Finding the Signal in the Noise

How We Find Our Subjects: A Multi-Faceted Approach

A great analysis begins with a great subject. Our goal is to find high-quality, often overlooked businesses that are worthy of a long-term investor's attention. We believe compelling ideas can come from anywhere, so our idea generation process is a deliberate blend of systematic screening and qualitative observation.

We cast a wide net using four primary pathways:

1. Reasoning from First Principles (The Munger Method)

This is our top-down approach. We start not with a stock, but with a durable, real-world idea or trend. We ask simple, powerful questions: "What is a product or service that will likely be in higher demand a decade from now?" or "What is a simple, understandable business model that has stood the test of time?"

This line of thinking—for example, starting with the durability of coffee as a global beverage—led us to specifically seek out and analyze a company like Food Empire. We start with the enduring principle, then find the business that embodies it.

2. Systematic, Quantitative Screening (The Buffett Method)

This is our bottom-up, data-driven approach. We use a proprietary "Investment Rubric" to screen the entire market for companies that exhibit the financial DNA of high-quality businesses. This rubric is grounded in principles of value investing and filters for metrics such as:

• Consistently high profit margins (e.g., >20%)
• High and stable Return on Equity (ROE)
• A strong balance sheet with manageable debt
• Sufficient trading liquidity for the individual investor

This process narrows a universe of thousands of companies down to a manageable watchlist of financially sound businesses that are worthy of a deeper, qualitative analysis.

3. On-the-Ground Observation (The Lynch Method)

Some of the best business insights come from our daily lives. We pay close attention to the products and services that are becoming indispensable to our families, colleagues, and communities.

When a service like Grab becomes the default verb for ride-hailing and delivery, or a specific brand starts dominating shelf space at the local supermarket, it's a powerful real-world signal. We take these familiar names and subject them to the same rigorous, unfamiliar analysis as any other company, looking for the business quality behind the brand recognition.

4. Observing Market Signals

Finally, we pay attention to overlooked corners of the market. While we ignore the daily noise of the blue chips, unusual trading activity or a sudden narrative shift in a smaller, less-followed company can be a signal that something interesting is happening. We treat these signals as a prompt—not to invest, but to begin our research process and find out what the market might be noticing.

The Great Filter

Regardless of how a company enters our radar, the journey has just begun. Every potential subject is then subjected to our same rigorous, first-principles analysis and evaluated against our Glavcot Business Quality Scorecard.

Less than 10% of the companies that make our initial watchlist ever become a full, published analysis.[^figure percentage is just an approximation.] Our job isn't just to find ideas; it's to filter out the noise and the mediocrity so you don't have to.