Growth-stage company crisis investment research method

Establishing a Systematic Cognitive Framework Before Investment Research: (Excess returns = Good companies experiencing reversible crises × Extremely low stock prices misjudged by emotions × Market space with enormous growth potential × Square of patience waiting time)

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Purpose of Investment Research Analysis: (Find a mission-driven company with simple, understandable business and a deep moat, operated by honest and rational management, cross-verify that the current stock price is below its intrinsic value and a good entry point ))

1. Introduction of the Target

1. A one-sentence statement of the company’s strategic positioning
2. Scenario-based explanation of user pain points, needs, and solutions
3. Data-driven validation of the authenticity of the solution’s demand

2. Is the Business Feasible?

1. Is the market space large?
2. Is the future growth space large?
3. Does the company have a significant market share?

3. Is the Team Capable?

1. Is the founder a focused and dedicated entrepreneurial leader?
2. Are the senior executives highly capable professionals with strong execution?
3. Does the team uphold a mission and vision-driven culture?

4. Is the Business Good?

1. Is the product positioning sufficiently niche and precise?
2. Is the profit model clear and simple?
3. Is the business scale growing rapidly?

5. Is the Industry Valuable?

1. Has overall cost been reduced?
2. Has industry efficiency increased?
3. Has user experience improved?

6. Is the Competitive Advantage Strong?

1. Is there potential for monopoly operation?
2. Are there leading ecological advantages?
3. Has the brand or category captured consumer mindshare?

7. Are the Competitors Strong?

1. Do the biggest competitors have deep moats?
2. Are the biggest competitors profitable?
3. Do the biggest competitors have a strong management team background?

8. Is Profitability Sufficient?

1. Is the return on invested capital among the highest in the industry?
2. Is the gross profit margin among the highest in the industry?
3. Is cost control among the highest in the industry?

9. Is Capital Management Effective?

1. Does profit retention create market value at the highest industry level?
2. Is owner’s return among the highest in the industry?
3. Do large mergers or buybacks generate long-term strategic value?

10. Is Financial Health Good?

1. Is free cash flow sufficient and aligned with long-term principles?
2. Is net asset debt ratio low and interest coverage ample?
3. Is revenue growth high enough and sustainable in the long term?

11. Is the Disruption Risk High?

1. How likely is the profit model to be completely disrupted within three years?
2. How likely is the technological barrier to be completely disrupted within three years?
3. How likely is the product advantage to be completely disrupted within three years?

12. Is the Buying Opportunity Not Expensive?

1. The stock price is completely misjudged by emotions, trading below intrinsic value by 50% (Must use more than ten valuation methods applicable to this industry for cross-verification of intrinsic value)
2. Downside risk is limited, upside potential is unlimited
3. Catalysts with clear signals are already visible

13. Is the Selling Timing Good?

1. The stock price has rebounded significantly and greatly exceeds its intrinsic value, with market consensus irrationally optimistic
2. The certainty of sustained future profitability is lost, and timely stop-loss is necessary if investment judgment is wrong
3. Management is involved in financial fraud, serious ethical flaws, or fundamental changes in corporate governance unfavorable to minority shareholders

14. Does the Positioning Align with the Principles?

1. Are you willing to become a shareholder of the company?
2. Can you sleep peacefully after buying?
3. Holding for 5 years, is there a 10x increase in business value?

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Three Principles for Post-Investment Review (Doing Great Things with Excellent People)

1. Leading profitable business with high growth potential

2. Intrinsic value is misjudged by emotions and the current buy-in price is very cheap

3. Mission, vision, values, strategic positioning, planning rhythm, goals and results, team capability, roadmap, etc., are aligned and consistent