Analyzing a Sector Like a Hedge Fund Pro
How top hedge fund analysts analyze and model consumer retail stocks: part 1
Going from 0 to 1 on a stock as a top hedge fund analyst requires developing a deep, fundamental understanding of the sector.
As I mentioned last week, I will be picking a stock and slowly walking you through the process to understand the sector and the specific company. We will also build the financial model, learn how to generate a truly variant view and how to pitch/communicate the thesis in the most effective way.
As per your choice, we’ll be focusing on consumer and specifically retailers. But much of what you will learn applies across the broader consumer sector, and the processes we will use along the way apply to any sector. I will also try to cover how some of the frameworks, especially around idea generation, relate to some TMT/industrial names.
If you haven’t joined Phoenix yet, you can do it now: phoenixlearning.io.
The goal for today is to start getting familiar with the metrics/terminology and the right lenses through which you should be looking at the consumer retail sector/names.
Understanding how to look at the sector is incredibly important as we prepare for building the model and, most importantly, as we ultimately think about what drives the stock and the due diligence required to get a variant and meaningful view. If you don’t know the sector well or frame it incorrectly, you won’t be able to generate good ideas.
I will focus on how seasoned long/short analysts at the best hedge funds think about and model these companies, and I will avoid going over information you can easily find yourself.
Let’s get into it.