MoneyMonk’s Investment Philosophy

Investment Philosophy


Investment Philosophy :

A set of guiding principles that inform and shape an individual’s investment decision-making process. Examples of investment philosophies, or styles, include: Value Investing: Seeking relatively undervalued stocks and believing they will eventually produce strong returns. Source : Investopedia

Over last the 2-3 years I have realized the importance of Investment Philosophy and hence I am starting to define my investment philosophy. I believe this will change over time but this is what it is as of now.

I don’t follow a particular screener criteria but I have accumulated a few qualitative and quantitative factors.

I usually prefer companies having

  •  High ROCE compared to peers (Effective Use of Capital than other)
    • The reason can be effective use of Working Capital or High Margin(Pricing Power) or Low Cost Benefit
  • Emerging & Long Lasting Moat
    • Without this, there is no fun. (Inspired by Sanjay Bakshi)
  • Increasing Operating Margins and ROCE
    • This indicates the efficiency of management
  • Growth visibility
    • Near term expansion plans or growth appetite
  • Young & Honest Management
    • Ambitious, Well Educated, Dynamic and honest management helps us to grow. On whom, we can bet our money.
  • Quality of Earnings
    • Sales should convert in cash. and Cash should be from Sales. 😉
  • Stay away from High Debt
    • I always look for Risk Mitigation. When my portfolio is higly concentrated than there is no logic in adding more risk by having leveraged companies.
  • Holding the winners and Cutting the losers
    • I have developed a discipline to cut losers if they are not performing as per our philosophy or rationale. I am learning to hold longer.

These are the basic points. I will update this as I accumulate my learnings.