We have an investment process that we use to analyze any potential investment idea. The process consists of four quadrants:
- Business. The growth, risks, and competitive advantage of a company’s business model
- Management. How talented and shareholder-friendly is the management team?
- Financials. The financial performance of a company over the last 5-10 years
- Valuation. Is the stock currently undervalued?
Now it can take quite a bit of time to analyze a company across all four quadrants – especially the business and management quadrants. Understanding a company’s business model (along with its myriad moving parts) and evaluating key management behavior requires effort and research. Many times, the information may not be easily available as well.
Financials and valuation on the other hand are done a lot faster. Because these quadrants deal with numbers and hard data, it’s easy to see whether or not a company has been performing over the ...
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