EXCHANGE: TICKER · July 31, 2026 · $18.40/share · $610mm market cap · Long
This is a sample memo, not a real one. Cascade Bearing Corp. is a fictional company and every figure on this page is invented. It exists as a formatting template — copy it to start a real memo, and delete it once the archive has something in it.
Cascade Bearing makes precision roller bearings for industrial gearboxes. In March 2025 its largest customer, representing 22% of revenue, moved to a second source. The stock fell 54% and has not recovered. I think the market has extrapolated a one-time contract loss into permanent impairment of a business whose economics have not changed.
At $18.40 the company trades at roughly 6x my estimate of normalized owner earnings, against a fifteen-year average of 13x. Replacement of the lost volume is already visible in the order book. I estimate fair value in the $34–42 range and expect the gap to close within 24 months as 2027 comparisons clean up.
Describe what the company actually does, in plain language, as if to someone who has never heard of it. How it makes money, who pays it, what the unit economics look like, and why customers do not switch. If you cannot explain this in three paragraphs without jargon, you do not understand it yet.
This is the most important section and most memos skip it. Markets are not usually wrong for no reason. Name the specific mechanism: forced selling, index exclusion, a headline that reads worse than the facts, a screen that misclassifies the business, a time horizon shorter than the fix. If you cannot name it, be honest that you cannot.
| Fiscal year | Revenue | EBIT | FCF | ROIC |
|---|---|---|---|---|
| 2023 | $412mm | $71mm | $58mm | 18.2% |
| 2024 | $438mm | $79mm | $64mm | 19.4% |
| 2025 | $351mm | $41mm | $33mm | 10.1% |
| 2026E | $375mm | $56mm | $47mm | 13.8% |
Show your work. State your assumptions as assumptions, give the bear, base, and bull cases, and say what has to be true for each. A memo that only contains the bull case is a pitch, not a memo.
The single best discipline in this format: write the strongest version of the argument against yourself, and then say honestly whether you have an answer for it.
Name the falsifying conditions now, while you are calm, so that you are not renegotiating with yourself later.