The company is not getting too big to grow – law of large numbers.Diversification in clients – one client should not be more than 10% of revenue source.The company is aware of disruptive threats and reinvesting to make sure they neutralize it.Founder-led company and if there is a plan of succession in place.Healthy balance of cash and long term debt.Healthy return on equity ( around 15-20%).Capital allocation: growing gross margins.Products that consumers will have to buy every 30 days Are you(the investor) using the product? Will you pay more for the same product/service? (Pricing power).Company’s rank in Fortune best companies to work for list.Culture :įollowing are some ways to understand company’s culture: Tom looks at the company’s Culture, Business Strategy, Financials, Safety and Valuation (in that order). Here are some key take aways from the book:įoolish investment process (Tom’s investment style): Whereas David’s style is more tuned towards growth stocks which have small market caps. Tom’s style leans more towards “traditional” approach, like large caps, companies with a long history which have survived multiple business cycles. They are also co-founders of the Motley Fool, which offers financial investment and planning services.Įach of them has their own style of investing and they differ quite a bit from each other. A few weeks back I read the book called “The Motley Fool investment guide” written by two charismatic brothers, David, and Tom Gardner.
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