Forum Topics Framework to evaluate the company
Valueinvestor0909
Added 7 months ago

Building upon this, added S.O.L.I.D Framework (Quantitative factors) to my blog.


S-Sustainable Growth

O-Operating Leverage

L-Liquidity

I-Investment Return Metrics

D-Dilution

If you are interested: https://growthgauge.substack.com/p/a-solid-framework-quantitative-analysis

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Valueinvestor0909
Added 7 months ago

I've written an article on my blog where I share my thoughts on evaluating the quality of a company: https://growthgauge.substack.com/p/a-simple-framework

This isn’t something I picked up from a book, another blog, or anyone else. I sat down, thought about it, and listed the things that I believe make a business a quality business.

My initial draft was quite detailed, but to make it more memorable and usable, I streamlined it significantly and came up with the S.I.M.P.L.E Framework.

I'd love to hear from folks about their go-to criteria for evaluating the quality of a company. Looking forward to a great discussion—my framework is very fluid and will adjust as I receive more feedback. Have a read and let me know—do you agree or disagree? Have I missed anything crucial?

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Strawman
Added 7 months ago

I really liked this @Valueinvestor0909. I think you got all the main qualitative factors (maybe I'd add culture too?), and I agree that these are well worth considering (even if they can be tricky to measure).

Extra points for making it fit into an acronym! :)


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Valueinvestor0909
Added 7 months ago

Agree culture is so important. I will be bit cheeky and add into Leadership to save my acronym.

Recollection factor isn't letting me leave the acronym. Whats the point of having perfect framework but no one remembers it.

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mikebrisy
Added 7 months ago

@Valueinvestor0909 I also like it, and it largely captures what I try to do when I look at companies. What I like about it is the simplicity!!!

I also agree with @Strawman that some of the elements are hard to assess in practice when looking outside in. But then having them in the framework, if you haven't assessed them, it should flag to you a gap in your knowledge and therefore increases the investment risk.

I also agree that culture fits within leadership. Ultimately the CEO, Board and rest of the top team (in that order in my experience, depending on how involved the Board is with the operations) drives the culture over the long term.

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