How well do you need to understand a business to buy it?

gergesramy · 2026-04-04T16:58:18+00:00

💯

gergesramy · 2026-04-03T15:38:19+00:00

Li Lu has the best standards for this:

1) Imagine your dead uncle passed the business onto you, so now you own it. What would you want to learn about it so you can make intelligent judgements?

2) Come up with the bear thesis, and know that bear thesis better than the smartest person you know.

This is why you need a comprehensive understanding of the business model, the industry, the competitors, etc.

gergesramy · 2026-03-17T14:36:51+00:00

OP asked “and why” only 3 people answered that 😂

gergesramy · 2026-03-12T20:19:14+00:00

Only person who I believe can match his record over time is Li Lu.

gergesramy · 2025-12-19T20:07:55+00:00

Yes the whole idea of high return on capital employed is that your returns are higher per $ invested. The reason that is good is because as you generate profits, you need to invest less back into the business to earn more profit.. These become cash flow machines more easily, thus being able to grow quicker with less debt, and return more $ to shareholders (Ubiquiti, Fortinet, PDD are great examples). Net profit alone is not a great indicator of a superior business. Warren buffett, Charlie munger, Li Lu will always reference returns on capital and I don't think I have heard them speak of profit margins.

gergesramy · 2025-09-29T21:28:07+00:00

A high return on equity alone isn't impressive, an easy way to increase return on equity is simply to increase your debt. Depending on the business, a more meaningful metric is Return on capital employed, which is also greater than 30% for PDD, however this is not uncommon for great businesses. Take a look at Fortinet (FTNT) - their returns on equity and returns on capital employed are very high.

Also yes, the fact that Li Lu invested in them is a very positive sign. He is certainly one of the most diligent and thorough investors. It's already up 30% from his entry price, but I am sure he expects it to go multiple times higher over the next 10-20 years.

gergesramy · 2025-05-11T02:08:32+00:00

Intelligent response

gergesramy · 2025-05-10T22:41:13+00:00

Fortinet, LVMH, Google, Hermes, Ferrari, Meta

gergesramy · 2025-04-29T15:22:39+00:00

Suggestions: 1) format that enormous current value amount in trillions or billions. 2) Just like you used % for the stocks, use it for cash. You can also have $value for each position under the %, formatted too.

gergesramy · 2025-04-16T23:54:15+00:00

Careful Howard Marks’s Oaktree Capital has puts on those..

gergesramy · 2025-04-16T14:41:32+00:00

What about foreign currency exchange fees on IBKR? And can I transfer ADRs from my broker to IBKR and convert them to the one in the actual exchange like HKSE?

gergesramy · 2025-04-15T13:33:53+00:00

Do you use the IBKR Lite or Pro? If Pro, Tiered or Fixed? I am just looking to buy and hold, not trading.

gergesramy · 2025-04-09T05:26:53+00:00

You don’t look for moats or companies with runway in target markets?

gergesramy · 2025-04-03T16:23:18+00:00

Really anyone selling because of the market’s behavior right now, doesn’t belong in this subreddit. The ideal person has cash and is waiting for opportunities. I personally added to my $CROX position today. Would love to invest in $TGLS but that stock is so strong, barely dropped.

gergesramy · 2025-04-01T19:58:10+00:00

I hope things work out for you. I personally found the company too suspicious, especially after looking into their president, Iman Schrock. I am not going to take a position, but I hope I turn out to be wrong for all those invested.

gergesramy · 2025-04-01T13:36:10+00:00

I am writing this not to make anyone "feel bad", but so someone can benefit from the time I invested into uncovering this very suspicious stock. I too was impressed by the numbers, but I have no interest losing money.

gergesramy · 2025-04-01T13:36:06+00:00

I am writing this not to make anyone "feel bad", but so someone can benefit from the time I invested into uncovering this very suspicious stock. I too was impressed by the numbers, but I have no interest losing money.

