At the highest level, we look for 5 things when we invest, which reflect our investment philosophy.
You should know, these aren’t all of our ideas.
I didn’t start Rask to reinvent the ‘stock picking wheel’. It’s a product of hundreds of years (if not thousands) of combined teachings and lessons learned by others who have gone before us.
Luckily for me, these investors — like Warren Buffett, David Gardner, Charlie Munger, Ben Graham, Peter Lynch, Pat Dorsey, Chuck Akre, Tom Gaynor… — are far smarter than yours truly and they chose to write about their lessons to help others.
The stock market is a vehicle for transferring wealth from the impatient to the patient (see Buffett annual letters)
Warren Buffett
☑️ See also: how we pick ETFs
Our 5 criteria
To identify individual Satellite positions for Rask Core 🌏, our approach is as follows:
- The companies must have a strong competitive advantage or ‘moat’
- Management must be aligned, talented, transparent and consider themselves as ‘owner-operators‘ (founders and families are great)
- The businesses must be within our team’s circle of competence (i.e. what we can understand). Given our expertise lies in the technology, finance, software and industrial sectors, we almost never venture outside of these industries. Fortunately for us, the companies in these industries can be extremely profitable.
- The business must operate in a structurally growing and increasingly important sector, market or geography. The total addressable market (TAM) is very important when we are aiming to invest for 5-10 years or more.
- The shares/business must be reasonably valued. We will use the standard valuation modelling tools, such as discounted cash flow (DCF) analysis, internal rate of return (IRR), comparables and ratios, and sum-of-the-parts.
Our checklist
The following checklist comes from one lesson inside the Value Investor Program, our complete online investor curriculum. I’m sharing it here to help you better understand the process we follow, but if you want the full immersive experience of how we do it, consider joining hundreds of other curious investors by taking the Rask Value Investor Program.
Michael Shearn wrote a 385-page(!) book solely on the art of creating investment checklists – check it out here.
In the video tutorial above, I’ll take you through the checklist for two companies. Please follow along, pause to take notes, and assign your own scores as I do mine. Before you watch the video, consider reading the introductory sections of Magellan Financial Group and ARB Corp’s annual reports.
Spreadsheet
PDF version
Below, you can download the PDF version of the checklist and a sub-section of the spreadsheet I use. If you’re enrolled in the full VIP you can access the full Notion template and Google Sheet workbook (including the valuation models).
I have also included a downloadable PDF checklist. For the full workbook (including valuation models, ASX case studies, etc.) you’ll need access to the course.
