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Betting on operational leverage. Do you do it? Here is a small peek into my process.
@nathanworden asked me in @valuabl's post about operating leverage(https://commonstock.com/post/e99142cb-3dd8-4041-b93b-92164eedca23)
What are some companies that are going from negative operational leverage to positive operational leverage @growthinvesting
Where and how can you screen for these?
Here is my Brief response:
All the ones declaring positive adjusted EBITDA(by 2024) are in that list, also the ones who are currently adjusted EBITDA profitable/GAAP profitable are in that list
As for specific names, $PLTR $NFLX $AMZN $NET $IOT $S $RBLX $AFRM $HIMS $RKLB and plenty of other "small fish" that may(or may not LOL, too risky for general public IMHO) 10x+ after this event and I dont want to reveal them as they not for the faint of heart(I have had permanent capital loss on some of these :D).
I generally screen rarely, I have my eye on industries, I pick an industry separate it into incumbents and innovators. Study the incumbents bottom up and find out their ROI, unit economics and moat and make a note of them. Then I look at innovators, do a highly qualitative study to see how they are different and check if their ROI, unit economics are better and also see if their moat is durable against the incumbents.
Then I pick the best incumbents(sometimes) and atleast 2-3 innovators to bet on.
Hopefully this is insightful.
Feel free to ask about my mistakes(LOL) or anything else.
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