Equities
Single stocks express views inside the circle of competence. Workflow aligns with the Investment framework thesis page and buy/sell lists.
1. Research pipeline
| Stage | Output | Time (rough) |
|---|---|---|
| Screen | 10–20 watchlist names | Batch with data screens |
| Deep dive | 3–5 one-page theses | 4–8+ hours each |
| Track | Update assumptions each quarter | 1–2 hr/name/quarter |
| Exit | Journal + lesson | Within 30 days of sell |
2. Screening dimensions (example)
Score for ranking, not false precision.
| Dimension | Look at | Red flags |
|---|---|---|
| Business model | Repeat purchase, pricing power, capex intensity | Subsidy-driven growth with no path |
| Quality | ROE, CFO/NI, leverage | Receivables spike; chronic negative CFO |
| Governance | Ownership, related parties, dividends | Repeated dilution; broken promises |
| Valuation | P/E, P/B, EV/EBIT percentiles | Hot narrative at 90th+ percentile |
| Catalyst | Product cycle, capacity, policy | Single uncontrollable bet |
3. Filing read order
- Cash flow statement: operating CFO vs net income (≥3 years)
- Balance sheet: interest-bearing debt, inventory, receivables
- Income statement: gross margin, opex ratio; non-recurring items
- Notes: revenue recognition, goodwill, related parties, contingencies
- MD&A: consistency vs prior quarter
Ratio cheat sheet
| Ratio | Meaning | Use |
|---|---|---|
| ROE | NI / equity | Return efficiency (DuPont split) |
| CFO / NI | >1 healthier | Earnings quality |
| Gross margin trend | YoY, QoQ | Competition and pricing |
| Net debt / EBITDA | Leverage | Survival in downturn |
4. Valuation: at least two methods
| Method | Fits | Caveat |
|---|---|---|
| Relative (P/E, P/B, P/S) | Stable earners, good comps | Cyclicals distort P/E |
| EV/EBIT, EV/EBITDA | Different capital structures | Strip cash and debt |
| DCF | Predictable cash flows | Terminal value sensitive—scenario it |
| Dividend / asset | Financials, resources, heavy assets | Industry-specific templates |
Output: bull / base / bear bands in thesis; buy nearer base–bear, sell nearer base–bull.
5. Holding-period tracking
Each quarter, update only what changed:
- Revenue/volume vs expectation?
- Margin and opex vs plan?
- Competitive shift (new entrant, price war)?
- Valuation percentile in sell zone?
- New risks not in original thesis?
6. Sources (personal)
| Type | Use |
|---|---|
| Exchange filings | Ground truth |
| IR, earnings calls | Management narrative |
| Industry bodies, trade data | Volume and price |
| Up/downstream leaders | Chain cross-check |
7. Relation to funds
- High research cost → use broad or sector ETFs for non-core names.
- Single-name cap: Discipline & sizing.
warning
Avoid “story stocks”: narrative only, no verifiable KPIs, no valuation anchor—default to L3 watch size or pass.