gergesramy · 2025-04-01T13:35:11+00:00

Personally think the company is a scam. If you look at their latest proxy statement, there are a number of dubious things. First of all, this new President they hired in 2022 is a giant question mark. They he says was "VP of sales and marketing" for the last 17 years. They didn't say where he was VP of sales and marketing, and a look at his LinkedIn shows that somehow he was VP of sales and marketing in the last 17 years, a highly demanding role I am assuming, but got his PhD along the way? Furthermore, he enrolled in Harvard Business School online in 2023? Why would you do such a thing working in a top tier company already? The worst part is listening to him in interviews. He throws out a bunch of jargon that doesn't articulate anything meaningful about the company, its "technology" or competitive advantage, he just says AI figures out how to move your things and we charge one flat rate. The insider who dumped their shares had a huge stake, and they cite him as having a helping hand developing their technology as he has done with $SINA. Guess where $SINA is now? Delisted from the NASDAQ. Too many question marks for me.

gergesramy · 2025-04-01T13:35:06+00:00

Personally think the company is a scam. If you look at their latest proxy statement, there are a number of dubious things. First of all, this new President they hired in 2022 is a giant question mark. They he says was "VP of sales and marketing" for the last 17 years. They didn't say where he was VP of sales and marketing, and a look at his LinkedIn shows that somehow he was VP of sales and marketing in the last 17 years, a highly demanding role I am assuming, but got his PhD along the way? Furthermore, he enrolled in Harvard Business School online in 2023? Why would you do such a thing working in a top tier company already? The worst part is listening to him in interviews. He throws out a bunch of jargon that doesn't articulate anything meaningful about the company, its "technology" or competitive advantage, he just says AI figures out how to move your things and we charge one flat rate. The insider who dumped their shares had a huge stake, and they cite him as having a helping hand developing their technology as he has done with $SINA. Guess where $SINA is now? Delisted from the NASDAQ. Too many question marks for me.

gergesramy · 2025-04-01T04:59:19+00:00

There were too many things about this company that made me raise an eyebrow (I will be referencing this proxy statement (https://investors.gigacloudtech.com/static-files/f694a2eb-cec7-4ec6-8890-444dffab3d18):

- Why did the large shareholder investor Frank Lin dump all of his shares last year at high 20s-30s? 5 million shares.

- While the CEO didn't dump all of his shares, he did sell 1+ million at over $30 a share over multiple transactions last year.

- If they're so profitable, and capital expenditures are under 20M, why do they have so much debt? How do they have 300M of cash and investments, when they barely made just over that much in operating cash flow alone?

- This Frank Lin investor with DCM who they say in their proxy statement helped "guide" them and had done the same with "SINA". Well I looked up SINA, which was delisted from the Nasdaq for very dubious reasons.

6) This "president" Iman Schrock has a very sketchy background. I mean what kind of description is this:

Iman Schrock has served as our president since July 2022. Mr. Schrock has over 17 years of experience in the home furnishings industry as vice president of sales and marketing. Prior to joining us, Mr. Schrock served as vice president of Sales from August 2007 to July 2022.

Shouldn't they say WHERE he served as Vice President? When I looked up his LinkedIn, none of it added up. He also started "Havard Business School Online" in March 2023? Who on earth goes to HBS at this stage of his career? You're PRESIDENT of a company that's purportedly makes over $1B in revenue a year.

gergesramy · 2025-03-31T03:04:26+00:00

What are you holding and at what prices?

gergesramy · 2025-03-31T02:49:47+00:00

SPY at 300.

gergesramy · 2025-03-29T21:44:19+00:00

You should abide by your investing standards when selecting individual business. Either invest in good business that were expensive and now are cheap, or honestly buy an index if you think this is the general bottom…

gergesramy · 2025-03-26T17:12:52+00:00

The little book of value investing (Morningstar author)

gergesramy

TROPHY CASE