Consistency is critical in our business. When it comes to investment analysis, this “First Principle” – “What primary market opportunity is the issuer pursuing?” – is the first question successful investors apply in their consistent approach to company analyses. Identifying the fundamental rationale for an enterprise is central to helping retain your focus on the ball. It’s what we consider...
We all have challenges to overcome. But, when it comes to private investments, understanding the challenges a business must overcome in order to capture a market opportunity is fundamental when considering an investment in that company. In our series of articles on First Principles, we show you how to easily define the basic elements of a business’s inherent value proposition. What is the market...
They all use something called First Principles to simplify complex problems. We use them for analyzing private investment opportunities. You might be surprised at how simple, yet effective, it can be. Investment analysis can be highly challenging. Each Issuer of securities (the company seeking your investment) is likely rather unique and is different from the previous company you analyzed....
To provide value (and generate income as an individual or a business), you need to solve a problem for someone. It’s actually why we get out of bed every day and go to work. If a company you’re looking to invest in doesn't do the same, it’s likely that company will fail. In this series of articles on First Principles, we show you how to easily define the basic elements of...
It may seem clear at first – your tenant (Jeff) signed an iron-clad lease. Now, he hasn’t paid rent for 2 months. So, do you go through the time-consuming (and, oftentimes, expensive) process of an eviction, hoping you land a new (paying) tenant quickly, or is it more reasonable for you try to fashion a deal — one that never was envisioned in the rental agreement? Suddenly, what had seemed...
Have you ever observed someone who is always busy? He comes into the office early and leaves late, but he never seems to deliver projects on time? It’s likely that psychologists have a name for this “syndrome.” When you’re considering whether a management team deserves your investment, however, this may be a material factor in deciding against committing capital. Carofin’s affiliate, Carolina...
My grandson asked me whether he should “give” some money for six months to some other 8th graders who had started a shoe painting business. No, I didn’t make that up. It reminded me of conversations we have every day with investors about loans to private companies. Without drawing too close a parallel, you’d probably help him think through the same questions that a wary investor approaches...
History is replete with famous, even eccentric, successful entrepreneurs. But the great ones also had the capacity to motivate others to do their best, to make great personal sacrifices for the company and to stay the course during tough times (e.g., Steve Jobs). Before making an investment in a new venture, ask whether a capable team has been assembled (Sales, Marketing, Operations,...
In the interest of accessibility, here are some terms that any investor should be familiary with.
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