My Investment Checklist
This is how I pick winners (Meta as an example)
In a world increasingly filled with noise and half-truths, I use a structured investment checklist as my filter.
Too many investors get pulled into the momentum fads, cult stocks, or vague theses like “AI is the future”. I’ve been guilty of that too.
But as I refined my thinking over the years, I realised the best investments tend to have a few things in common, durable traits that compound quietly over time, regardless of market noise.
I’ve learned that to outperform over the long run, you need something far more grounded than narrative and opinions.
You need a checklist.
Here’s mine. I hope it sparks ideas for your own.
Quality Checklist
There are 5 main categories for which I give points to, and 1 main category of potential risks where points may be deducted.
The maximum score is 20 points, with up to 12 points in deductions.
Founders and Vision
Visionary Founder: (2 points)
Are they long-term thinkers with strong product and market instincts?
Skin in the Game: (1 point)
Do management and insiders own significant equity stakes? Are they clearly aligned with long-term value creation?
Market Dynamics
Exposure to Emerging Markets & Secular Tailwinds: (2 points)
Are they positioned in under-penetrated sectors/regions with strong secular trends?
Large and Growing TAM: (1 point)
Are they operating in a space with ample room for multi-year compounding?
Contrarian but Right: (1 point)
Does the market misunderstand or discount the business, but underlying fundamentals suggest otherwise?
Business Model Quality
Asset Light Model: (1 point)
Can the business grow and scale without requiring heavy CAPEX?
Strong Operating Leverage: (2 points)
Can margins expand significantly as revenues grow?
Recurring or Sticky Revenue: (1 point)
Does the business have high retention of revenues? (Either through subscriptions or customer-behaviour related)
Optionality: (2 points)
Do they have levers to unlock new growth vectors or new verticals?
Moats and Competitive Edge
Sustainable Competitive Advantage: (2 points)
Does the business have a durable moat that is expanding over time with a clear advantage over competitors?
Dominant or Disruptive Position: (1 point)
Is the company already a leader or changing the rules of the category?
Brand or Cultural Affinity: (1 point)
Is the business trusted and/or deeply embedded in customer behaviour or local culture?
Financial & Growth Characteristics
High Growth at Sustainable Rates: (1 point)
Is the business able to grow at double-digit growth rates, sustainably for over 5 years?
Scalable Unit Economics: (1 point)
Is the business capable of having healthy margins at scale, low customer acquisition costs and attractive payback periods?
Cash Burn Under Control / Clear Path to Profitability: (1 point)
Is the business either already profitable or clearly headed that way without constant equity dilution?
Potential Risks
Customer Acquisition Dependency: (-2 points)
Does the business rely heavily on paid marketing and/or incentives to drive growth, with low organic traction?
Regulatory/Geopolitical Risks: (-2 points)
Does it operate in a sector or region with high regulatory/geopolitical uncertainty?
Industry Disruption: (-2 points)
Is the core business model at risk of being disrupted?
Lack of Moat: (-2 points)
Is the business model easy to replicate, with low switching costs and low differentiation?
Balance Sheet Risk: (-2 points)
Does the business have high debt to equity ratios? Is it vulnerable under stress with a potential lack of resilience?
Lack of Profit Visibility: (-1 point)
Is there persistent cash burn without operational leverage and/or no clear path to profitability within 2 years?
Customer Concentration Risk: (-1 point)
Does a large portion of revenues come from one or a few customers?
Final Score
Based on these metrics, a final score will be calculated.
This is how i classify them:
10 and below: High Risk/Pass
11 to 13: Viable
14 to 16: High Conviction
17 and above: Best-in-Class
This is NOT a Perfect Tool
That said, investment checklists are merely a tool in the arsenal that I utilise.
Checklists are not the endgame. They are the entry point.
Beyond checklists, I utilise technical analysis, valuation metrics, catalyst checks and more to decide on my purchases.
To Make This Real: Let’s Score Meta
To give you a better sense of how this checklist works in practice, I’ll walk through a full example with Meta ($META).
Meta is one of the most widely debated stocks of the last decade. Some call it a dying social network. Others call it a cash-flow machine with unmatched scale and AI leverage. I think both views miss the nuance.
This is Meta, scored with my Quality Checklist.
1. Founders and Vision
Visionary Founder: (2/2)
Zuck is the archetype of a product-driven, long-term founder. He’s obsessive, brutal and relentless in his approach. He’s willing to ignore Wall Street when he believes he’s right, even if it takes years.
Skin in the Game: (1/1)
Zuck controls over 50% of Meta’s voting power and his wealth is inextricably tied to Meta’s share price, aligning himself with shareholders.
