The Five-Factor Model: A Supreme Quality Screen for Reasonable Assessment

I only buy strong businesses. I only buy them when they are cheap. Background in economics, philosophy, governance, data. I started my investment journey with a fairly concentrated portfolio of Canadian dividend payers in the telecommunications, pipelines and banking industries. We have advanced across industries including payments, US regional banking, Chinese and Brazilian equities, REITs, technology companies and several other emerging market opportunities, as well as the microcap to megacap range. I am currently focused on owning the highest quality businesses and continuing to expand my knowledge of their benefits. I think a lot can be learned from listening to Warren Buffett, Charlie Munger, Monish Pabrai, Terry Smith, Li Lu, Bill Ackman, Guy Spier, and perhaps most importantly, CEOs: Jensen Huang, Mark Zuckerberg, Jeff Bezos, and others. I focus primarily on large tech companies with billions of users and expanding content libraries. I think the cross-selling possibilities when you have such large bases are underappreciated. I prefer to value companies at EBIT+R&D because of the potential in certain R&D investments that I believe. I have no professional affiliations. My annual return from February 2019 to August 2024 was 10.5% CAGR (a 1.72x), somewhat underperforming the market’s 14.84% CAGR (a 2x). But I believe my extensive knowledge of 2019, especially the last two years, has given me the tools to outperform the market going forward. I find investing to be an exciting journey. Honestly, it’s hard to say what your portfolio will look like in 5 years, let alone 10 years. But I think the principles I’ve learned will keep portfolio turnover to a minimum in the future, and that most of the money to be made will be made without selling the companies I already own. Finally, I don’t believe in “Buy” and “Sell” recommendations. We have a selection of 50,000 stocks worldwide, all with different prices. If your focus is on total return and you’re looking for truly exceptional businesses at more than fair prices, then your capital allocation threshold should only be titled “Strong Buy”, with everything else being “Strong Sell”. I will initiate a “Hold” on some of these great deals if the price is not favorable.