Idea Generation

Idea Generation

Workflow

Step 1: Define Search Criteria

Ask the user for parameters:

• Direction: Long ideas, short ideas, or both

• Market cap: Large, mid, small, micro

• Sector: Specific sector or cross-sector

• Style: Value, growth, quality, special situation, event-driven

• Geography: US, international, global

• Theme: Any specific thematic angle (AI, reshoring, aging demographics, etc.)

Step 2: Quantitative Screens

Run screens based on the style:

Value Screen

• P/E below sector median

• EV/EBITDA below historical average

• Free cash flow yield >5%

• Price/book below 1.5x

• Insider buying in last 90 days

• Dividend yield above market average

Growth Screen

• Revenue growth >15% YoY

• Earnings growth >20% YoY

• Revenue acceleration (growth rate increasing)

• Expanding margins

• High return on invested capital (>15%)

• Strong net retention (>110% for SaaS)

Quality Screen

• Consistent revenue growth (5+ years)

• Stable or expanding margins

• ROE >15%

• Low debt/equity

• High free cash flow conversion

• Insider ownership >5%

Short Screen

• Declining revenue or decelerating growth

• Margin compression

• Rising receivables / inventory vs. sales

• Insider selling

• Valuation premium to peers without justification

• High short interest with deteriorating fundamentals

• Accounting red flags (auditor changes, restatements)

Special Situation Screen

• Recent IPOs / SPACs with lockup expirations

• Spin-offs in last 12 months

• Companies emerging from restructuring

• Activist involvement

• Management changes at underperforming companies

Step 3: Thematic Sweep

For thematic ideas, research the theme and identify beneficiaries:

1. Define the thesis (e.g., "AI infrastructure spending accelerates through 2026")

2. Map the value chain — who benefits directly vs. indirectly?

3. Identify pure-play vs. diversified exposure

4. Assess which names are already "priced in" vs. under-appreciated

5. Look for second-order beneficiaries that the market hasn't connected to the theme

Step 4: Idea Presentation

For each idea that passes the screen, present:

[Company Name] — [Long/Short] — [One-Line Thesis]

Thesis (3-5 bullets):

• Why this is mispriced

• What the market is missing

• Catalyst to realize value

Key Risks:

• What would make this wrong

Suggested Next Steps:

• Build full model? Deep-dive diligence? Expert call?

Step 5: Output

• Shortlist of 5-10 ideas with one-page summaries

• Screening criteria and methodology documented

• Comparison table across all ideas

• Prioritized list: which ideas to research first

Important Notes

• Screens surface candidates, not conclusions — every screen output needs fundamental work

• The best ideas often come from intersections (e.g., quality company at value price due to temporary headwind)

• Avoid crowded trades — check ownership data, short interest, and how many analysts cover the name

• Contrarian ideas need a catalyst — being early without a catalyst is the same as being wrong

• Track idea hit rates over time — which screens and approaches produce the best ideas?

• Short ideas need higher conviction — timing is harder and risk is asymmetric