2020-2021 Investment Committee Workshop 2 – Overview Guide

October 14, 2020

mcgillinvestment.club Agenda

I. Sector Announcements

II. What is an Industry Overview and Why is it Important?

III. Structure of an Industry Overview

IV. Industry Overview Example

V. Data Sources

VI. To-Do For Next Session

McGill Investment Club 2 Sector Announcements Section I Hope You Guys Are Happy!

Consumers Diversified Energy / Util.

▪ Emanuel Vella ▪ Julia Jin ▪ Adam Di Re ▪ Ben Williamson ▪ Luca Pollota ▪ Sophie Song ▪ Grace Cosby ▪ Bing Peng ▪ Caroline Clarke

FIG Healthcare TMT

▪ Jasmine Liu ▪ Collin Wang ▪ Bennet Wang ▪ Larry Ge ▪ Harry Su ▪ James Xu ▪ Woo Park ▪ Thomas Rusaw ▪ Jason Hum

McGill Investment Club 4 What is an Industry Overview Section II What is an Industry Overview and Why is it Important?

What is an Industry Overview? ▪ An industry overview should give the audience a better overall understanding on a specific industry ▪ Common ways to help give insights: − What are the subsectors within the industry? − How is the competitive landscape structured? (fragmented, , etc.) − Identifying select key players within the industry (i.e. who are the dominant companies?) − How do actually make money? − What do margins look like? − What are some key drivers within the space? (political, environmental, etc.) − What are some major trends happening within the space?

Why is it Important? ▪ An industry overview gives the audience a better background about the competitive and surrounding landscape of a company ▪ Presenting interesting macro or industry trends can help you craft unique investment theses ▪ You will need to understand how companies operate within an industry before providing a recommendation on if it’s an attractive investment – some models are more complex than others!

An industry overview should help you learn about the industry as well as teach others

McGill Investment Club 6 Structure of an Industry Overview Section III Basic Elements of an Industry Overview

Explaining the Business Model Key Trends & Outlook Market Valuations

▪ Outline what are the major ▪ What are some key trends that ▪ Stock chart performance of subverticals within the industry we observe within the industry? industry benchmark over past year ▪ How do companies in each ▪ How do these trends impact subvertical generate revenue? companies within the space? ▪ Are their any exceptions in terms What do their profit margins of stock price performance? usually look like? ▪ What is our general outlook on the industry? Positive or ▪ How do multiples look like? Are ▪ Some industries will be more negative? companies trading at relatively intuitive than others (ex: expensive or cheap prices? consumers vs. O&G)

Start with the basics first, then present any interesting insights or opinions

McGill Investment Club 8 Example of Industry Overview Presentation Structure

Information # of Slides Example ()

▪ Explain medical devices, drugs, and services subsectors Outline of Industry Subsectors 2-3 ▪ Provide few examples of dominant players in subsector + Key Players ▪ Touch upon health model + FDA regulatory process

▪ Historical performance of U.S. healthcare index over last year Sector Trends + Performance 2-3 ▪ Macro trends of changing demographic and healthcare policies

▪ Explanation of new wave of digital health (MedTech)

▪ Example subsector: Medical Devices Specific Subsector Details 1-2 ▪ Explain the major revenue and cost drivers

▪ Recent trends of consolidation and M&A activity

▪ How has COVID-19 affected the Medical Devices space? Insights 1-2 ▪ Will consolidation continue? Will companies be able to continue growing at a fast pace?

BONUS: Add in valuation multiples trends over time

McGill Investment Club 9 Industry Overview Example Section IV McGill Investment Club 11 McGill Investment Club 12 McGill Investment Club 13 McGill Investment Club 14 McGill Investment Club 15 McGill Investment Club 16 McGill Investment Club 17 McGill Investment Club 18 McGill Investment Club 19 McGill Investment Club 20 McGill Investment Club 21 McGill Investment Club 22 McGill Investment Club 23 McGill Investment Club 24 McGill Investment Club 25 McGill Investment Club 26 McGill Investment Club 27 McGill Investment Club 28 McGill Investment Club 29 McGill Investment Club 30 McGill Investment Club 31 Data Sources Section V Where To Find Data

Government Publications Research & Reports Company Investor Relations

▪ Federal Reserve Economic Data ▪ Bloomberg and CapIQ can ▪ Company investor presentations (FRED) has publications on provide information on index will generally provide some recent GDP, income, etc. prices, M&A activity, and background on their industry, but numbers valuations will be more specific to their company ▪ Other governmental institutions ▪ Equity research can provide will have information larger general information on industry ▪ Company annual report may macro data (ex: COVID cases, trends (especially in initiating include some industry consumer spend) coverage) benchmarks ▪ Some firms provide free publications (ex: Deloitte, BCG) ▪ Research websites can provide numbers on market size and growth outlook (ex: IBIS world, Mintel)

McGill Investment Club 33 To-Do For Next Session Section VI Homework!

1. Start working on industry overviews with your team – presentations are 15 min + 5 min Q&A a) Start with reading some primers about the industry b) Build out a shell about how you want to structure your presentation c) Gather relevant information and datasets d) Put it together in a slide deck e) Go through presentation together to see what’s missing or needs fixing + practice timing 2. Start thinking about what company you want to pitch when researching your industry overview

McGill Investment Club 35 Q&A MIC Disclaimer

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