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1) My investment philosophy: I invest in companies earlier in the S-curve that are winning their markets and can grow FCF per share at high rates over 3-5 years.
2) I own ~10 companies at a time & my biggest positions are 20% at cost. For max sizing, I need a significantly variant view on out-year estimates based on deep primary research.
3) I prefer founder-led mgmt or "encore execs" (e.g. Slootman). Ppl w/ integrity, ownership, a track record of success in life, and a dogged persistence to win are paramount.
4) Organic revenue growth is typically 20%+ at the time I invest. FCF must start to look "meaningful" by year 3 in my initial underwriting estimates.
5) I don't overpay. I'm looking for a dislocation - ST relative underperformance, overblown headline risk, etc.
6) I let the fundamentals and risk/reward drive my positioning but watch price action - over the medium term, mkt should agree w/ my thesis.
7) I sell when my thesis breaks (i.e. when it stops showing up in reported numbers). I don't sell just on valuation/price targets bc this can change if a co successfully reinvests for growth over time.
8) Risk = permanent capital loss, not volatility. Risk mgmt starts w/ a high bar for new ideas to enter the portfolio (pre-built conviction). Volatility, all else equal, is oppty to add to my best ideas.
9) I avoid statistically cheap stocks, turnarounds & companies chronically missing numbers. Mean reversion is not my game.
10) I don't short stocks. A long career of doing it has taught me it's easier to avoid inferior businesses vs getting blown up on a value factor rotation, M&A, etc.
