Different firms with different focuses will have wildly different approaches to writing investment memos. The core idea is the same: a deal team will do work on an investment opportunity and then summarize their learning for the broader team to get up to speed. The output can range from a few slides with mostly visuals to 100+ page memorandums drilling into every aspect of a company and market.
The purpose of Fundamentals: Due Diligence is to find all of the questions you could possibly ask about an opportunity. Throughout this process some of the key activities are Taking Notes on the things you read and Talking to Customers because these each represent puzzle pieces that you're trying to structure together to understand the bigger picture around the opportunity at hand.
In reference to gaining knowledge, Charlie Munger famously said, "How do you get worldly wisdom? What system do you use to rise into the tiny top percentage of the world in terms of having sort of an elementary practical wisdom? I've long believed that a certain system-which almost any intelligent person can learn-works way better than the systems that most people use. What you need is a latticework of mental models in your head. And you hang your actual experience and your vicarious experience (that you get from reading and so forth) on this latticework of powerful models. And, with that system, things gradually get to fit together in a way that enhances cognition." (Source: Poor Charlie's Almanack)
As you build this latticework through reading, having conversations, and testing things out you'll start to feel a level of competency with any subject. The goal is to start to consciously map this latticework.
Your latticework will start to feel complete when you hear new things about the market or company and immediately understand right where it should go in the framework you have for yourself.9
It's important for you to have a broad collection of resources and notes from all the things you've watched/read and people you've talked to. But in order to effectively communicate what you've learned in a coherent investment thesis you need to start to synthesize your idea down to the most important and impactful pieces.
People like to think that if they just take a lot of notes and have a massive collection of links and screenshots then they know something. The critical part is understanding what all that information means. Once you've collected all that information you need to turn it into meaningful takeaways and ask yourself: "Therefore, what?"
<aside> 💡 “One of my companions, an apprentice Hatter was about to open shop for himself—his first concern was to have a handsome sign-board, with a proper inscription. he composed it in these words ‘John Thompson, Hatter, makes and sells hats—for ready money,’ with a figure of a hat: but he thought he would submit it to his friends for their amendments. [After a number of edits,] his inscription was reduced ultimately to ‘John Thomson’ with the figure of a hat.” (Benjamin Franklin)
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