🧜♀️ My Investing Process
I prefer to invest in:
- Great companies at fair prices
- Good companies at great prices
🔎 How I Find Potential Stocks
- 🧙♂️ Insider buys – Insiders can sell for multiple reasons, but they buy for only one reason.
- 🧑💼 Investor buys – Buys/sells from investors I respect.
- 📰 Notes from others – Blogs, newsletters, or social channels that share relevant insights.
- 📈 Scanners based on price movement
- 💰 Scanners based on revenue growth
🧙♀️ How I Evaluate Them
📊 Is it a Good Vertical?
- Market size (growing, stagnant, or shrinking)
- Adding new product lines (expanding TAM)
- TAM (Total Addressable Market)
- Headwinds
- Tailwinds
🏗️ Is the Company Good?
What are the moats? (Hamilton Helmer’s 7 Powers)
- Network Economies
- Switching Costs
- Scale Economies
- Cornered Resources
- Branding Power
- Process Power
- Counter Positioning
Other Factors:
- Moat direction (narrowing, widening, or stable)
- Destination analysis (where the company will be in 5‑10 years)
- Bear case
🧜♀️ Is it Well Managed?
- Management ownership in the company
- % of their total net worth
- Recent buying/selling activity
- Founder-run or founder-owned
- Happy employees
- Happy customers
- Track record
- Consistently beats expectations
- Shareholder-friendly actions
💵 Do the Numbers Back the Story?
- Gross margin
- Revenue growth
- Free Cash Flow (FCF)
- Return on Invested Capital (ROIC)
- Debt levels
- EV/Revenue
- EV/FCF
🚩 Are There Any Red Flags?
- Accounting irregularities
- Complicated financials
- High executive turnover
- Concentration risk
🐂 vs 🐻 Bull vs. Bear Case
- Potential upside vs downside
📈 Other Considerations
- Institutional buying/selling
- Short positions
- Social sentiment
💡 How I Invest in Them
After researching a company, I classify it into a few categories:
- ❌ Reject
- 👀 Continue to Monitor
- 🚀 Great Buy – Strong moats, great management, and growth potential.
- 💎 Good Buy – Potential to become a great company over time; available at a great price.
I set a price range for each company based on my research and buy when they trade within that range.
⚖️ Portfolio Allocation
I typically invest ~80% in equity and ~20% in LEAPS or spreads for leverage.
This ratio depends on the company quality and valuation.