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Essence

  • Equity investing is complex. A checklist is an excellent tool to bring discipline to the process.
  • The 25 questions and the 25 related frameworks covered in the report are a good starting point for an investor to eventually arrive at their own checklist over time.

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?

QGLP CONNECT

  • The checklist is designed specifically to identify QGLP stocks. All aspects – Q, G, L and P – are addressed in the checklist.