – new SBUX CEO (1:14)
My view versus the market’s view (3:45)
Stock performance driver: valuation vs earnings change (2:03)
Does earnings change result in multiple change? (1:42)
Enterprise value buildup (0:32)
Calcs sheet – quantitative look into multiples and R/R (1:10)
Target discount/premium (2:38)
Calculating the upside (1:27)
Estimating target ratios (1:23)
How to determine the target discount (0:21)
Why is the 2025 upside number higher than the 2024 one? (0:23)
Key takeaway – little downside (0:33)

(Allen W.) Investment process deep dive 2 (example walkthrough): sizing, portfolio construction, position management, market neutrality

Before you watch the videos in this section
Sizing types (2:50)
Liquidity-based sizing (1:34)
Portfolio weight sizing and leverage (2:25)
Liquidity and takeout risk DPZ (3:07)
Shorting M&A risks (1:06)
M&A risks YUM (1:04)
Familiarity considerations (1:02)
Fundamental considerations and tactical trades (4:17)
Quality trade (1:01)
SBUX and MCD different business models (1:25)
Building up position against short-term momentum (0:22)
Beta neutrality part (1:32)
Beta neutrality part 2 (0:58)
Sizing – dollar for dollar (0:27)
Trading increments and setup levels (0:54)
Evaluating positions going against you (1:52)
Borrow cost and leverage (1:12)

(Allen W.) Investment process deep dive part 3 (example walkthrough): evaluating a trade, risk/reward, valuation, stock performance, narratives, sentiment, short interest, pair correlations, liquidity, trade downs, expectations and more

Before you watch the videos in this section
Loss threshold and max exposure (1:14)
Target upside and risk/reward (0:38)
Evaluating risk (1:25)
Risk numbers key takeaway (0:27)
Relative stock performance (1:46)
Current valuation (1:05)
Historical valuation (2:12)
Valuation numbers for MCD (0:22)
What is MCD’s story in the current market environment? (1:55)
Premiums expansion for a set of stocks (0:31)
WMT vs TGT business models and trade downs (0:33)
Is long MCD / short SBUX an attractive trade? (1:06)
Long SBUX commentary (1:06)
Pair options for SBUX (1:05)
Dunkin’ Donuts commentary (1:01)
Leverage and 1yr and 2yr beta (1:12)
Liquidity (0:34)
Pair correlations (0:39)
Sentiment (1:43)
Hedge fund ownership (0:41)
Change in short interest (1:10)
Is the change in short interest meaningful? (1:09)
“Current days to cover” metric (0:26)
Narrative of the stock is critical (1:34)
Long MCD / Short SBUX – conclusion (1:08)
What to do to confirm the thesis (1:05)
The argument for Short SBUX (1:25)
The worst case scenario for the trade (0:56)
MCD risks on the long side (0:19)
The recent E. coli outbreak for MCD (1:40)
Expected time horizon and contrarian bet (1:12)
Is it easier for SBUX to beat expectations? (0:53)
Same-store sales numbers (0:18)
MCD, SBUX (0:19)

(Allen W.) Long MCD / Short SBUX: drivers, defensive trade, narratives

Drivers of MCD – defensive stock (1:41)
Before you watch the videos in this section
MCD key debates, initiatives, advantages (2:22)
SBUX’s optimism and defining the bet (0:54)
What has gone wrong with SBUX? (1:22)
SBUX’s issue vs DPZ’s aggregators (3:24)

(Allen W.) Investment process deep dive part 4: what is priced into a stock, short-term vs long-term fundamentals, competitive advantage and more

Consolidating all market players and competitive advantage (1:22)
How to determine what is priced into a stock? (2:28)
The importance of daily stock moves (1:43)
Short-term versus long-term fundamentals (2:26)
Trades breakdown and philosophy (1:16)

(Allen W.) How to leverage the sell-side like a pro MASTERCLASS

Sell-side quick intro and thoughts (2:31)
How to leverage the sell-side like a pro (5:05)
Disclosing your position (1:53)
Updating your view (0:50)
Gauging everyone’s opinion (0:44)
Published sell-side consensus isn’t real consensus (1:05)
Rating changes (1:38)
How to stand out as a junior analyst (3:06)
Read everything (0:56)

(Allen W.) Investment process deep dive part 5 (with examples): pattern recognition, building conviction, story, position sizing and more

Pattern recognition, different subsectors, key factors (1:52)
Conviction, pattern recognition, market reaction (2:26)
SSS and factors that move a stock (2:17)
WMT drivers, pattern recognition (2:40)
WMT / TGT business models (1:00)
WMT – capital allocation story (1:51)
Product exposures (0:31)
Negative stock reaction on an expected earnings miss (1:27)
Are earnings purely fundamentally driven? (0:06)
Modeling and competitive advantage (1:10)
Position sizing (2:01)
Number of positions, stale ideas, portfolio management (1:43)
Building conviction (1:32)
Do the pairs ever trade at the extremes? (2:01)

