Investment thesis

The central argument for a recommendation: why the market has the share wrong and what will correct it. Everything else in a research report should support or test it.

Where you will meet it

Investment thesis appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Set out what goes into a company research report, including one that initiates coverage
  CFA Level I · Equity Investments

  “A detailed company research report usually opens with a summary of the recommendation, target price and key reasons, followed by the investment thesis, a description of the business and its industry, financial analysis and forecasts, the valuation and how it was reached, and the main risks to the view, with disclosures of conflicts of interest.”

• Explain why investigating a target and drawing up a business plan are central steps when committing to a private deal
  CFA Level III · Private Markets Pathway

  “Due diligence tests the investment thesis.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with I · Glossary