Investment Thesis Template: A Research Checklist for Long-Term Investors

Richard Ralph editorial cover for investment thesis template

For education and information only. This page is not personal financial, investment, tax or legal advice, and is not a recommendation or invitation to buy, sell, transfer or hold an investment. Investing involves risk and you can lose money, including the amount invested.

A written thesis is not a prediction. It is a decision record: what you believe, why you believe it, what evidence supports it and what would change your mind.

The one-page template

  • Business in one sentence: what the company sells, who pays and why the relationship may endure.
  • What must be true: name the two or three assumptions that drive the outcome.
  • Evidence: link the filing, investor presentation or other primary source, date it and record the next check.
  • Financial quality: revenue, margins, cash conversion, debt, liquidity and customer concentration over more than one period.
  • Valuation: show assumptions and a range. A valuation is an interpretation, not a fact.
  • Risks and invalidation: write the strongest bear case and the evidence that would break the view.
  • Dilution: check basic and diluted shares, options, warrants, convertibles and financing capacity.
  • Position decision: set an initial size, a maximum and conditions for adding, trimming or doing nothing.

Use primary sources first

For US companies, the SEC’s 10-K and 10-Q guidance is a useful starting point. Read the business description, risk factors, liquidity discussion, financial statements and notes before adopting a narrative from elsewhere.

The rule that matters most

Write the invalidation test before any action. A share-price fall alone is not proof that a thesis is broken. A failed milestone, deterioration in customer retention, an unexpected capital raise or a weakening competitive position may be more informative. The point is to prevent a later outcome from rewriting the original reason for owning something.

Related reading

Leave a Reply

Your email address will not be published. Required fields are marked *