Investment Memo Template

A section-by-section template for writing an investment memo. Where Investment Frameworks is a library of other investors’ checklists, this is the structure you write a memo into — the prompts that force a complete view of a company before committing capital. See Networked Conviction — Roam + Investing for how Kyle uses it in practice.

Credit: Jonathan Tepper, Bijan Sabet, Roelof Botha, and others.

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Stock Page

Pull in the live stock data page (e.g. an iFrame embed from a data source) so price and fundamentals sit at the top of the memo.

Company Background

Focus on any special insights you have into the company or the particular situation. Detailed operating descriptions can easily be found in the 10-K, so space should not be wasted with readily available information that is not central to the basic investment thesis.

Daily Sentiment

Track your daily notes and comments as you casually observe things about your companies (e.g. a Company Name - Daily Sentiment tag), and log that over time to see how sentiment changes.

Vision

What is the mission-statement of what this business hopes to become? Is it a compelling vision? Is this a business that you would go work for because you believe so strongly in that vision?

Investment Thesis

What is the basis for this investment? About a 500-word explanation of your investment idea — not just why it’s a good business, but what price you’re investing at and why that decision makes sense. “How long do you anticipate holding the stock? Remember, if you aren’t willing to own a stock for 10 years, you shouldn’t even think about owning it for 10 minutes.”

Circle of Competence

Do you truly understand what this business does? What is your unique perspective on this company that enables you to have a differentiated view on its potential?

Variant Perception

Where is the market wrong?

Pre-Parade

What is the forward-thinking “best-case” scenario? What will this look like in 5–10 years if this investment goes well?

Pre-Mortem

What is the forward-thinking “worst-case” scenario? What will this look like in 5–10 years if this investment goes wrong?

Key Drivers

What are the key levers that make this investment work? What is the secret sauce that could make it special? Explain what action, event, situation, or future realization will cause the market to recognize the value discrepancy you observe.

Key Tailwinds

What are the things independent of the company that will help accelerate its success? Changing consumer sentiment? Advancing technology? Regulatory changes?

Key Risks

• What are the things that haven’t been worked out yet and are still very unproven?
• What could kill this business?

Existing Investors

Understand who the existing shareholders are and, more importantly, what their buying behavior has been. Are they buying more? Hedging bets with broad category diversification?

Management Team

• Are these the people you would pick if you could select anyone in the world to solve this problem? Are they in the top percentile of people positioned to solve it?
• Outside of their qualifications to run this business, are these generally extraordinary people? People you would fight to hire or even work for?
• What is their hiring plan? Where is their team weakest, and how are they leveling-up that talent area?
• Are they effective allocators of capital in the projects they undertake?

Product

• What is the job-to-be-done for this product? What is the value proposition? Is it fundamental to the customer’s way of life? Is this an aspirin or a vitamin?
• How does this product evolve over time? Is this a feature? Is it a path to a broader platform or suite of products?

Customer

Who is the ideal customer profile (ICP) for this business / product? Are they hard or easy to sell to? Is the customer base large and diversified or concentrated?

Market

• What is the current total addressable market (TAM) and what does it consist of? What is the back-of-the-envelope math that makes up this market’s equation?
• What are the key things that could increase this market? What is stopping this solution from reaching a much larger addressable market, if anything?
• What are the barriers to entry in this market?

Competition

• Who else is solving this problem? Even if not direct competitors, who represents the alternatives that might be evaluated in tandem?
• What is the status quo that is being revolutionized?
• How commoditized is this product? Does this company have any pricing power?
• Is there a network effect inherent in this business?

Metrics

What are the “north star” metrics that this business is guided by? How does it perform on those metrics relative to peers? Are there any details about those metrics that could make them misleading (e.g. gross vs. net differences)?

Investment Frameworks

What frameworks would most help you evaluate this business? Is there something unique that is worth exploring further? (See Investment Frameworks.)

Resources

Best research available on the category or company, including white papers, analyst research, and media coverage.