With 2022 in the books I'm reviewing how my stock pitches did and the lessons learned as I seek a full-time equity research job.

Let's get into it! (Long Thread but hopefully useful!)

PICK 1: Short $META on 1/10, market not pricing risks to $META's growth, margins, and competitive position

Result: Outperformed by ~4700bps (~25% below my bear case, so I was wrong too!)

Learnings: Better understand what facts drive a stock

PICK 2: Long $BBW on 1/17, market incorrectly thinks sales and profits can't grow further

Result: Outperformed by ~4300bps

Learnings: Communicate facts and not just assumptions in a pitch, updating priors, & filtering noise

PICK 3: Short $KIND on 2/14, market not seeing demographic/engagement issues + low saturation level

Result: Outperformed by ~5800bps (over 50% below my base case)

Learnings: Use my and other's real-life experiences to understand businesses

PICK 4: Short $BRCC on 2/21, market not pricing governance and core biz issues

Result: Would've been forced to close for a loss, even if squeeze is allegedly caused by illegal activity from CEO/CFO

Learnings: Find names with actionable CTB rates

PICK 5: Short $HYMC on 3/21, market not pricing reality on biz prospects

Result: Same as $BRCC; winner with time but would've been forced to cover for a loss

Learnings: Avoid short-squeeze candidates

PICK 6: Short $DWAC on 4/25, merger likely won't close + combined biz has 90%+ downside

Result: Outperformed by ~5400bps, but volatile

Learnings: Make future short ideas actionable on cost-to-borrow, shares available, avoid squeeze candidates

PICK 7: Long $ESCA on 5/16, market not pricing pickleball potential + dividend growth potential

Result: Underperformed by ~1400bps

Learnings: Focus on facts rather than just assumptions, better analyze risks, probability-weighting

PICK 8: Long $BLMN on 9/12, market not pricing upside in margins and growth. (this and remaining pitches are too short in time to give a "result" to)

Learnings: Quantify facts being presented rather than just giving anecdotes

PICK 9: Long $SP on 9/29, market not pricing margin expansion and market share growth

Learnings: Better understand competitive landscape & industry dynamics, clearly communicate facts behind valuation assumptions

PICK 10: Long $GOGO on 10/14, market not pricing profit growth or competitive position properly

Learnings: Thoroughly vet risks, understand the products/services, take the time to understand an industry when it's my first time covering it

Out of my 10 published pitches this year, 9/10 outperformed the S&P. However, the latter 3 are too short of a time to really judge, so I was 6/7 in beating the benchmark. But 2 of my short picks would've realistically been covered for losses, so I was 4/7. This is ~57%, seems mediocre right? Well, the reality of stock-picking is the best of the best will be right 60% of the time if they're lucky. You will be wrong a lot, and while 7 is a small sample size, I think I've shown to myself that I have a framework to make this a career.

What were my biggest lessons of the year?

1) Make actionable pitches! When I'm hopefully working for a firm starting this summer, I need to give actionable analysis. Many of my shorts and some longs were too illiquid, and I should screen these out

2) Learn from people smarter than myself. The reality is I won't be the smartest/most knowledgeable about any industry/stock I'm researching. Learning from those who know more than me will be a vital tool in my career

3) Know my circle of competency and use my real-life experience to create an edge. Peter Lynch like lesson, but true. My experience as a former weather YouTuber helped me understand risks to $META and $KIND that the market couldn't see

4) Having a long-term perspective. Especially on my long pitches, a long time horizon is important. I said I'm "4/7" but My timeframe is 3+ years, so I'll circle back and see if I really outperformed. Social media makes it harder for young people to embrace this imo

5) Updating priors. Learning how to update my priors as new information comes in has been a big lesson and important in teaching me to see when I'm wrong.

6) Thinking in probabilities. I'm not the smartest, so why should my "base case" be the only factor in price targets/portfolio allocation? It shouldn't. Leaning into probability-weighted analysis has made me better

7) Use facts, not just assumptions. One of the best pieces of learning I had this year was from someone telling me a quote from the movie A Few Good Men: "It doesn't matter what I believe. It only matters what I can prove!" A good pitch uses facts instead of just beliefs

8) Put in the effort that others won't. My best pitch, $BBW, is one I found and understand because I've put in work that most market participants aren't (though I've had much teaching from others even on this name). Similarly, cold emails were how I got my fall internship!

