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The Checklist


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everyone is aware of the "checklist" that one use to quickly evaluate a company.


was wondering what is one peoples checklist? i am just starting to build one, here is my current list.



Check List


1. Do I understand the biz/industry or is it easily understood

2. Is it undervalue (by how much, diff level for diff type of biz)

3. What is my downside (worst case senario), what is the upside

4. What is the moat/competitive advantage

5. Can this business be decimated by low-cost competition from China or other low-cost countries?

6. Is this a win-win business for the entire ecosystem?

7. Does this biz depend on financing if it does what are the implications

8. Is insiders align with shareholders

9. Are you looking at normalized earnings or are you looking at boom/depress earnings

10. Any respectable value investor a shareholder

11. what are its competition and what product/service can replace this companies product/service (both direct and indirectly)

12. Can technology deminish the moat






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Investment Checklist

Is it a long term investment? A short term investment?

What is your target for this stock?

What timeline do you foresee for this stock to realise it's projected value?

Investor psychology checklist

Is it in your circle of competence?

Are you investing now because this is a good deal or because you feel you need to dance on the music?

Are you sure you are not speculating?

Are you sure you are not acting on over-confidence?

Are you following the 3 rules: Don't lose money, don't lose money, never forget the first two?

Are you sure you are no acting on an impulse buy?

Are you taking undue risk?

Are you sure you are not delusioning yourself by the great numbers, therefore forgetting the great risks?

Are you changing your strategy because of a series of bad performances?

For the review only: Are you reinforcing yourself just to avoid the reality that you were wrong?

Are you sure you are not buying just because you don't want to miss the boat?

Investment metrics

Are you sure you are not buying on a market that has front wind?

Are you buying a great company at a good price or a good company at a great price?

Do you understand correctly the financial structure of the company?

Is the business understandeable?

Do you know how the money is made?

Does the business have a consistent operating history?

Does the business have favorable long term prospect?

Is it a business that even a dummy could make money in?

Is the company free to adjust prices to inflation?

Have you read the annual report of the main competitor?

Are you buying at a PE around the growth rate or lower?

Do you feel you have more then 10% margin of safety?

Is the equity to leverage acceptable for you?

Does the company have a strong track record from the past?

Does the company has good prospect in the future?

Has the management's demonstrated a high degree of intelligence?

Has the management's demonstrated a high level of integrety?

Has the management demonstrated a high degree of energy?

Is the management rational?

Is the management candid with shareholders?

Has the management resisted the temptation to grow quickly by merger?

Has the management the strenght not to follow institutional imperatives?

Has the management been free of a major merger within this period? (Many merger failures come out of the woodwork within this period)

Are stock options treated as an expense?

Are the insider been buying lately?

How is the company able to resist economic cycles?

Could a small change in the liability wype oup an apparently huge equity? (Ex Fanny Mae)

Can the company generate enough Free Cash Flow to survive if another downturn happens?

Does this company have some kind of moat?

Do you see an asymetric Risk/Reward?

Are you sure you are not buying at the top of a cyclical company?

Do you see strange informations in the report that you don't understand?

Is the company earning a good return on it's investment?

Is the company earning a good return on equity?

Is there a plausible catalyst that can unlock this stock?

Is the company having a heathy organic growth?

Does this stock have good tangible equity to protect in a downturn?

Has the companyhad a track record of earning growth in most years above the stock market average?

Is the value of discounted earnings greater then the current market value?

Have you discounted at a rate greater or equal then the 10 year bond rate?

Have cash flow been based on net income+depreciation+depletion+amortization-capEx-additional working capital?

Has the company been temporarily punished for a specific risk that is not long term risk?

Is the company conservatively financed?

Are those kind of revenues sustainable?

Could the moat shrink in a short period of time?

Can this investment be a zero?

Does it make you overexposed into an area of the economy?

Is it a bet?


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  • 2 years later...

I've been playing with checklists lately to try to improve my process and I thought I would bump up this thread since I think checklists are probably still underrated. Once mine's done, I'll probably post it here.


If you have one and want to share, it would be greatly appreciated.

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