Step 1

Automated Screening for Superior Outcomes

Industry Strength
  • Industry strength relative to other industries
  • 50% of a stock performance tied to the industry group
  • Shortlist leading stocks in leading industries
Relative Price Strength
  • Look for leading price performers
  • 52 week and lifetime highs
  • Winners show price strength early in a bull cycle
Earnings Acceleration
  • Stable historical earnings
  • Accelerating current annual & quarterly earnings
  • Immense future earnings growth potential
Step 2

Establishing Leadership

Product/ Service Leadership
Ability to Scale
Management Track Record
Efficient Capital Allocation & Superior Return Ratios
Governance Standards & Alignment of Interest
Step 3

Fundamental Research Overview

Step 4

Valuation Consideration

Value in Growth
  • Expensive in the short run but cheap in the long run
  • Accelerating earnings growth combined with leadership ensures premium multiple justification
Margin of Safety
  • Assessment of longevity of growth and leadership
  • Estimate downside risk of going wrong due to overestimating growth
Traditional Valuation Metrics
  • Reliance on traditional valuation metrics can be deceiving
  • Trading Multiples (P/CF, P/E, EV/EBITDA) relative to historical averages – significant premium requires serious justification
  • “Low P/E” investing can be a value trap
Step 5

Risk Management Framework

Portfolio Review
  • Weekly fundamental stock reviews
  • Ensure balance in portfolios based on industry & stock concentration, market cap weights, and liquidity
  • Check for technical / distribution patterns
Eliminating Losers
  • Identify and eliminate investment mistakes actively
  • Monitor for any sectorial and stock weakness
  • No averaging down on a loss making position
Taking Profits
  • Riding winners until see earnings growth deceleration
  • Selling in euphoric tops
  • Red flags – crowded trades, consensus bets, excessive media coverage, over-guidance from management

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