24 September 2020

My Plan To Find 5 Investable Companies

There are about 7,000 companies listed in India. I aim to invest (monthly) in at least 5 of them. The task on hand is to find the top 5 companies which would give me return in 15-20 years.

I'm 27 right now. 47 seems to be a decent age to be worth a few crores. I have had a lot of goals in the past. I have given up on a landslide majority of them. I hope I don't give-up this goal.

How do I Plan To Do This?

Buy a good Screener, go through all 7,000 listings. Easy. A little time consuming, but I suppose it's worth it.


How long it'll take to find 5 assets from 7,000 companies? (I should use better words to describe. Saying company sounds like I know nothing, which is true)

If I spend a day at 1 company, it'll take me 19 years to go through all the listings. I don't think I have that much time. Need a faster method.

Let's start by eliminating the obvious

  • Nothing from Nifty 50, and Next 50. They are too obvious.
  • No Banks. I don't understand them.
  • No Health Care. No idea how they operate.
  • No Sin Stocks. (Tobacco, Alcohol, etc) I know this is a high yield. But meh. Wanna keep my money halal.
  • No Airlines. God knows when they'll be profitable.
  • No Oil and gas. I mean, does it still have a future? I have no knowledge of it. #GoTesla
  • Materials. I have no idea what this is. Why are people betting on Copper and Lead? IDK.

After all these, I may have eliminated a good chunk of assets. This should give me a shorter list of companies to study.

What I Look In A Business

A founder or management who loves what they do. See, I am not interested in investing companies like Asian paints or Titan *. I am more interested in investing companies like See's Candies. Wikipedia. Berkshire Hathaway letter's to shareholders: Read page 6-7.

Ever since I read those two pages, I have had a special interest ** in finding undervalued companies. Something so boring and unexciting, fewer people would think of buying shares from.

In the words of Charlie Munger, I am looking for undervalued assets that could be bought cheaply.

What I Should be Looking

Here are a few things I'd be more inclined to

  • Based In India. Preferably Hyderabad. But only because I'd want to go visit them.
  • Tech-based startup. Although I am also ok with others. It has to be interesting in a competitive market.

Simple things I'd look at:

  • Cash flow,
  • Total Revenue,
  • Do I know the product?,
  • How much is the profit per unit?,
  • What is their distribution strategy?,
  • Is the product/service a need or a want?

Asking these questions, will either spark an interest or put water over it. I need to ask these questions fast and move on.

If I am investing in a company, I should know everything there is to know about them. Including their:

  • history,
  • future plans,
  • CEO's psychology,
  • customer base, and
  • verticals.

I can't think of anything more. But I have a feeling I should be knowing more about the company.

Ending This

This was just a brain dump of my investing plan. Will get better as I move along.

* When I say that I don't mean I actively would go after looking for such companies. If I get hold of such business, I won't miss the chance.

** special interest. Like everything else in life, I read about a few companies and gave up after a few weeks. Wish I could start reading about at least 2 companies every week.