Model Templates

THINKSheet Model Template

Note: Development Caveat

Critical Issues Model

CIModel3

 Morgan Stanley Description of This Template

This template was used by the senior publishing analyst first at Morgan Stanley and then at Evercore Partners. The extracts below are from Morgan Stanley’s description of the THINKSheet methodology and value proposition – with a special focus on the benefits of quantifying the qualitative factors and making their comparison “apples to apples” with the quantitative factors, such as valuation and financials. You can see the examples of the Morgan Stanley models and research reports on the TST Equities Systems site: Morgan Stanley Use & Description of THINKSheet

“Truer To Life” Approach

By merging critical issues analysis with a traditional quantitative approach, we believe we are creating a robust analytical approach and one “truer to life” than that provided by a quant-based methodology alone.

Apples To Apples Comparisons

The model (employing ThinkSheet™ software and applications) relies on a number of algorithms that quantify the value of our thought process per stock and then re-computes the inputs to provide comparability.

Therefore, our thoughts on the strategy or leadership or market risks facing each individual company are comparable in measurement to the stock’s underlying P/E or earnings growth assessment.

In turn, by creating a truly apples-to- apples comparable measurement system for our entire universe, we believe, we are better able to compare seemingly different companies such as Moody’s, New York Times, or R.R. Donnelley on the same basis.

Relative Value Criteria

The aim of the exercise, as with our prior ranking system, is to identify the cheapest stocks with the best fundamentals that have a near-term, positive catalyst, low risk, and beneficial X-factors.

What’s New

In re-introducing and, we believe, enhancing our stock ranking methodology, eleven valuation inputs and fourteen financial measures (all individually ranked and scaled) represent only 60% of the weighted score for each stock.

The balance, or 40% of the weighted score, is the quantification of critical/subjective issues or catalysts, risks, and — what we call — the “X-factor” (or unique attribute per stock).

We are attempting to supplement largely efficiently priced-in valuation and financial measures for each stock by quantifying our major thoughts / concerns / expectations for each company/stock in a systematic method.

 

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