The QGLP Checklist – 25 questions, 25 frameworks
- CHECKLIST BACKDROP
- Frameworks: (1) Investment v/s Speculation (2) Discounted Free Cash Flow to Equity (3) Power of Compounding (4) QGLP
- BUSINESS CHECKLIST
- Q#1 What is the history of the company and management?
- Framework: (5) Lindy Effect
- Q#2 Is the company’s business model understandable? How does it make money?
- Q#3 Is the company profitable? If not, is it expected to emerge?
- Framework: (6) Great, Good, Gruesome, (7) Emergence
- Q#4 Are the company’s terms of trade favorable? Is Cash flow healthy?
- Framework: (8) Terms of Trade
- Q#5 What is the company’s cost and margin structure? How has it changed in the past?
- Framework: (9) Common Size Analysis
- Q#6 How’s the Du Pont Analysis for the company?
- Framework: (10) Du Pont Analysis
- Q#7 What is the competitive landscape? What is the role of regulation in the business?
- Framework: (11) Porter’s 5 Forces
- Q#8 Does the company enjoy an Economic Moat? What are its sources?
- Framework: (12) Economic Moat, (13) Porter’s Strategy Framework, (14) CAP & GAP
- GROWTH CHECKLIST
- Q#9 What is the addressable market opportunity and its key drivers?
- Framework: (15) Value Migration, (16) India – the NTD Opportunity, (17) Winner Categories, Category Winners
- Q#10 What is the company's growth plan? How sustainable is the growth?
- Framework: (18) CVPM Analysis, (19) 100x, (20) Mid to Mega, (21) Large unpopular
- MANAGEMENT CHECKLIST
- Q#11 Is the management high on Integrity & transparency?
- Framework: (22) Sharp Practices
- Q#12 Is the management competent?
- Q#13 Does the management have passion / growth mindset?
- Framework: (23) Fixed v/s Growth Mindset
- Q#14 Does the company have a rational capital allocation policy?
- Q#15 Does the company have a suitable organization structure and depth of management?
- Q#16 What is the organization culture?
- Q#17 Does the company have a sound succession plan?
- Q#18 Do the owners have enough skin in the game?
- Q#19 Have the promoters pledged a large portion of their holding?
- PRICE CHECKLIST
- Q#20 Has the financial modeling been done with earnings estimates for at least 3 years?
- Q#21 Is it a QGL stock?
- Q#22 Is valuation reasonable?
- Framework: (24) PEG, (25) Payback Ratio
- Q#23 Is there enough Margin of Safety?
- Q#24 Is the stock reasonably liquid?
- RISK CHECKLIST
- Q#25 What can go wrong with the company narrative & numbers?