Fsi Er 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