Mission Statement

I shall have an owner’s mindset when picking stocks. I want to create a diverse conglomerate. This includes geographic and industry diversification. I also want to try to beat the MSCI World ETF ticker(URTH). I choose URTH as my benchmark because I felt like if I wasn’t going to pick individual stocks I’d opt for a globally diversified ETF.

Portfolio Philosophy

• Maintain a portfolio of 15-20 stocks. A balance between concentration and diversification.
• Each position is equally weighted on a cost basis.
• Portfolio turnover target is 20% a year so a max 4 positions can be rotated a year. Which creates an average holding period of 5 years.
• The portfolio is to be diversified across sectors –  max four stocks in a theme.
• Another soft goal is diversification across countries.
• $10 billion market cap limit except defenders and goalkeepers.
  
  The Team
  – 1-2 Goalkeepers
  – 4-8 Defenders
  – 6-10 Midfielders
  – 2-6 Strikers

Goalkeepers – Hedges against bad outcomes ie: Inflation and Recessions
Defenders – Low correlation to economic cycles. Bigger companies. Defensive Sectors.
Midfielders – Quality compounders with high returns on capital and large runway.
Strikers – High return High Risk stocks with big upside.

The Soccer Analogy was inspired by Diego Parrilla

Choosing a Company

This will describe the recipe that will be used to select the investments.

1. Portfolio – How is the portfolio looking? What am I missing? How will this affect the portfolio? I don’t want to be making too many of the same bets.
2. Marco view/ Sectors – First I think about the future and the macro environment. Where will we be in 5, 10, 15, 30 years? This will tell me the sectors and companies to look for. Where are the Mega Trends? What sectors will benefit?
3. The Search – Screens, blogs, podcasts anything can be used to find interesting ideas.
4. Financial Data and Ratios – Collecting 5-10 years of financial Data. What is the story the numbers are telling?
5. Qualitative analysis – Which companies are best? Looking for high quality companies? What makes this a great company? The rest of the picture.
6. Management – Are they buying? What is their incentive package? Have they done a good job in the past?
7. Value – What is this company worth? What’s my IRR?