Wall Street Prep – Buy-Side Financial Modeling

This course offers an in-depth exploration of process-driven investing, emphasizing the critical role of modeling in developing investment theses. Participants will learn to construct buy-side models tailored to the needs of portfolio managers, understand the intricacies of business analysis, and master forecasting frameworks essential for accurate predictions.

The course also covers valuation techniques and the transition from model outputs to actionable investment theses. Key topics include alpha generation, stock selection frameworks, unit economics, and evaluating risks versus rewards in the context of market consensus. Ideal for aspiring buy-side analysts, this course provides the tools needed to excel in the competitive world of buy-side investing.

What You’ll Learn In Buy-Side Financial Modeling

Process Driven Investing

Understand the role of modeling as a tool for thesis development in the investing process. You’ll learn about:

• “Alpha load” and the quest for outperformance
• The model as the backbone of the investing process
• Stock selection frameworks
• The typical model use cases (i.e. “Is this a good or bad business”, “Will this stock beat or miss earnings?, etc.)

Buy-Side Model Construction

Learn what a PM wants to see from a buy-side model and how that differs from a sell-side model. Starting with a “scratch build” using TSLA, you’ll learn about:

• The upside of bespoke modeling
• The raw ingredients needed for your model
• Architecture to handle a torrent of earnings prints, news flow and market moves.

Analyzing a Business

Learn how buy-side Analysts go about the process of understanding a business in depth. You’ll learn:

• The good business / bad business framework
• The importance of key driver identification and build your model around what actually drives value
• Unit economics (i.e. “how does this business make money”)
• Cost structure analysis, and incremental margins

Buy-Side Forecasting Frameworks

Gain a general orientation to forecasting and learn key forecasting frameworks including:

• Growth stack forecasting, mix accelerator, comp waterfall, box replicator, ramp curve, creative lags, mid-Cycle, data correlations
• Revenue forecasting & sustaining growth
• Approaches to expense forecasting
• The role of company guidance and investor relations in your modeling process.

Buy-Side Valuation

Learn the factors that influence valuation, from growth, business momentum, business quality, capital deployment/structure, and terminal value stability.

• The dichotomy of the DCF and the messy reality of equity pricing
• The roles of multiples in buy-side investing
• The core formula for price target derivation
• Normalized earnings analysis

Buy-Side Thesis Development

Here, we will move from the model towards a thesis. You’ll learn:

• How buy-side analysts use the model to generate outputs that answer “what is the risk/reward”, “what is the upside / downside”?
• How the model can clarify thoughts on the FEV framework (fundamentals, expectations, and valuation
• What is baked in? What do we believe is true / what is the expectations gap?
• Evaluating a view on variance versus consensus

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