Cigar Capital

Equity Analyst

[Wallo267 @Wallo267]

Business is built on belief long before it’s built on profit. Believe in the vision when numbers are quiet.

[Ken 🧙 @thekenndubisi]

If you are a highly ambitious person, you need someone in your life that can check you when you are playing way smaller than you are capable of.

[Brian Armstrong @brian_armstrong]

One of my favorite lessons I’ve learnt from working with smart people:

Action produces information. If you’re unsure of what to do, just do anything, even if it’s the wrong thing. This will give you information about what you should actually be doing.

Sounds simple on the surface - the hard part is making it part of your every day working process.

[Anna Riedl @AnnaLeptikon]

“If you don't get what you want, it's a sign either that you did not seriously want it, or that you tried to bargain over the price.”

― Rudyard Kipling

[AReviewOrTwo @AReviewOrTwo1]

Some excellent insights in the interview in Graham & Doddsville from Beeneet Kothari at Tekne Capital Management.

Covers:

1. How he thinks about volatility

2. Idea generation

3. Individual ideas vs portfolio outcomes and portfolio construction

4. The five characteristics that ideas need to possess

5. On catalysts

6. On bias, management teams and customer due diligence

[Finding Compounders @F_Compounders]

Warren Buffett dunking on Beta and also explaining Margin of safety during his speech at Columbia University in 1984.

[Boring_Business @BoringBiz_]

a lot of junior folks worry about financial modeling and excel skills when first stepping into a role on the buyside

my opinion is that these concerns are completely misplaced, and here is why

modeling is the most commoditized skill in finance. knowing how to build a financial model incrementally better is not going to make you stand out at a firm with reasonable reputation

the tough part of a buyside role at the junior level really comes down to a few things:

> coming to the right assumptions around the model
> knowing what the right DD questions to ask are
> coordination and communication with your team to manage expectations
> being organized and having soft skills to deal with all the third parties

Lets break these down:

1. coming to the right assumptions around the model

> mgmt is telling you 12% top line growth for next 3 years. how much conviction do you have? how do you haircut the growth in your downside case?

> company is launching new product during the projected period. how do you factor that in? what about new sales people they need to hire? what about R&D and marketing costs? what are margins for new product line?

> what capital structure can the business support? does it break at 60% loan to value vs 50%? what pricing on the debt do we assume? can we stretch financing with a junior capital piece or is it better to put more equity dollars to work?

the excel part of any model is very simple. coming to the right assumptions around what to model is the tough part

this actually requires detailed understanding of the business, market conditions and industry

not something you can learn overnight, but the best juniors are able to think through these before their VPs and MDs ask them to

2. what are the right DD questions to ask?

in an ideal world, you pick apart every investment opportunity and analyze everything down to the very last detail

unfortunately, we do not live in an ideal world. if you work at a reasonably sized private equity firm, most of your processes are auction driven and run by professional investment banking firms

that means there is a timing pressure to get the work done so you can properly make a bid in time and not completely lose the deal to your competitors

in that sense, time is of the essence. and the way to maximize value of your time is to only spend due diligence time on the things that actually matter

the best juniors on the buyside are able to quickly identify the 3-5 things that really drive the business and dig into the data behind those items

this can be the top 10 products within the portfolio, operating risks specific to the business, unit or pricing risks etc.

this is a core skill that really takes a lot of time to build up, but one of the biggest differentiators between good juniors and bad ones

the best buyside people know exactly where to look

3. coordination and organization

going to lump these together but the idea here is self explanatory. in a deal driven role, there is a lot of process and administrative work. a lot of people wont like to admit this, but that is the reality

you are constantly working with third parties all the time (QoE providers, bankers, legal advisors, consultants, experts etc.)

soft skills are critical for juniors if they want to step up in their careers. what really sets a junior associate apart here is being able to understand the process, and then eventually being able to lead them

if your VP or MD can rely on you to properly lead the diligence session with accounting firms, bankers or the legal advisors, you become an invaluable asset to the deal process

a part of this is also handling all forms of internal communication well. keeping your VP or MD updated on the latest process update on where things are makes you valuable. they are busy themselves and will not always keep up with everything going on

the idea is very simple - you are reliable, you can lead calls and represent your firm well, and you communicate effectively to keep the process moving

As always, would love to hear anyone else' feedback on whether they would add anything else to this list. In my opinion, these are the core components of what makes a good buyside associate

The best juniors do these exceptionally well, and the ones who are able to do it well are usually the ones who end up being promoted

[Iman Gadzhi @GadzhiIman]

Being around wealthy people is wildly inspiring.

Not because of the money.

But because you realize they’re no better than you.

[DAN KOE @thedankoe]

Try everything until you find the one thing you can't pull yourself away from.

[Finding Compounders @F_Compounders]

How a Great Investor Thinks

Glenn Greenberg

[Dr Danish @operationdanish]

Young people are not ok.

[Glenn Greenwald @ggreenwald]

David Muir is criticizing and attacking Trump more than Kamala is.

Kamala can relax because the ABC "moderators" are handling the debate for her.

[Gene Munster @munster_gene]

September 9th is going to be the biggest day for $AAPL investors since the iPhone 6 Plus (first true larger display) came out a decade ago. In the year prior to the 6 Plus, the iPhone business was up 12% y/y and accelerated to 52% y/y growth in the 6 Plus’s first full year.

The lesson is major feature updates have a major impact on growth. Apple Intelligence is one such feature.

[Brett @CCM_Brett]

- wide and durable moat
- management you can trust
- cheap price

That's all you need to look for

[Cigar Capital @divergentvalue]

@rich_toad @DanielSLoeb1 @POTUS It’s either raise taxes and increase reckless spending or cut taxes and perpetuate reckless spending. That’s what’s on the table for us rn lol.

[Cigar Capital @divergentvalue]

@Uzo_Investor I like your framework

[Connor Haley @AltaFoxCapital]

It amazes me how many people in this industry enjoy tearing down others by either minimizing someone's success or (even worse) kicking someone when they are down. I try to genuinely root for the good guys to succeed and be helpful when possible. It's a happier way to live!

[Jared Kubin @JaredKubin]

@bucketshopcap @ChairliftCap 💯… pendulum has swung too far for analysts … all the channel checks, conferences, q/q math… there is a place for all those things.

TLDR: Think more. Write more. Alpha more.

[Naval @naval]

The great ones don’t do it for money or fame or power.

Or to build an institution, or to help others, or to save the world.

Like a child tinkering, they create it for its own sake.

Free of the burden of ambition.

Deaf to the demands of the world.

[Cigar Capital @divergentvalue]

@TMTMoats Do you think management may be overly optimistic? I’m not sure how many times Taylor Swift and Drake will tour at about the same time. One tour the highest grossing of all-time and the latter the highest grossing in its genre.