Investment Checklist
A checklist designed to improve my decision-making based on lessons from past investments.
Negatives
Financial Health
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Declining margins without clear recovery plan
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Working capital requirements increasing faster than sales
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Negative free cash flow with unclear path to profitability
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High leverage during cyclical downturns
Industry Dynamics
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New disruptive technology threatening business model
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Commodity business with no pricing power
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Industry in structural decline
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Supply chain normalization after temporary advantages
Management & Execution
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Infrastructure investments with no immediate ROI
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Asset monetization timeline uncertainty
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Long-term investments without near-term benefits
Positives
Competitive Advantages
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Clear and defensible moat (brand, network effects, switching costs)
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Pricing power demonstrated over time
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Market share gains in core business
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Vertical integration advantages
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Strategic network assets
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Regional manufacturing advantages
Financial Metrics
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ROIC consistently above 15%
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Revenue growth > inflation + GDP growth
☐ Is revenue going to grow?
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Gross margins stable or improving
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High gross margins (80%+)
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Strong free cash flow generation
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Industry-leading margins vs. peers
Valuation & Risk
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Trading below intrinsic value (margin of safety)
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Strong balance sheet (net cash or low debt)
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Asset play with sum-of-parts upside
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Downside protection from valuable assets
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High free cash flow yield (10%+)
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Debt-free balance sheet
Growth Catalysts
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Infrastructure spending tailwinds
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AI integration across products
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Business model transformation (ATMaaS)
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Market share consolidation
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Data center and broadband infrastructure growth
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Optionality from new ventures (VR/AR)
Management Quality
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Significant insider ownership
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Track record of value creation
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Cost discipline and capital allocation
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Operational excellence in cyclical business
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Strategic transformation execution