An investment memo is a written case for or against owning a stock. It exists so that your reasoning can be checked — by a colleague today, and by you after the next 10-K. The best ones fit on one page. You can download our free template (Word and PDF, with a blank, a guided and a completed version) and follow along below.
1. Thesis — three sentences or fewer
State what you own, why now, and what has to happen for you to make money. A thesis is a claim someone could disagree with. “Great brand, strong management” is a description, not a thesis.
2. Variant view — where the market is wrong
Write down what today's price assumes, then where you disagree and why your information or judgement is better. If you agree with the market, you have no reason to expect a better result than the market.
3. Key numbers — with a source for each
Pick the five to eight figures that decide the case and show three years of each. Every number gets a source: the filing, the fiscal period and the line item. Label adjusted figures as adjusted; mixing them with reported ones without saying so is the most common error in this section.
4. Valuation — what has to be true
Instead of one precise target, write what you have to believe to justify today's price, then a base, bull and bear case. The spread between them tells the reader how much the answer depends on one assumption.
5. What would make me wrong
List the facts that, if they appeared in the next two filings, would make you sell. Write this before the valuation. “Macro” and “competition” are not answers: a filing can never confirm or refute them.
6. What I will watch
Turn section 5 into tripwires: a line item, a threshold, where it shows up and the next date it will be reported. Then put the review date in your calendar — a memo nobody rereads is a diary entry.
A worked example
The template's completed version is a memo on NIKE, Inc. Its key numbers come from NIKE's own SEC filings — revenue, margins, free cash flow, segment revenue and three forensic screens — each with its source. It is an illustration of the format, not investment advice.
Section 3 is the slowest part to fill in by hand. In AnalystBook those figures are computed from each company's filings with fixed rules, every one linked to its source, and your memo sits next to the data so you can reread it after the next filing.