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voyager

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    Idea Generation

    in General Discussion

    Posted

    This is something that I've been spending a lot of time thinking about recently.  How do you all come up with ideas?

     

    The standard ways include 52 week low lists, reading the Wall St. Journal, spin-offs, 13Fs, reading Barrons, screening, ect. 

     

    However, it seems like the really great investors do one of two things.  1) They have differential insights 2) They have a circle of competence that they stick to.  Some examples of investors that I'd stick in bucket 1 are Edgar Wachenheim, Seth Klarman, Li Lu, Warren & Charlie.  Bucket 2 examples would Tom Russo with consumer, Alexander Sacerdote with technology, and nearly all the folks at Oaktree. 

     

    It's understandable how one could build and stick to a circle of competence over time.  How do you come up with differential insights so that you're ahead of the curve though?

     

    What Warren has said before is start with the As and end with the Zs, which is absolutely valid.  If you know the companies from a high level, that doesn't mean you have differential insights.  What mental models have you found to be extraordinarily insightful?

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