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:
- Define the thesis (e.g., "AI infrastructure spending accelerates through 2026")
- Map the value chain — who benefits directly vs. indirectly?
- Identify pure-play vs. diversified exposure
- Assess which names are already "priced in" vs. under-appreciated
- 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]
| Metric | Value | vs. Peers |
|---|---|---|
| Market cap | ||
| EV/EBITDA (NTM) | ||
| P/E (NTM) | ||
| Revenue growth | ||
| EBITDA margin | ||
| FCF yield |
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