(Rich F.W.) Asset classes, investment philosophies, L/S equity intro

Asset classes intro (distressed credit and equities) (2:29)
Credit and distressed debt example (5:56)
Equity strategies & philosophies: SM value-oriented vs MM pods vs Tiger Cubs (2:33)
Distressed “similar” to value-oriented L/S equity (2:02)
Credit markets philosophy (2:08)
Quants, fundamental L/S and PE analysts, quantamental (6:30)
L/S equity: risk management (6:54)
L/S equity: convergence in ideal holding period (4:13)
L/S equity: position sizing (4:10)
Deep dive: what sectors to cover and how they differ (7:45)
Advice on sector coverage (5:08)
Consumer & healthcare sectors; secular movers (4:12)

(Rich F.W.) Idea generation, key debates / alpha drivers, ramp up, alt data, stock charts

Ramping up intro: concentric circles (6:18)
Deep dive: steps of the ramping up process (8:34)
Sketching out unit economics: prep for idea generation & the model (8:25)
Impactful differentiation: used car prices & 4 lines of business examples (6:28)
Summary of the ramp up process (0:42)
Identifying 1-3 alpha drivers & key debates (copper, software, cyclicals) (8:05)
Alternative data: intro, integration, tracking (8:18)
Alternative data as part of the ramp up process (1:43)
Core fundamental numbers to know (1:19)
How to look at and analyze a stock chart (4:51)
Ramping up on one name vs a whole sector (1:49)
How to approach reading and organization during ramp up (2:56)
Outline of ways to determine key debates for a stock (2:56)

(Rich F.W.) How to sketch out unit economics from scratch

Importance of unit economics (2:48)
FRC: what it does, exposure, assets/liabilities (6:03)
FRC investor presentation (4:40)
Sketching out the unit economics of FRC from scratch (10:53)
Explaining line items & building out the income statement side (23:53)

(Rich F.W.) FRC unit swag, SVB collapse, positioning

Value of sketching out the unit economics (2:21)
FRC unit swag interpretation (3:17)
Implications for FRC and the broader market (4:01)
Summary of key takeaways and where to look next (4:48)
Why SVB failed: were unrealized losses the key? (3:14)
SVB: what analysts should’ve been doing ahead of time (3:37)
Why did SVB start selling their available-for-sale book? (1:43)
In retrospect, long or short SVB? (2:21)
How to know if a name is shorted (7:22)
Hedge fund positioning ahead of SVB collapse (1:15)

(Rich F.W.) Consensus/market views, differentiation & profitability

Why the market is well proxied by the sell-side and how to get a variant view (5:29)
Is beating consensus enough for differentiation and profitability (90%)? (1:48)
The psychotic mind game (10%) (2:31)
The numbers that matter (revenue, EBITDA, eps) (3:01)

(Rich F.W.) Conviction, shorting a stock, commerciality

How investors gain conviction to execute their ideas (4:22)
Rich’s personal way of developing conviction (4:32)
Shorting a stock example from Rich’s career - thought process deep dive (8:29)
Difference between shorter- and longer-term HF (turnover) (3:13)

(Rich F.W.) PITCHING MASTERCLASS

Pitching isn’t selling your idea (1:00)
Generalists vs specialists (0:36)
[watch!!!] Pitching deep dive - example and structure (2:59)
[watch!!!] Pitching deep dive - part 2 (3:53)

(Rich F.W.) Background (interesting in finance, choosing IB, skills, life advice)

Interest in finance and coding skills (3:55)
Math intimidation in college (3:21)
Why did Rich choose Investment Banking? (1:43)
Overcoming math intimidation and life advice (2:16)

(Rich F.W.) Transitioning from Investment Banking to Hedge Funds

Do you need IB to get into a HF? (4:46)
How to get in the HF door (3:43)
How to get the HF job once in the door (1:37)
Two models of HF interviewing after IB (0:34)
Required skills (modeling, unit economics, comps, diligence) (5:36)

(Thomas Li) Background, idea generation frameworks, true edge, sentiment, get ideas into the book

Background - joining P72, coverage (1:25)
Being an analyst at a multimanager (2:24)
Skillset - junior vs senior analyst (2:42)
Finding a true edge - hardware & supply chain example (3:41)
Doing impactful research (1:40)
Idea generation deep dive (3:57)
NVDA example - shareholder base, incremental framework (3:35)
PnL explained: velocity, hit rate, slugging (3:25)
Idea generation framework - second-order effects (3:06)
Idea generation framework - capital inflow and outflow (4:08)
How to track sector order inflows and outflows (1:47)
Sentiment (3:18)
Why is my idea not in the book? (2:07)
Advice to get your ideas in the book (2:51)
Upside/downside - when to cut/flip/get out of position (2:08)

