Our process is highly iterative in which we play devil's advocate and try to "kill" our best ideas. Some of the reasons why an idea may be "killed":

  • Valuation
  • Management integrity / ability
  • Strategic advantage not defensible enough
  • Lack of accounting clarity
  • Lack of identifiable catalyst(s), etc.

1. Screening target universe

  • Growth
  • Cash generation ability
  • Accounting clarity
  • Margin sustenance

2. Digging deeper

  • Is growth sustainable?
  • Are accounting disclosures appropriate?
  • Does this business have defensible advantages?
  • Does it have pricing power?
  • Is capital deployed appropriately?
  • Is there focus on shareholder value?
  • Does management stay ahead of competition?
  • Is management shareholder friendly?

Practical Risk Management

  • Cap industry-wise exposure
  • Manage sensitive exposure
  • Can position be unwinded quickly?
  • Get comfortable with level of speculative momentum.

4. How much should we pay?

  • Do absolute valuations suggest material upside (20%+), despite conservative expectations?
  • Current valuation should ascribe little or no value to material optionality
  • Are technicals (value-based) favorable for entry?

3. Identifying quantifiable optionality

  • Can existing assets be deployed elsewhere?
  • Can existing moat be leveraged for a new opportunity?
  • Is the opportunity quantifiable?
  • Can we capture this optionality cheaply?