Frameworks
Investing checklists
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VISA · NYSE
Buffett, Munger, Dorsey. Grade a business on durability, capital efficiency, and management. Score each item 1 to 5; mark any kill criteria to disqualify outright.
Kill criteria · Munger inversion
Tick any one and the score drops to zero. The position is disqualified outright.
Too Hard Pile: I cannot easily explain how this business makes money to a 10-year-old.
Financial Shenanigans: History of creative accounting, constantly adjusted non-GAAP figures, or serial dilution.
The Value Trap: The core industry or Total Addressable Market (TAM) is in a terminal, secular decline.
Structural Fragility: Extreme concentration (>20% revenue from one client) or immense regulatory/geopolitical threat.
1. Business Quality & Moat
weight 40%Pricing Power: Can management easily raise prices without losing customers?
The Dorsey Moat: Does it possess a distinct moat (Intangibles, Switching Costs, Network Effects, Cost Advantage)?
Predictability: Are revenues highly recurring, sticky, or subscription-based?
2. Financial Fortitude
weight 30%Cash Conversion: Do accounting earnings consistently translate into high Free Cash Flow (FCF)?
Return on Capital: Is ROIC/ROCE consistently high (>15%) and above the cost of capital?
Balance Sheet: Is debt low enough to comfortably survive a severe, multi-year recession?
3. Management & Capital Allocation
weight 15%Skin in the Game: Does management have high insider ownership and an owner-operator mindset?
Capital Allocation: Is management highly effective at reinvesting capital, making smart M&A, or buying back stock?
4. Valuation & Growth
weight 15%Margin of Safety: Is the current market price trading at a clear discount to your conservative Intrinsic Value?
Total Return: Does the FCF yield plus realistic growth rate provide a market-beating expected return?