(Thomas Li) Modeling AAPL walkthrough (part 1)

Intro: reported numbers, guidance, drivers (5:29)
Forecasting revenue segments (5:37)
Forecasting services revenue (6:09)
Research the largest driver of change (0:57)
Decomposing services revenue explained (2:14)
Forecasting growth margins (5:44)
Forecasting R&D and SG&A (6:29)
Guidance/geo breakdown comparison (3:33)
How do you research geographical revenue? (1:36)

(Thomas Li) Modeling AAPL: L/S playbook, scaling ideas, shareholder base, buy-side consensus, forecasts (part 2)

2-3 qtrs ahead, stacking growth rates, AAPL units/ASP (4:40)
Sell-side vs buy-side consensus (2:11)
Shareholder base is key (1:57)
Long/short playbook (AAPL example), multiples, scaling ideas (3:53)
Updating your view based on your playbook (2:05)

(Thomas Li) Market neutrality deep dive, key narratives for a stock, risk/factors

How to effectively track what the buy-side thinks (1:32)
Key narratives for a stock: bucketing the buy-side, mgmt, sell-side (3:46)
MARKET NEUTRALITY explained - deep dive (6:31)
Understanding risk/factors as a senior analyst (2:25)

(Thomas Li) Pitching, cash flow, multiples, conviction, macro, failure

Pitching & getting an idea into the book (3:23)
What makes a great business, cash flow (4:12)
Multiples, proxy for cash flow, fundamental numbers (1:05)
Conviction, hit rate, circle of competence (2:35)
Bull/bear view, spectrum of outcomes (2:15)
How to think about macro factors (2:32)
How to deal with failure as an analyst (4:24)

(Thomas Li) Deconstructing fundamental and systematic movements, portfolio construction

Systematic strategies breakdown (3:02)
Impact of systematic on stock price (2:20)
Are most stock movements fundamental? (1:21)
Risk vector neutral - deconstructing stock movements (5:11)
Portfolio construction > stock selection (0:15)

(Thomas Li) IPOs, sector coverage, cyclicals, small caps

IPOs - market forces, limited supply (3:47)
IPOs - slumps/pricing explained, why HFs want to get in pre-IPO (2:42)
Sector coverage - tech, consumer, healthcare (2:26)
Cyclicals - alpha & differentiation (2:22)
Coverage matters less than knowing the game (2:01)
Small caps - challenges & alpha (2:34)

(Thomas Li) Smaller vs larger fund, prep & skills for HF, ramp up process, impact of AI on research process

Should I join a smaller vs larger fund? (2:14)
IB / family office as a prep for HF (2:35)
What skills you need to work at a HF (2:29)
Ramping up on a new name - process (2:50)
The impact of AI on businesses (1:43)
What parts of your process to automate using AI (2:33)

(Stefan T.) Modeling Revenue - Full Stock Example

Preliminary readings
Modeling revenue - full walkthrough & example video (27:36)

(EXCLUSIVE) Session with a former partner & PM at Citadel

Introduction to speaker
The Best PMs at Citadel, Millennium, Balyasny: What They All Share
Full session - video (93:18)

(Arun Dhar) Head of Eisler Capital USA and Senior Portfolio Manager

Arun's Investment Process Deep Dive (Reading)
Full session - video (72:03)

(Qaisar Hasan) Data-driven investing, buyside expectations, alternative data nuances

Background, coverage, investment style (1:07)
Alternative data evolution - Majestic, intro of MScience/Yipit (3:40)
Why do stock prices move? (1:39)
Data-driven stock price movements are on a spectrum (0:25)
Investment process as a mosaic (1:47)
BURL – data, building block of valuation, timing, stock price reaction (3:01)
Forecasting KPIs - fill period & confidence (1:21)
Sell-side numbers, buyside whisper, investor positioning (4:04)
Alt data modeling nuances, non-traditional alt data sectors (2:29)

(Qaisar Hasan) Shorting WW (Weight Watchers) deep dive

Shorting WW (Weight Watchers) deep dive (5:00)
Alt data – catalysts & path to getting paid (1:23)
Could you still apply the WW alt data short today? (1:18)

(Qaisar Hasan) Idea generation, using alternative data in your process, multiples sensitivity

How to generate an idea (2:01)
How do you measure impact of data on stock prices? Inflections, quant strategy (1:38)
Do you have a different to approach to idea generation for non-alt-data names? (0:55)
Idea generation framework (1:15)
Using data in your overall process – model relevance, portfolio construction, expectations (2:17)
Alt data forecasts and feature selection (NFLX, META, SNAP) (3:29)
Simpler vs more complex models (0:49)
Multiples sensitivity to data: biz model, free float, borrow rates (subscription vs cyclical vs transaction-oriented) (1:18)

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Understanding risk/factors as a senior analyst

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