skills/memo-builder/references/sector-overlays.md

# Memo Builder Sector Overlays

Load only the overlay that matches the prompt. These overlays sharpen formal Public Equity Investing memo judgment; they do not replace the core memo workflow.

## Software / Subscription Equity Memo
Use for public software, SaaS, payments software, developer-platform software, cybersecurity, vertical software, or other recurring-revenue equity memos.

### What a senior reviewer cares about
- whether growth durability is proven or merely narrated
- whether retention, expansion, pricing, seat/module growth, and churn support the valuation
- whether margins reflect durable operating leverage or temporary cost timing
- whether FCF conversion is real after SBC, capitalized software, restructuring, and working-capital timing
- whether consensus revisions are more important than headline valuation

### Must-have memo facts
- revenue growth, ARR/MRR if available, NRR, gross retention, cRPO/bookings/billings if material
- gross margin, EBITDA margin, FCF margin, SBC load, net cash/debt, diluted share count
- peer valuation and the company's own trading history
- guidance, consensus setup, and next catalyst window
- model sensitivity to growth, margin, and terminal multiple assumptions

### Common failure modes
- rerating story without revision path
- using EBITDA without quality caveats
- no reconciliation of market cap to enterprise value
- product narrative without economic evidence

## Consumer Internet / Platform Memo
Use for marketplaces, ad platforms, consumer internet, fintech platforms, e-commerce platforms, gig economy, and network-effect businesses.

### What a senior reviewer cares about
- whether engagement, monetization, retention, take rate, or unit economics drive the thesis
- whether platform quality is improving or masking saturation
- whether margin improvement is durable or caused by temporary spending cuts
- whether regulation, platform dependency, or consumer behavior changes alter the value case

### Must-have memo facts
- MAU/DAU, payer count, transactions, GMV, AOV, take rate, conversion, retention, or monetization metrics as applicable
- segment performance between mature, declining, and growth assets
- revenue growth, incremental margin, FCF, and marketing efficiency
- consensus expectations and next print/catalyst sensitivity
- valuation bridge and scenario price targets

### Common failure modes
- broad platform language with no KPI proof
- ignoring healthy segment offsets in a bearish memo
- no catalyst path
- no downside mechanism if growth or engagement disappoints

## Credit Markets Handoff / Equity-Risk Memo Context
Use only when credit data supports a common-equity or listed-equity memo. Credit-first committee notes, public-credit memos, bond/loan/CDS recommendations, covenant reviews, recovery waterfalls, restructuring views, and debt-security selection route to Credit Markets.

### What a senior equity reviewer cares about
- whether liquidity runway, maturity walls, refinancing risk, rating pressure, or CDS/spread signals change equity downside
- whether debt pressure alters the valuation bridge, catalyst path, sizing, hedge posture, or kill case
- what evidence comes from public-equity sources versus Credit Markets handoff output

### Must-have local memo facts
- common-equity implication and downside mechanism
- source/as-of date for credit signal data used as evidence
- explicit Credit Markets handoff when the memo depends on security selection, covenants, recovery, restructuring, or debt valuation

### Common failure modes
- writing a credit memo inside the Public Equity skill
- implying covenant, recovery, or spread/yield expertise without Credit Markets support
- using credit stress as a conclusion without linking it to equity impairment or estimate risk

## Event-Driven / Special Situation Memo
Use for merger arbitrage, spin-offs, litigation, regulatory approvals, restructurings, tender offers, index events, and other discrete-event memos.

### What a senior reviewer cares about
- expected value after probability, timing, and break downside
- market-implied probability versus memo probability
- whether legal, regulatory, shareholder, financing, and process milestones are mapped
- what evidence changes the probability before the final event

### Must-have memo facts
- current spread or price
- consideration, timing, outside date, and break price
- probability tree and expected value
- approval and milestone calendar
- downside if the event fails
- source posture for legal/regulatory assumptions

### Common failure modes
- treating management confidence as probability
- no timing drag
- no break price
- missing interim milestones

## Macro / Sector Memo
Use for rate, commodity, FX, policy, factor, or sector-level memos that need to tie macro views to public securities.

### What a senior reviewer cares about
- the transmission mechanism from macro view to security-level earnings, valuation, credit risk, or factor exposure
- whether the memo is actionable or just descriptive
- sensitivity to rates, FX, commodity, inflation, policy, or factor shifts
- portfolio interaction, correlation, and hedge implications

### Must-have memo facts
- driver and transmission path
- exposed securities, sectors, or factors
- sensitivity table or qualitative stress map
- catalyst calendar
- disconfirming data

### Common failure modes
- broad macro call with no security implication
- no timing or catalyst
- no sensitivity to alternative macro outcomes
- no risk-management implication