Hedge fund ppl - How do you get the undisclosed information on unit economics of your stock? Like, my interviewer asks me "how much of this revenue is up sell vs. unit vs. price vs M&A?" But this is not a CPG name where they tell you this information. How the hell did you know when the press release and IR don't tell you jack?
Tks
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price/vol/scope isn't unit economics, ime a lot of non-CPG companies disclose this somewhere in presentations or 10-q. Just have to dig.
For actual unit economics you customer make it if they disclose units sold. Unit economics and incremental revenue split are 2 different things though. Sometimes they disclose one of units/pricing and you can back out the other one.
also peers/3rd party data
Tks, I guess I meant anything more granular than just revenue and cost. How do you know this is a price story, volume story, cost story, capex story? And how do you model capex? I know it depends on the company, which makes it hard to give examples.
The story will change, because what matters to a stock can change. Especially as you play out the business cycle...
The way you find out what matters is by putting in the work. If there's no way to get more granular, then you can try doing so by using a peer as a comp or using data sets. For example you might have a diversified P&P co which only discloses segment revenues and ebit and you have no concrete price x volume for each segment. You either settle for that, or you do the work to try build something akin to it. Maybe its by using a competitor that discloses this data and trying to mirror it.
e.g data provider says corrugated paper prices has been xyz and is following ABC trend, you reckon your company has strong market share in this segment so you mirror the trend and back out volume.
Cost builds I've seen it all. Sometimes its inputting lagged raw material costs and doing sumproduct and statistical analysis to figure out what's a decent cost basket to track, other times management will be talking outright about costs they're facing in transcripts and you can try track those vs pricing. They'll say something in transcripts, will just be very, very vague at times. Its up to you to build the mosaic.
As an aside, this is the beauty of the markets, and finding ways to be creative and get a good read on these is a legitimate edge. Its eroded as data providers have only gotten larger and more popular, but if you find a way to model black box firms you're disincentivized to share it. Some people don't like making bets on imperfect data, but that's the game.
A lot of times, you just don't have the data and it's nowhere to be found.
To state the obvious, many times the inputs you'd need to build your ideal model aren't available anywhere, and so you need to settle with building a much less granular model than you'd like to.
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