Systematically decode what’s already priced in, build a differentiated, model-backed view on 2–3 key drivers, frame bull/base/bear risk-reward, and bet ahead of identifiable catalysts that close the expectations gap.
What is your process and what it really means
What is your process to repeatedly identify, research and execute on mis-priced investment ideas?
what are the structured steps along the way?
why is this process replicable and not arbitraged away?
what source of market error are you exploiting?
A Typical Buy-Side Investment Process
Initial analysis & opportunity assessment To understand what is baked into the stock and whether there is an opportunity to generate a differential view ("the alpha load")
Business analysis & model construction To understand the business deeply, using a bespoke financial model to understand how the business operates financially, then use the model as a backbone to value the stock and assess business momentum and potential earnings revisions
Key driver assessment & deep dive process To understand 3 key drivers, the executing a deep-dive research process to identify areas of differentiation on those key drivers
Case construction & risk/reward assessment To understand what is baked into the stock, then develop my own bull/base.bear cases and determine how attractive the risk/reward is on the stock
Thesis development & communication Layer in qualitative and quantitative work into a structured thesis to pitch up to my PM (or LP)
Idea monitoring & catalyst assessment Develop an ongoing research plan relating to catalysts and earnings, then monitor ongoing news flow to assess whether the idea is on track with my initial thesis
MIC Process
Understand market embedded view
Generate differentiated internal view
Bet ahead of catalyst
M (Understand market embedded view ):
"If it's in the press, it's in the price" framework
What's "in the press" - Management commentary - Guidance - Sell-side commentary
Quantifying the "market view" - Commentary scrub - Reverse DCF - Multiples analysis - Do performance analysis
I (Generate differentiated internal view):
Deep dive process
Model construction
Key driver differentiation (its own module)
Develop your own unique view on the fundamentals (and, subsequently, the valuation)
C (Identify a Catalyst for Convergence)
MIC process assumes the market is "wrong " and you are "right"
This "expectations gap"is the source of your trading alpha
When will that expectations gap close?When will the market come around to your way of thinking?
