Hey folks, today I wanted to share a few thoughts on investment writing—specifically, how to write a compelling memo on Commonstock. A convincing stock pitch combines weaving a tale with selling a product. You want to not just educate the reader, but provoke them to action—spur them to make a trade. Here are seven tips that might help the next time you're putting your thoughts together on the page.

Have a title that gives readers the urge to click. What would be more likely to pique your interest: “Tesla – BUY” or “Tesla’s Model 3 Could Outperform Even the Most Optimistic Sales Estimates”? The best titles strike a balance between promotional and informative, and give a glimpse of the pitch content.

Never assume the reader knows what you’re talking about. Explain acronyms the first time you use them. You don’t have to spell out common financial terms like EBITDA, but if you’re talking about a defense stock, don’t assume your reader understands what you mean when you say "NAVFAC awarded the company an IDIQ contract for MILCON." Avoid jargon, spell things out, and explain the facts’ relevance to your pitch—connect the dots for the reader.

Explain your variant view. The key to writing actionable research is to make the argument the centre of the pitch. Too many buy pitches are just a laundry list of the positive attributes of the business (or negative attributes, for a short). A description of a business, an update on operations, a walk through corporate history—they may be worthwhile fireside reading, but none of them are a pitch.

Try to focus your writeup on an argument for why the stock is a buy or a short at the current price. What’s not priced in today? What are most observers missing? What unrecognized insight are you presenting? If you’re writing an update to a previous pitch based on quarterly results or a press release, don’t rehash the details—instead, answer the question: what was surprising? What supports or refutes my previous thesis? The more out-of-consensus your views, the more you’ll get pushback in replies—which may provide you with novel research angles.

Discuss management as a skeptic—not a cheerleader. People rarely become C-level executives without a winning personality, and that can dent analysts’ ability to remain skeptical. When Valeant’s stock was on a tear, the more the price surged, the more you heard CEO Mike Pearson referred to by analysts and investors as “Mike”—like he was a friend. But “Mike” was no longer the guy you wanted to have a beer with when Valeant collapsed due to murky undisclosed related-party transactions.

Sure, everybody knows who you mean when you say Elon, Sundar, or Satya—but keep it on a professional last-name basis. When you discuss management in a pitch, be like an investigative journalist, not a fanboy.

Stay out of the weeds. With the volume of information public companies disgorge, it’s easy to get bogged down in minutia. What’s this “Other” line on the income statement? Why did the company close two of its twenty-seven factories, or discontinue a product line accounting for 3% of revenue?

When working on an idea, triage by relevance to avoid analysis paralysis. If you’re starting out in stockpicking, stick to the broad strokes. How does the company make money? Is revenue growing? Are margins above or below average for the industry? Does the business generate free cash flow? Just like no work of art is ever finished—only abandoned—you’ll never be finished learning about a public company. Luckily, you don’t need 100% conviction—80% is typically enough to develop a view, and publish a great pitch.

“It’s dirt cheap” is not an argument. So, you did a screen and most of the widget-makers trade at 18X EBITDA, but Big City Widgets trades at 12X EBITDA. Pound the table, right? Not so fast.

Everybody can run the same screen you did and figure out the stock is “cheap” versus peers, so you probably haven’t found a free $20 bill lying on the sidewalk. Figure out why it’s cheaper: Out-of-date products? Three blown quarters in a row? CEO is the founder’s incompetent son? A solid pitch should discuss not just the valuation discount, but why it exists, and what the catalyst might be to close the gap.

Post it on Commonstock! It’s easy to just drop a link to your own blog, website, or newsletter, but engagement suffers when you link off-platform—that’s why on Twitter people post threads rather than a link. Why not post the whole text of your writeup here, then link your personal content site at the bottom? You may end up with more readers, followers, and subscribers.

This list is far from exhaustive, but provides what I hope are a few pointers in the right direction. What do you think—agree, disagree? I look forward to reading your comments!