The 6-Prompt Framework: How Elite Analysts Dissect Any Stock Like a Hedge Fund

Most retail investors look at a stock. Institutional analysts interrogate it. The difference between the two is not access to information — it is a structured, repeatable framework that forces every angle to be examined before a single dollar is committed. The 6 prompts below represent the analytical skeleton of a professional equity research process. Each one is designed to be dropped into any AI model with a ticker symbol and return institutional-quality insight. Use them in sequence for a complete mosaic, or individually to pressure-test a specific part of your thesis.

Prompt 1: Fundamental Analysis

Act as a senior equity research analyst at a bulge-bracket investment bank. I want you to conduct a deep fundamental analysis of [COMPANY / TICKER]. Start by explaining exactly how this company makes money — not the surface-level answer, but the actual business model mechanics, including where margin is generated and where it is competed away. Then walk me through the last three years of financial performance: revenue growth trajectory, gross and operating margin trends, free cash flow conversion, and the quality of the balance sheet. Flag anything that looks like financial engineering or earnings inflation. After that, assess the competitive moat — is it real, how durable is it, and what would have to happen for it to erode? Give me your honest view on management: are they disciplined capital allocators or are they optimising for optics? Close with the three things that could make this stock a multi-bagger and the three things that could permanently impair the thesis. End with a one-sentence verdict on whether this is a business worth owning.

Prompt 2: Technical Analysis

Act as a quantitative technical strategist with an institutional charting background. Analyse the price structure of [TICKER] across three timeframes — the weekly trend for macro direction, the daily chart for intermediate positioning, and the 4-hour for tactical entry. Tell me what phase the stock is in: accumulation, markup, distribution, or markdown — and show your reasoning through the structure of the price action itself, not just a label. Identify the two most important support zones and two resistance levels that institutional players are likely watching, and explain what makes each one significant. Then assess momentum: is it confirming the trend or quietly diverging? Walk me through the moving average picture — where price sits relative to the 20, 50, and 200-day SMAs and what that tells us about trend health. Finally, give me a precise entry zone, two upside targets, and a hard invalidation level. Only propose the trade if the risk-reward is 2:1 or better. Close with a clear directional stance — bullish, bearish, or neutral — and your confidence level.

Prompt 3: Valuation Analysis

Act as a valuation specialist in an investment bank's equity capital markets division. I need you to derive an intrinsic value for [COMPANY] using three independent methods so we can triangulate a fair price range. First, build a DCF using a 5-year free cash flow forecast — use realistic margin assumptions, justify your WACC choice, and calculate terminal value using both a perpetuity growth model and an exit multiple approach. Show me the implied per-share value and the margin of safety versus today's price. Second, run a comparable company analysis using five true peers matched by growth profile, margin structure, and business model — not just sector classification. Compare them across EV/Revenue, EV/EBITDA, P/E, and P/FCF, and tell me whether any premium or discount the stock trades at is justified. Third, look at recent M&A transactions in the space and apply the relevant acquisition multiples to derive a takeout valuation. Once you have all three outputs, give me a valuation football field — a base case, bull case, and bear case price target — and tell me clearly whether this stock is overvalued, fairly valued, or undervalued at the current price.

Prompt 4: Macro & Industry Analysis

Act as a macro strategist and sector specialist preparing a briefing for a sovereign wealth fund. I want you to place [COMPANY] inside its macro and industry context with precision. Start with the current phase of the business cycle and tell me how this company's sector has historically performed in this regime — is the macro a tailwind, a headwind, or neutral? Then assess the industry itself using Porter's Five Forces framework, but don't just run through the checklist — tell me where the real power sits today and where it is shifting. Identify the top three structural forces reshaping this industry over the next five years and explain how [COMPANY] is positioned relative to each one. Then stress-test the company against the current interest rate and inflation environment: how does a 100 basis point rate shock affect its cost structure, debt obligations, and customer demand? Finally, identify any geopolitical or regulatory exposure that the market may be underpricing. Close with a forward-looking view — five years from now, is [COMPANY] a share gainer or a share loser, and what gives you conviction either way?

Prompt 5: Risk Analysis

Act as a risk manager and short-side analyst. Your job is not to argue for or against [COMPANY] — it is to find every credible path to permanent capital loss and stress-test the bull thesis with intellectual honesty. Start by identifying the three assumptions embedded in the bull case that are most vulnerable to being wrong, and show me what the stock price implies if those assumptions fail. Then conduct a balance sheet stress test — look at leverage, interest coverage, debt maturity schedules, and covenant exposure. Could this company be forced to raise equity at a dilutive price? Next, interrogate earnings quality: is the gap between reported earnings and free cash flow widening? Are there signs of aggressive revenue recognition, rising receivables, or non-GAAP adjustments that flatter the headline numbers? Then go hunting for the risks the market hasn't priced — customer concentration, key-man dependency, technology disruption risk, litigation overhang, or regulatory shifts on the horizon. Finally, construct two low-probability but high-impact scenarios that could cause a 40% or greater drawdown, assign rough probabilities to each, and tell me how a sophisticated portfolio manager would hedge against them. Close with probability-weighted bull, base, and bear price targets and the expected value that falls out of that framework.

Prompt 6: Smart Money & Institutional Activity

Act as a market microstructure analyst who specialises in tracking institutional and insider behaviour. I want you to build a complete picture of the smart money footprint in [TICKER] using the most recent available data. Start with insider activity: review Form 4 filings from the last six months and distinguish between open-market purchases — which carry the highest signal — and plan-driven or exercise-related sales, which carry far less. Are the people who know this business best buying it with their own money? Then move to 13-F filings and tell me which tier-one institutions have initiated, added to, or quietly exited positions over the last two quarters. Is aggregate institutional ownership growing or shrinking, and which names carry the most weight? Assess the short side next — what is short interest as a percentage of float, what is the days-to-cover ratio, and is the short position expanding or compressing? A rising short position in a declining stock is very different from a rising short position in a stock making new highs. Then look at the options market for signals: is there unusual call buying that might suggest institutional accumulation, or is elevated put skew telling you that sophisticated money is hedging or positioning for a decline? Finally, identify any volume anomalies versus the 30-day average and map them against news events or filings. Close with a single verdict: is smart money accumulating, neutral, or distributing — and who do you think is right?

How to Use These Prompts Together

Run them in order for a full investment thesis. Start with Prompt 1 to establish whether the business is worth analysing at all. Move to Prompt 3 to understand what fair value looks like before price action corrupts your judgment. Use Prompt 4 to sense-check whether the macro environment supports or undermines the thesis. Run Prompt 5 before you size in — conviction is not the same as being immune to risk. Use Prompt 2 for timing entry, and Prompt 6 as a final sanity check against what the most informed market participants are actually doing with real money.

The Underlying Philosophy

What separates institutional research from retail analysis is not sophistication for its own sake — it is the discipline to examine a stock from multiple independent angles before forming a view. Each of these six prompts is designed to be adversarial to the others. The fundamental analyst wants to believe in the business. The risk analyst is paid to destroy that belief. The technical analyst doesn't care about the business at all — only what the market is signalling. When all six lenses converge on the same conclusion, that is when conviction is earned.