Investment Memo: Format, Template, and How to Write an Investment Thesis

What is an Investment Memo vs. an Investment Thesis?

The thesis states the central investment hypothesis. The memo shows how it was tested and what remains uncertain. Length and format depend on the asset, audience and decision; there is no universal institutional page count.

A practical seven-section format

Adapt this suggested structure to the investment. Public equities, private deals and credit require different data and decision criteria.

• 1. Decision summary: asset, price and date, proposed action, horizon, valuation range and portfolio constraints.
• 2. Business and financing: revenue drivers, costs, customer concentration, capital structure and liquidity needs.
• 3. Thesis: a small number of explicit claims, each with supporting and opposing evidence. Do not force every investment into three pillars.
• 4. Competition: identify the relevant market, substitutes and customer or supplier bargaining power.
• 5. Valuation: show base, upside and downside assumptions, share dilution, debt and cash treatment, discount rates and sensitivity.
• 6. Risks and alternatives: describe what can go wrong, what is not known and why waiting or another investment may be preferable.
• 7. Monitoring and action: specify review dates, evidence to collect and decision rules. Separate thesis review from price-based risk limits.

A hypothetical thesis example with an explicit calculation

The following Cloud Corp example is fictional. Every number is an assumption for demonstrating the method, not a forecast, real consensus estimate or investment result. Keep valuation and operating assumptions separate.

Copyable Investment Memo Template

Copy this educational template and replace placeholders with dated evidence. It is not a tested investment strategy or a mandatory fund format. Preserve the original memo when updating it so later outcomes do not rewrite the original assumptions.

# Investment Memo: [Asset / Company / Ticker]
Date: [YYYY-MM-DD] | Author: [Name] | Status: [Draft / Reviewed]

## 1. Proposed Decision
- Action: [Invest / Wait / Reject / Review existing position]
- Price and timestamp: [Observed input and source]
- Horizon and portfolio constraints: [Assumptions]
- Thesis: [One clear, testable statement]

## 2. Business and Financing
- Revenue and cost drivers: [Sources and reporting periods]
- Debt, cash, dilution and liquidity needs: [Definitions and evidence]
- Important missing information: [Items to resolve]

## 3. Evidence for and Against the Thesis
- Claim: [Hypothesis]
- Supporting evidence: [Source, date, page]
- Counterevidence: [Source, date, page]
- Uncertainty: [What could change the conclusion]

## 4. Competition
- Proposed advantage: [Mechanism, not a label]
- Customer and competitor evidence: [Sources]
- Threats to durability: [Substitutes, regulation, changing behaviour]

## 5. Valuation Scenarios
- Base / upside / downside: [Inputs, method and resulting value range]
- Return calculation: [Horizon, cash-flow timing, fees, taxes and dilution]
- Sensitivity: [Which assumptions drive the result]
- Scenario weights, if used: [Judgment and rationale, not measured certainty]

## 6. Risks and Alternatives
- Failure case and potential loss: [Scenario]
- Constraints and risk controls: [Limits and execution assumptions]
- Alternative use of capital: [Reason for preference]

## 7. Monitoring and Review
- Review date and evidence to collect: [Plan]
- Thesis review triggers: [Observable changes]
- Price-based risk limits, if any: [Separate from fundamental thesis]
- Update log: [What changed, when and why]

Distinguish target upside from annualised return

A target price is conditional on assumptions. Hypothetically, a purchase at 100 followed by a sale at 130 three years later produces 30% total price appreciation and approximately 9.14% annualised growth: (130 / 100)^(1/3) - 1. This assumes no interim distributions, costs, taxes or dilution. With dated cash flows, calculate IRR using their timing rather than labelling target-price upside as IRR.