ROIC above 15 percent
Sustained return on invested capital meaningfully above the cost of capital, averaged across a full cycle. Munger's litmus test for a franchise business.
Definition
What is the Munger-Fit Score?
The Munger-Fit Score is a 0 to 100 grade for how closely a stock fits Charlie Munger's quality-at-a-fair-price framework: ROIC above 15 percent, low debt, durable franchise, and rational management. invest-like computes it for every US-listed stock.
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Short answer
Munger-Fit grades a stock from 0 to 100 against the quality framework Charlie Munger articulated across decades of Berkshire and Daily Journal meetings: ROIC sustained above 15 percent through a cycle, net debt close to zero, a durable competitive franchise with pricing power, and capital allocation history that demonstrates rationality. The score maps to an A+ to D grade ladder. Educational fit assessment, never advice.
How the Munger-Fit Score is calculated
Munger-Fit is the strictest of the seven quality lenses invest-like applies. Daily fundamentals feed the four pillars, and the cycle-average ROIC and debt thresholds are checked against the most recent ten years of data where available. Each pillar produces a 0 to 100 sub-score with one paragraph of LLM-generated reasoning. Sub-scores blend equally into the headline grade.
Low debt
Net debt close to zero or comfortably below one turn of EBITDA. Munger preferred businesses that compound from internal cash flow, not from leverage.
Durable franchise
Pricing power, customer captivity, regulatory advantages, brand or scale moat. The asset has to keep working without constant reinvestment of the moat itself.
Rational management
Capital allocation history that prefers buybacks at low prices and disciplined acquisitions over empire-building. Disclosure quality high enough to audit the decisions.
Why Munger-Fit matters
Munger pushed Buffett away from cigar-butt value into great businesses at fair prices. The Munger-Fit lens filters more aggressively than Buffett-Fit and surfaces the strictest subset of compounders. A stock that grades A+ on Munger-Fit is rare; when it appears, it is usually worth understanding why.
The full 7-framework methodology lives at /methodology/ with cross-framework consensus rules and the backtested track record.
Related
- Seven-framework methodology hub - how Munger-Fit sits alongside the other six value-investing frameworks invest-like scores every stock against.
- Top Munger-fit stocks today - the live ranking of US-listed stocks scoring highest on Munger's quality-with-temperament test.
- Cross-framework working papers - evidence on how quality-tilt strategies hold up across decades of US-listed equity data.
See the Munger-Fit grade for any stock
Open any verdict page on invest-like and Munger-Fit appears alongside the other six framework grades.
Educational only. invest-like is not a registered investment adviser; nothing here is personalised investment advice. Always do your own research and consider your individual circumstances.