Nice! I love how you go from 44 000 stocks to a narrow selection. And that you also point out weaknesess in your strategy.
The six setups are:
1) Under-recognised growth,
2) Hidden assets,
3) Temporary headwinds,
4) Cyclicals,
5) Capital returns,
6) Others
My questions is: In practise, do you end up in small and unknown companies (overlooked and undiscovered). Certainly, hidden assets and under-recognised growth can more easily be found there. But cyclicals and temporary headwinds, are then also larger companies on the table, and it's more about going against consensus (rejected companies, misunderstood)?
I'm just wandering if there are different types of companies in the different setups, in terms of market cap and how well known they are.
And if you over time find that let's say 2 or 3 setups works better (for you) than the others do, will you focus more on them? Or is it so soon for that, and is diversification on strategies a goal in itself? I guess it also really depends on what you find.
1. JJust to clarify: I haven’t individually gone through 44,000 stocks. I used that number to illustrate how vast the investable universe is and why I need a process that quickly narrows it to a manageable opportunity set.
2. For me, a thesis explains why the shares are mispriced. Being small or unknown alone doesn’t make a company attractive. What matters is understanding how others are pricing the stock today and where my variant perception differs. In practice, I agree that mispricings often show up more in smaller, less-followed names, but larger companies can be badly mispriced too when there is crowding or a strong consensus narrative
3. Exactly like you said. It depends on what I find, but I would prefer diversification
Thanks for reading and subscribing! I will also be posting my notes from a recent meeting with Jennifer Kang, the CFO of HRnetGroup Limited (CHZ; HRNET SP). There were a lot of insights from that conversation that I think you'll enjoy
Nice! I love how you go from 44 000 stocks to a narrow selection. And that you also point out weaknesess in your strategy.
The six setups are:
1) Under-recognised growth,
2) Hidden assets,
3) Temporary headwinds,
4) Cyclicals,
5) Capital returns,
6) Others
My questions is: In practise, do you end up in small and unknown companies (overlooked and undiscovered). Certainly, hidden assets and under-recognised growth can more easily be found there. But cyclicals and temporary headwinds, are then also larger companies on the table, and it's more about going against consensus (rejected companies, misunderstood)?
I'm just wandering if there are different types of companies in the different setups, in terms of market cap and how well known they are.
And if you over time find that let's say 2 or 3 setups works better (for you) than the others do, will you focus more on them? Or is it so soon for that, and is diversification on strategies a goal in itself? I guess it also really depends on what you find.
Good luck and I will follow future post!
Thanks for asking.
1. JJust to clarify: I haven’t individually gone through 44,000 stocks. I used that number to illustrate how vast the investable universe is and why I need a process that quickly narrows it to a manageable opportunity set.
2. For me, a thesis explains why the shares are mispriced. Being small or unknown alone doesn’t make a company attractive. What matters is understanding how others are pricing the stock today and where my variant perception differs. In practice, I agree that mispricings often show up more in smaller, less-followed names, but larger companies can be badly mispriced too when there is crowding or a strong consensus narrative
3. Exactly like you said. It depends on what I find, but I would prefer diversification
Thanks for reading and subscribing! I will also be posting my notes from a recent meeting with Jennifer Kang, the CFO of HRnetGroup Limited (CHZ; HRNET SP). There were a lot of insights from that conversation that I think you'll enjoy