Processing ideas at the top of the funnel

Analysts and PMs are suddenly back in attack mode. Tariff uncertainty is shrinking. Earnings have happened. And there are seven months left in the year. Let’s put some gross exposure back on, amigos! Plenty of game to play. This note focuses on idea generation with a view that a healthy velocity of ideas is the best way to ensure a portfolio does not go stale, the short book provides both return and good hedges in a low net strategy, and that when everyone else is burning productive hours at conferences in nice places bullshitting each other about the stocks they have already traded, doing the work of an analyst right now is your highest and best use of time.

Where to find ideas.

1. Look where no one else is looking - new issues.

With the caveat that a new stock provides enough trading liquidity to preserve optionality for closing a position when a price target is achieved or when a trade does not work, the unloved, or more likely uncovered or lightly covered names can be a great space to find alpha. New issues fall into this bucket frequently. Many investors like to see a trading history, a few quarters of financial track record and analyst coverage before committing capital to a name. But herein lies the opportunity. Before opinions are formed and key debates unfurl, stocks exhibit unpredictable volatility, which is of course another name for alpha.