2. Market Dynamics
Exposure to Emerging Markets & Secular Tailwinds: (1.5/2)
Meta’s suite of products have strong penetration in Southeast Asia, India, and Latin America. These are regions where we may see the next wave of growth.
Additionally, WhatsApp is still extremely under-monetised while Meta is arguably the leader in the Spatial Computing (AR/VR) space.
Large and Growing TAM: (1/1)
Global Ad Spend continues to shift online. Messaging commerce, Reels monetisation and AI-native ad products will continue to grow Meta’s TAM.
Contrarian but Right: (0/1)
I believe the market understands the importance of Meta. It is no longer a contrarian position to hold.
3. Business Model Quality
Asset Light Model: (1/1)
The core ad business scales with negligible incremental cost. While Meta invests heavily in AI infra, it is a small percentage of its revenues, and is done so by choice, not necessity.
Strong Operating Leverage: (2/2)
Between 2019 to 2022, Meta’s operating costs exploded, with headcount doubling. 2023’s cost cuts showed Meta’s operating leverage.
Despite cost cuts, revenue continued to grow, leading to +62% YoY operating income growth and operating margin rebounding to ~40% from 28% in 2023.
Additionally, for Meta’s core services (Facebook, Instagram, WhatsApp), every new user adds incremental ad revenue but doesn’t require a proportionate increase in cost to service.
Recurring or Sticky Revenue: (1/1)
Advertisers come back to Meta daily, as it provides the highest return on ad spend. Users engage with its apps multiple times a day. Meta’s family of apps now average 3.4 BILLION daily active users.
While not subscription-based, Meta’s business is behaviourally sticky and embedded in routines.
Optionality: (2/2)
Meta has multiple growth levers to pull:
Reels monetisation
WhatsApp monetisation
Llama models for Enterprise AI
Reality Labs
4. Moats and Competitive Edge
Sustainable Competitive Advantage: (2/2)
Meta has scale, proprietary data, entrenched network effects, and one of the most advanced in-house AI stacks globally. Few companies can replicate its ad engine, much less its social networks.
Dominant or Disruptive Position: (1/1)
Meta is dominant in social and ads, and increasingly disruptive in AI-driven ad delivery and infrastructure. Even TikTok has failed to dent its revenue base meaningfully.
Brand or Cultural Affinity: (1/1)
Instagram is aspirational. WhatsApp is essential. Facebook remains relevant in many demographics. While “Meta” as a brand isn’t loved, its products are woven into culture.
5. Financial & Growth Characteristics
High Growth at Sustainable Rates: (1/1)
Meta has grown at a 27% CAGR for the past 10 years. Now, 20 years after the launch of Facebook, Meta is still growing at ~20% annually, and with its vast optionality will likely grow at double-digit rates for the foreseeable future.
Scalable Unit Economics: (1/1)
Meta earns high ROAS, has ultra-low CAC and benefits from automation across its entire stack. Each marginal dollar is extremely profitable. This is a business that has scaled beyond any other.
Cash Burn Under Control / Clear Path to Profitability: (1/1)
Meta generates $50B in free cash flows annually.
6. Potential Risks
Customer Acquisition Dependency: (0)
Meta has no need to acquire users, it already owns their attention.
Regulatory/Geopolitical Risks: (-1/-2)
Meta faces constant scrutiny in the US and EU over antitrust, privacy and political concerns. Yet, that has had a near-zero impact on the business.
Industry Disruption: (0)
TikTok has proved Meta can be blindsided. Open-source AI tools might eventually weaken Meta’s moat on ad targeting. That said, Meta has proved its ability to copy fast and scale faster.
Lack of Moat: (0)
Meta’s moat is multi-layered, defensible and expanding. Network effects across Facebook, Instagram and WhatsApp create a self-reinforcing loop. The more people and businesses use these platforms, the more valuable they become.
Balance Sheet Risk: (0)
Meta sits on $70B in cash and cash equivalents with $50B+ in annual FCFs.
Lack of Profit Visibility: (0)
Quite the opposite, Meta is consistently profitable, and increasingly so.
Customer Concentration Risk: (0)
Meta has millions of advertisers and billions of users. No single customer accounts for a significant fraction of revenue.
Meta Quality Score (FINAL):
Adding up the scores and deducting one for potential risk, Meta scores a total of 17.5/20 points, making it a “Best-in-Class” business and one worthy of my investment dollars.
Conclusion:
As investors, we are constantly bombarded with narratives, headlines, and hype. A well-constructed checklist is how I stay grounded. It helps me filter quality from confusion, story from substance.
In the coming weeks, I’ll be applying this framework to several of my personal holdings. Not just to score them, but to spark deeper reflection and conviction.
Thanks for following along, and stay tuned.
Superb, it adds to other frameworks i use.
Love it!