When we write our Long Ideas, we try to anticipate every possible outcome. We discuss and attempt to refute the bear case, model multiple DCF scenarios, and try to account for how macroeconomic factors, competitive pressures, and management incentives might impact future operating performance.
Nevertheless, sometimes we get things wrong. Maybe, we underestimate the validity of the bear case or place too much faith in the management team. Maybe, there are unexpected macroeconomic or industry-specific shocks that throw the company’s business into disarray. Figure 1 shows four Long Ideas that have faced issues we did not anticipate and compares their performance to the S&P 500 (SPY).Not a Member Yet? You need a Gold Membership or higher to view the content on this page.
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