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4 Stage Investment Process


1

Generate Ideas

  • Screen for statistically cheap stocks (Graham)
  • Screen for good businesses (Buffett)
  • Screen for behavioral anomalies / companies in transition
  • Collective investment experience / contact network / out of office experiences / obvious headline
    issues

2

Qualify

  • CSC analytical spreadsheet
  • Digest public company information
  • Does it appear to be either: a statistically cheap stock that provides enough margin of safety (Graham)OR a good business at a reasonable price (Buffett)

3

Deep Dive

  • Team tackle by generalists — avoid expert fallacy
  • Socratic method: long vs. short
  • Qualitative and quantitative analysis:
    • Business
    • Value
    • People

4

Decision

  • Margin of safety
  • Sufficient risk-adjusted upside
  • Industry concentration and subtle risk correlation
  • Full or half position
  • Decision process detailed and recorded

Final decision is made by the PM