LimJianYang
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Investing Checklist

There are many great ideas out there. A quick way to filter them is to use a list of clearly defined traits for great companies, paired with an LLM to help identify whether an investment deserves attention.

This is the first layer of the vetting process: a guard at the door of a jewellery store, deciding whether a visitor is a potential client or a robber.

Moat & Durability

  • Does the company have a strong moat?
  • Is the moat sustainable for decades?
  • Is the product or service essential?
  • Can customers easily switch away?
  • Does the company have pricing power?
  • Can it raise prices above inflation?
  • Is the business hard to replicate?
  • Does the company benefit from scale?
  • Does it have network effects?
  • Does it have a strong installed base?
  • Are its physical assets irreplaceable?
  • Are its intangible assets durable?
  • Does the brand truly matter?
  • Does it have multiple layers of protection?

Industry & Demand

  • Is the industry structurally attractive?
  • Is competition rational or destructive?
  • Is demand resilient, not discretionary?
  • Is the company exposed to substitution risk?
  • Is the business vulnerable to AI or technological disruption?
  • Is regulation a risk or an advantage?
  • Does regulation still allow attractive returns?
  • Is the company in an industry worth avoiding?
  • Would customers still need this product in a downturn?
  • Would the company remain relevant despite technology shifts?

Growth & Unit Economics

  • Does growth come with barriers to entry?
  • Is growth profitable, not just fast?
  • Are returns high because of real advantages?
  • Does the company earn high ROIC?
  • Does it earn high ROIIC?
  • Are incremental returns better than competitors?
  • Can it reinvest at high returns?
  • Is capital deployment scalable?
  • Is growth repeatable?
  • Does growth require too much capital?
  • Is the spread over the cost of capital attractive?
  • Are returns driven by inflation or real productivity?

Revenue & Cash Flow

  • Does it have recurring revenue?
  • Is the recurring revenue predictable?
  • Does the business convert profits into cash?
  • Does it generate excess cash?
  • Can cash flows be projected with confidence?
  • Are cash flows received early enough to reduce risk?

Management & Accounting

  • Is excess cash used wisely?
  • Are buybacks value-accretive?
  • Are dividends the best use of cash?
  • Is management disciplined with capital allocation?
  • Does management understand ROIIC?
  • Has management avoided poor acquisitions?
  • Does management avoid hoarding cash?
  • Does management communicate honestly?
  • Are adjusted numbers used reasonably?
  • Are bad results being hidden through adjustments?
  • Are one-time costs truly one-time?
  • Is the company's accounting clear?

Balance Sheet & Cyclicality

  • Is the balance sheet strong?
  • Is leverage manageable?
  • Is the business dependent on macro tailwinds?
  • Can the company control its own destiny?
  • Does the company perform well across cycles?
  • Can it survive higher interest rates?
  • Are recent margins sustainable?
  • Has inflation temporarily inflated results?

Valuation & Expected Return

  • Is the valuation based on realistic assumptions?
  • Does the DCF depend too much on distant cash flows?
  • Is the business likely to remain good for 10, 20, or 30 years?
  • Is the market underestimating duration?
  • Is the company slightly expensive but still a great compounder?
  • Would a small overpayment be overcome by compounding?
  • Is the expected return still attractive from today's price?
  • Is there a margin of safety?
  • Is the IRR attractive?
  • Is the risk permanent capital loss or just short-term volatility?

Monitoring & Sell Discipline

  • Is the business better than the index on quality and risk?
  • Is underperformance due to fundamentals or valuation?
  • Has the investment case weakened?
  • Has the moat weakened?
  • Has the industry structure changed?
  • Has competition become more aggressive?
  • Has disruption risk increased?
  • Would you buy more today?
  • Are you anchored to an old opinion?
  • Should you change your mind?
  • Is selling based on lower conviction or short-term price movement?

Portfolio & Temperament

  • Is the company still one of your best ideas?
  • Does the position size match your conviction?
  • Do you understand the business deeply enough to concentrate?
  • Are you confusing diversification with safety?
  • Are you adding too many average ideas?
  • Are you chasing novelty?
  • Are you focusing on the few things that matter?
  • Are you ignoring market noise?
  • Are you patient enough for compounding to work?
  • Is this a company you would want to own for many years?
  • Is the business exceptional, not merely good?
  • Is time an asset or liability for this company?
  • Are you buying a steady winner or an average business?
  • Do you know why the company wins?
  • Can you clearly explain why the advantage will last?
  • Would a rational competitor struggle to attack this business?
  • Do you truly know what you are doing?
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