Most newbie value investors, when it comes to analysing companies, typically use a method of analysis which is based on an ideal scenario. But as you know, in real life, “ideal” doesn’t happen very often at all and most companies simply don’t fit an ideal scenario for analysis. That’s why I believe to become a better, savvier investor, you need to adapt your methods of analysis for different types of companies.

Here at The Fifth Person, we’ve split value investing into three categories – predictable, special situations and asset plays. Each category requires a different type of analysis.

Predictable Value Investing

In this ideal scenario, you want a company to fit the four quadrants of business, management, financials and valuation nice and snug. Here’s what a company like that looks like:

• Business – Look for a simple business that is within the investor’s circle of competence. If you can’t ...