And that's 2022 in the books! I'm glad I started putting my ideas online; not only have I grown from it, but it got me an internship and helped me meet several mentors.

My goal for 2023 is simple: Get an equity research job. It's competitive and hard, but it's what I love. I'm currently working on a few ideas, and DMs are always open to talk stocks or about leads regarding jobs. Thank you and Happy New Year!

I recently completed initial research on SP Plus and have put together a one-pager detailing the investment thesis and potential risks. I would highly appreciate any feedback or comments on potential improvements!

If you want future pitches delivered to your inbox alongside brief audio snippets that give some extra detail feel free to subscribe to my substack. If you want to connect my dms are always open :) https://dueyourdiligence.substack.com/subscribe

Really grateful for the opportunity to be on Chit Chat Money with @ccm_brett and @ccm_ryan this week! Would love to hear peoples’ thoughts and comments on the company we discussed!

In my pursuit of landing a full-time role after graduation I'm spending my time working on the fundamentals I'll need: communicating a thesis clearly and concisely. No more "4000-word deep-dives" that 99% of people don't read through (though I'd still love to connect and share deep conversations). Instead, we're using one-pagers to hit the key points in a simple manner.

I collaborated with @paulcerro to publish a piece on the investment thesis of $BBW and actions that can increase shareholder value. We’ll be on Twitter Spaces at 7pm tonight to discuss and would love to have you there to ask questions! https://twitter.com/i/spaces/1MnGnkPPyzOJO

Key points of the thesis are:

1) The physical footprint of the company has evolved away from malls and will continue to do so

2) E-commerce is 20% of sales from 4% in 2015. It’s a strong growth driver and spreads the age-base of customers to adults without harming the in-store value proposition

3) 70% of e-commerce orders being filled in store locations and up selling throughout the transaction process create significant operating leverage with further opportunities to spread out fixed overhead and incremental labor costs

4) Growth opportunities from vending machines, wholesale distribution agreements, online gifting and subscription services, website/CRM upgrades, and new store locations are all capital light with 2022 CapEx including maintenance of exiting operations being at most 3.25% of sales

As a part of my research process I love to visit physical locations of companies I’m looking into and talk with employees to understand my business or update my priors on a company I already know. I got to visit a Build-A-Bear Workshop today and here are some of my takeaways

1) Staff turnover is low at this store, good news as well-trained staff are essential for upselling customers

2) Business has been accelerating in recent weeks, notable as Q3 is seasonally weakest for the company and there are no major film releases or holidays at this time. Commentary on my visit is that there were over 10 customer groups in-store when I arrived which is a lot when they need about 10 transactions an hour to hit revenue targets (though it is a weekend).

3) Customer demographics are involving more adults. This location gets 4-5 online orders a day despite its smaller size limiting its accessory availability which will mostly be for adult end-customers. There were also multiple teen/adult customer groups in-store.

4) New summer products introduced by the company, particularly color patterned and rainbow products are selling very strong, as are all licensed items.

5) Some of the newest product announcements like the pink frog are not in this location yet.

Overall takeaways are that the business is doing surprisingly strong at this spot, though I think any prioritization to get their new and best selling original IP items in store could be a plus. Great info gathering session!

I wanted to share a key takeaway I had from my internship:

Being able to build team chemistry is vital and working in-person is a necessity for young people to build this. From my experience as a young and new team member, the little conversations that happen with colleagues when they cross your path are invaluable, and can't be replicated in zoom meetings.

Don't take me as saying this means I think we all need to do 5 days a week in the office, I think the hybrid model is the future. However, I also believe that in-person work is extremely important for young people to fit in with their new co-workers.

Hey Commonstock: it's been a minute, but I'm finally back!

I just wrapped up a 10-week internship on Friday and am now allowed to be posting my thoughts on public companies again, which you bet I'll be doing! it may take some time for my activity to ramp up since I'm going through the process of applying for full-time roles while having to start researching from scratch again, but I'm excited to tackle the challenge and bring my perspective to the table again. Hope you've all been doing well this summer and I'm looking forward to new conversations :)

Tomorrow marks the half way point of my first internship in a full time capacity for an investment management firm.

Best thing about the experience? Just getting to learn from so many kind people.

Most underrated part? Being able to talk in person about the markets and new knowledge with other people that have different opinions.

On a meeting this week for my internship

Manager: “Is that a stonks poster in your background?”

Me: 😱