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Qualitative thinking?


premfan
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Hi friends i want the boards take on how you guys think of the qualitative aspect of your investments. Numbers are number they are what they are.  This is my qualitative process:

 

1.) I will only invest in something with a large market. I see many companies doing well but they have already saturated there market. Wheres the growth going to come from? They need to expand but doing so they might lose focus on what got them there.

 

2.) I look for market leaders or soon to be market leaders.  In a large market there are many slices of the pie to take. The more competitors the more liquidity the bigger the market gets. Paradoxically the lower barrier to entries the larger the future potential market. 

 

3.)  I look  for companies inventing new markets or new solutions. They are the innovators and first movers in the field. The market is new and its impossible to model the future size of the market.  Wall street guys cant model these companies and will go to default mode and say there model is unsustainable.

 

How you guys think of the qualitative aspect of your investments?

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Not really designed for public consumption, but here's some of the stuff I look at:

 

[] management interests aligned with shareholder? Pro-shareholder policies?

 

[] moat around business? Durable competitive advantage? Low-cost producer?

 

[] good runway for future growth? Small fish in big pond? Growing market?

 

[] management has integrity, intelligence, energy?

 

[] good track record?

 

[] is stock undervalued? Sufficient margin of safety?

 

[] good defense? Would it do well in bad environment? Over-leveraged? Dependant on external sources of financing?

 

[] good capital allocation?

 

[] transparent communications with shareholders?

 

[] do I understand the business well enough? circle of competence?

 

[] have I looked at the short thesis for this business? What would kill it? Can lower cost operator (china) come in and kill it?

 

[] could I do better by being patient?

 

[] do I understand the downside and upside? Opportunity cost?

 

[] does business provide clear value to its customers?

 

[] Are you looking at normalized earnings or are you looking at boom/depress earnings?

 

[] vetted by investor(s) I respect?

 

[] any pricing power? How would it do with high inflation?

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Hi friends i want the boards take on how you guys think of the qualitative aspect of your investments. Numbers are number they are what they are.  This is my qualitative process:

 

1.) I will only invest in something with a large market. I see many companies doing well but they have already saturated there market. Wheres the growth going to come from? They need to expand but doing so they might lose focus on what got them there.

 

2.) I look for market leaders or soon to be market leaders.  In a large market there are many slices of the pie to take. The more competitors the more liquidity the bigger the market gets. Paradoxically the lower barrier to entries the larger the future potential market. 

 

3.)  I look  for companies inventing new markets or new solutions. They are the innovators and first movers in the field. The market is new and its impossible to model the future size of the market.  Wall street guys cant model these companies and will go to default mode and say there model is unsustainable.

 

How you guys think of the qualitative aspect of your investments?

 

You are looking for those rare birds that could become 100 baggers.  Any good ideas?

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Hi twa,

 

I wrote about coinstar awhile ago. Heres my take on coinstar.  I'm big into philosophy and my favorite philosopher is lao tzu who wrote "tao te ching". I make investments and live my life based on the principles in the book.  Currently there are two worlds the world wide web "online" world and the " off line " world.  The  two worlds will eventually balance itself out. Anything in excess will become equal. 

 

Coinstar is the bridge between the offline world of retail and the online world of retail. Coinstar is an automated retail solutions company not a dvd company. They are leveraging there redbox success but have other seeds in place that will hopefully bloom to lever in the future.  Coinstar is changing the way content is distributed to the offline world. Its creating a balance between both worlds.  Simply put coinstar is an disruptive technology with almost an limitless market. 

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Guest valueInv

They are leveraging there redbox success but have other seeds in place that will hopefully bloom to lever in the future.  Coinstar is changing the way content is distributed to the offline world. Its creating a balance between both worlds.  Simply put coinstar is an disruptive technology with almost an limitless market.

 

What other seeds?

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They are leveraging there redbox success but have other seeds in place that will hopefully bloom to lever in the future.  Coinstar is changing the way content is distributed to the offline world. Its creating a balance between both worlds.  Simply put coinstar is an disruptive technology with almost an limitless market.

 

What other seeds?

 

And how does their streaming venture have synergy with their vending machines?

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