Frame 'of Work'
We try to know whatever we can before owning it.
| Growth |
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| Business competitiveness |
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| Management |
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| Valuation |
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| Balance Sheet Strength |
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Frame 'of Mind'
Is actually more important than Frame ‘of Work’ and makes the difference over the long run
| A. Decision Making | |
| 1. What need to do (BUY/SELL) |
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| 2. What actually need to do (HOLD) |
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| 3. What not to do |
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| B. Risk Management | |
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We classify companies under four categories
Where E – Entrepreneurs, I – Investors. + and – means positive/negative on business prospects.
Our focus would be to find opportunities,
- Where Entrepreneurs are positive on their business, but investors are not (due to short term blips).
- Where both of them are negative, our role would be to determine whether these are structural negatives or to look for early signs of business revival.
- When both are positive and reflected in the valuations, the chances of overpaying for the business are high (e.g., IPOs, etc.), although there may be exceptions
- When the Entrepreneur is negative (not all entrepreneurs would directly communicate this; it needs to be understood from industry trends, level of transparency, mgmt. undertone, lack of execution, promoter selling, etc.), but investors are positive, it may become a ‘Hope Story’.
In Investing, most of the gains are captured by professionals, not because they focus on winning, but on avoiding losing. This helps them to minimize mistakes and stay invested for the long haul.
This is why investing is often referred to as a “Loser’s game,” because it is more important to avoid losing money than it is to try to win big.
We encourage to read further on it here .