Recently, I had a chance to attend North Zone final of CFA Institute’s Research Challenge in India (“IRC”) organized by Delhi chapter of CFA Society India (Indian Association of Investment Professionals- IAIP). This is the third time of i was attending this annual event. I noticed that that all the teams did not do well and repeated the same mistakes. Same issues we saw in the teams in the past years too. Amit Khurana, CFA – Director Dolat Capital and Board Member at India CFA Society, who was a judge at the event also made a similar point. He noted that the feedback provided by the judges does not seem to percolate down.
I feel it will be beneficial to create a list of ideal guidelines so that future participants can better prepare for the challenge.
This list is based on observations made by judges, my own experience watching this challenge for last 3 years as well as points that came from interaction with others during the challenge. Note that while I tried to include as many point as possible, this is certainly not an exhaustive list and additions are welcome:
Presentation of Analysis
- Focus on teaser part: You only have 10 minutes to make your case. Imagine that you are making this presentation to a client who is in this business for a very long time. They would not be interested in general data points, they would want you to be very specific (crisp and to the point) about your recommendation and how you arrived at.
- Keep it to business: Focus on product, business model, ecosystem of the company, competition, how the company will generate revenues and profits in the future etc. Financial analysis is also important but if you don’t understand the business then it will have no relevance. According to a judge, 70-80% of the emphasis must be on the business and 20-30% about numbers.
- Don’t focus too much on calculation: You don’t have to tell formulas during your presentation like how you calculated beta, judges know all these calculations and they may not be interested (if they are, you will be quizzed on these during Q&A and you will have enough time to answer).
- Don’t base your analysis on management’s view: Remember you are doing an independent analysis and you should not take management’s view at face value.
- No jargons: With use of jargons you might sound fancy but this may also take concentration off the more important part of the analysis. Use simple terminologies.
- Keep focus on the fundamental analysis: There are many methods of analysis and valuation. You don’t have to include all of them in your analysis, remain focused on widely used methods (mostly fundamental and relative analysis). Don’t mix and match different investment analysis methods (technical, fundamental, Monte Carlo etc.).
- Assumptions used: Make sure you understand why or why not certain assumption were made e.g. why did you choose a certain long-term growth number OR what underlying index did you select to calculate beta?
- Sync between talk and slide: Make sure what you are talking and the slide that is being shown is in sync. One mismatch is enough to throw off the judges’ concentration.
- Don’t Hurry: Don’t discuss analysis in fast forward mode even if you are in the last one minute of your presentation. You will race through to meet the time but the judges won’t be able to understand.
- Your recommendation doesn’t matter: As per my experience, there is no right answer in the mind of the judges about the final recommendation (buy, sell or hold). They are more interested about the process and analysis which was followed to come up with the recommendation.
- Buy or Sell price range: Generally, buy or sell call is not given if the target price is +/- 10% of current price. Unless, there is a bigger swing, investor may not want to disturb is his/her portfolio.
- Don’t keep too much data: During the course of your analysis, you might have collected many data points to support your analysis. There is no need to include all the data in your main presentation. However, add appendices for additional data points which you considered in your analysis - you never know when you might need any set of data.
- Create an index: Create an index table at the beginning of the presentation and use hyperlinks to flip through pages so that it is easier to get to data when requested by judges. Remember, this is very crucial, I have seen good teams losing confidence as they scramble to find data.
- Responsibility of index management: Give responsibility of managing the index table to one or two persons (two to cover the case of one person not being able to attend the event due to any last minute emergency) who know in and out of what data can be found at which place. This person should be given the responsibility of flipping through slides to produce data within seconds when asked by the judges.
- Data on fingertips: You are expected to be intimately aware of certain data points and have them at your fingertips. When judges ask what was the dividend payout ratio or revenue growth in the last 5 years, “let me check” is not an acceptable response.
- Listen to understand, not to answer: Listen to questions asked by the judges with utmost patience; don’t jump to answer them before they finish. If you understand what is being asked, answering shall not be a big problem.
- No Contradictions: Don’t give contradicting statements e.g. if you are saying that markets are currently overvalued yet your analysis give 60% weight to the market approach.
- Take time out to discuss: During Q&A, if you are not very sure of the answer, then request a minute from the judges and discuss among team members before answering.
- Keep numbers in USD: It will be very useful when you go at Asia Pacific final and Global final.
- Incorrect numbers are unacceptable: Your presentation should be proof read to make sure that analysis flows through well, numbers used are correct and there are no spelling mistakes.
- Consistent Formatting: Formatting of presentation and data used must be consistent throughout. It should not happen that you are creating two sensitivity tables: one for DCF and one for market approach and you show numbers in million in one table and in actual in other table.
- Team Work: Though certain team members may be given exclusive responsibility of certain part of the presentation, each and every member of the team shall well versed with the analysis. Remember this presentation is the result of team work and that should reflect when you present.
- Body Language: Your body language shows your confidence and gives good impression.
- Voice Modulation: Voice modulation may change the way judges hear you. Know when to raise the pitch, when to pause etc. to communicate your analysis in effective manner.
Rehearse Presentation and Q&A: Rehearse presentation a couple of times with all team members. Just run it through like you would want to run on the day of presentation, note down areas where chances of improvement or if you were unable to explain. Similarly for the Q&A session, compile a list of possible questions and then see if you are able to answer those questions. Seek help from classmates or faculty to provide feedback and ask them to be as ruthless as they could be while asking questions or suggesting any improvements.