Seven investor frameworks, one transparent scorecard

What it looks for

• Economic moat - ROIC > 15%, gross margin > 40% in a thin-margin sector, brand or network-effect evidence.
• Durable demand - the product still matters in 10-20 years and survives at least one downturn intact.
• Owner-friendly management - insider ownership, buybacks at low prices, plain-English shareholder letters.
• Financial health + reasonable valuation - net debt / EBITDA < 2x, owner-earnings yield comparable to 10y Treasury + risk premium.

What it looks for

• Earnings stability - 10 consecutive years of positive earnings, no major loss years.
• Conservative balance sheet - current ratio > 2, long-term debt below net working capital.
• Dividend record - uninterrupted dividends for 20+ years where applicable.
• Modest valuation - P/E (3y average) < 15, P/B < 1.5, combined P/E * P/B < 22.5 (Graham number).

What it looks for

• Growth runway - revenue is compounding because the underlying market is still expanding, not because of share-take in a flat market.
• Above-average R&D and salesforce productivity for the industry.
• Management depth - the company functions without the founder being in every meeting.
• Profit margins improving with scale, not deteriorating - efficient growth is the test.

What it looks for

• PEG ratio < 1 - earnings growth matches or exceeds the P/E multiple, so growth is priced reasonably.
• Earnings growth 15-25%/yr (the sweet spot - faster gets fragile, slower isn't a compounder).
• Comprehensible business - Lynch's famous rule: 'invest in what you know'. No black-box financial engineering.
• Insider buying + low institutional ownership - undiscovered names beat over-owned ones.

What it looks for

• High ROIC (Greenblatt's quality proxy - return on capital actually employed in the business).
• High earnings yield (EBIT / Enterprise Value, his cheapness proxy - cleaner than P/E because it neutralises capital structure).
• Combined rank: top 30-50 names by sum of ROIC rank + earnings-yield rank.
• Mid-to-large cap (Greenblatt screens out micro-caps to keep the universe trade-able).

What it looks for

• Very high quality - ROE > 20%, ROIC > 15%, stable margins through cycles, no accounting acrobatics.
• Almost no debt - Munger explicitly preferred zero leverage where possible; net debt > 1x EBITDA fails this lens.
• Simple, understandable business model - if the IR slide deck needs more than one diagram to explain the unit economics, it fails.
• Multi-decade demand stability - same test as Buffett's durability pillar but applied more strictly.

What it looks for

• Free cash flow conversion > 90% - reported earnings show up as cash, not working-capital fictions.
• Return on capital employed (ROCE) > 25% consistently - high quality, not just high growth.
• Pricing power - revenue grows ahead of inflation without volume tricks.
• Capital-light economics - growth doesn't require huge ongoing capex; the business compounds on its own cash.