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Business characteristics I don't like.

1) No moat/shrinking moat

Q to ask: What prevents competitors from stealing customers?

"Nothing" = not good

Ex:
No moat: Most marijuana stocks/retailers

Shrinking moat: $UA / $WU / $GRUB
2) Customer concentration

>10% sales/accounts recievable w/ 1 or more customers = risk

Search 10k for word "concentration"

Ex:
$AMT 51% of rev from 4 cust
$OLED 80% of rev from 3 cust
$SWKS 51% of rev from 1 cust ($AAPL)
3) Industry disruption

Active / possible / none

Ex:
Active:
electrifiation/autonomous - $GM $F $TM
download vid gmz: $GME

Possible:
crypto $MA $V
4) Outside forces

Success depends on something outside of management control going right = too hard.

Ex:
Interest rates: banks $JPM $C
Oil prices: $XOM $CVX
Strong economy: Most industrials $AA
5) Big market loser

#winnerswin
#loserslose

I pull up 5-yr chart vs $SPY & since IPO date

Good = market beater
Bad = big loser

Ex:
$MNKD / $CHK / $GRPN
6) Binary outcomes

Business is hard enough as is. Why bother with 50 / 50 shots?

Ex:
Key patent being challenged in court
FDA approval for a single drug: most small-cap pharma/biotech
7) Extreme dilution

Stock-based comp a fact of life now. I get it. I still don't like excessive dilution >5%/yr.

Some companies dilute to stay in business $TNDM

or

Excessive employee compensation $TCOM / $CRM
8) Growth by acquisition

Acquisitions are hard. Numbers show most don't work out.

If growth thesis = constant acquisitions, I pass.

Ex:
$MIDD
$TDG
$HAIN
9) Excessive leverage

Some companies are WAY too comfortable w/ debt.

Super ugly balance sheet = pass.

Ex:
$TCS
$SBH
$HZN
Some of these risks I can live with (dilution/cust concentration)

Others I can't (moat under attack/industry disruption).

Business is hard.

Investing is hard.

Don't make it even harder by assuming unnecessary risks.
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