🎙️ Interview Quality Stocks
Hello friend! 👋
My name is Yorrin, also known as ‘‘Fluentinvalue’’.
I am pleased to have you here for the first-ever interview! Today we are interviewing Quality Stocks.
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Quality Stocks
If you think about one-pagers, quality deep dives, sector and company breakdowns, you think of Quality Stocks. With a staggering 21.4K followers, Quality Stocks is a well-known name in the world of investing and quality.
In this interview, we will:
Get to know Quality Stocks
Hear about his journey in the world of finances and investing
Know how he does his research
Find out where he finds his inspiration
Hear memorable stories
And much more!
If you’re not yet following Quality Stocks, check out his X & Substack page:
Click here for Quality Stocks his Twitter/X
Click here for Quality Stocks his Substack
Can you tell us how Quality Stocks came about?
At first, it started as a joke among friends. Then after a while, I realized that publishing quality content was capturing more and more audiences. I got caught up in it.
Can you tell us about your journey into the world of finance and investing? What inspired you to start sharing your insights on Twitter and Substack?
I've been investing in the financial markets for nearly 15 years. I've also tried a bit of everything: real estate, cryptocurrencies, crowdfunding. I made quite a few mistakes before finding my style, which is very focused on the quality of companies and rather diversified
I wanted to share primarily because I enjoy it, but also because the segment I'm in isn't very well covered. There are plenty of trading accounts, many accounts for beginners that offer educational content. However, I felt there weren't many accounts for seasoned investors seeking quality information. I'm not aiming for overly detailed and technical content, but rather I provide insights and understanding that I would have appreciated finding during my journey.
How do you approach your research process when analyzing potential investment opportunities? Could you walk us through your methodology?
My methodology is quite traditional. I have a rating system that helps identify stocks within my investable universe. For those that pass the screening, I analyze them to identify their potential - aiming for annualized returns between 8 and 15% for my big caps and closer to 20% for my small caps (including growth, acquisitions, dividends, buybacks, changes in valuation multiples, etc.). I also identify moat, risks, opportunities, competitive advantages, management quality, etc. Once this is done, the companies enter my watchlist. The decision to buy depends on several criteria: price, of course, but also diversification and balance of my portfolio. Generally, I force myself to invest at least as much in stocks I already own as in new ones - and I avoid averaging down too much by also reloading on companies that perform well.
What are some key factors you consider when evaluating a company for an investment? Are there specific metrics or indicators that hold particular weight in your analysis?
I use 5 metrics categories: growth, quality, valuation, shareholder (how the shareholder is treated), and market (how the company is positioned and the interest of the market). Profitability (margin, capital efficiency), growth, and leverage are the main metrics I look at, but I don’t have an approach 100% based on metrics.
You often provide in-depth analyses of companies on your Substack. How do you decide which companies to dive into, and what criteria do you use to select them? Also, how do you remove personal bias and be subjective to the stock?
I select the stocks I want to analyze 1 week in advance. For that, I use the stock I want to analyze, the stock with a newsflow, and some stocks requested by followers
Biais is a difficult thing to remove and I cannot do it 100%. For instance, I don’t like banks (and to be honest I am unable to understand their balance sheet) therefore it will be complicated for me to be fully unbiased. However, for my score, I use metrics and a purely mathematical calculation.
Where do you find inspiration to create/up-scale new ideas, like one-pagers, etc., and keep informing the investors who follow you?
I use a lot of methods, and analytical skills from my main job (I am a strategy consultant). Synthesizing and analyzing are 2 strengths I have so I use them. And for most formats, I simply do something I would like to find!
Many investors struggle with managing risk in their portfolios. How do you personally approach risk management, especially when dealing with volatile markets or uncertain economic conditions?
I don’t have a magic answer but I use several tools to mitigate risk. First, I have a diversified approach (geography, sectors, etc). I also have a wide portfolio (25-30 for my big cap portfolio / for my small cap portfolio still under construction I would like something like 15) which prevents huge issues with a specific company. This also allows to be able to manage easily each position vs my cash inflows. Considering the market conditions, I rarely sell and don’t time the market.
Could you share a memorable success story from your investing journey? What lessons did you learn from that experience?
My quickest gain in investing was Delfingen at the end of 2020 going from 17€ to 50€ in less than 2 months. The lesson: the market can be inefficient for small caps.
On the flip side, can you discuss a setback or mistake you encountered as an investor? How did you overcome it, and what did you learn from the experience?
Investing in biotech and averaging down while fundamentals were degrading have been the 2 main mistakes I made at the beginning of my journey. Now I only average down if fundamentals remain the same or improve (and wait to average down, not doing it immediately) and for biotechs the only ones interesting me now are the ones already profitable.
Your insights on Twitter cover a wide range of topics in the stock market. How do you stay updated with the latest news and trends in the industry?
I am very curious and I spend a lot of time. However, there are industries I know more about (technology, industrials, services, luxury, payment, etc) and industries I know less about (banks, energy, telecom). So if you take a look, you can see that 90% of my content is on industries I know - and where I estimate there is a potential.
What advice would you give to someone new to investing and looking to build a solid portfolio? Are there any common pitfalls they should avoid?
I don’t give financial advice. But of course, quality is key for individual investors.
As someone who interacts with various companies and their financials regularly, what qualities do you believe distinguish a top-tier investment opportunity?
Great management, great teams, and a great business model. That is simple but then you need to add the stock price because this kind of company is often expensive.
How do you balance fundamental analysis with market sentiment and macroeconomic factors when making investment decisions?
I usually don’t integrate macroeconomic factors except for long-term trends (market outlooks in 10 years, population aging, etc). I am not great at momentum investing so I prefer to focus on companies that should perform in any economy.
In your opinion, what are the most common misconceptions or myths about investing that you encounter in your interactions with your audience, and how do you debunk them?
I don’t try to be a lecturer. I just want to share my method and experience so everyone can improve their investment method. So if they are misconceptions, usually I ignore them. The most common is certainly the link between stock price and quality:
A stock 70% down from its ATH is garbage.
Or even a stock down 70% from its ATH will rebound.
Those 2 sentences are wrong and we see that very often.
Could you share some of your favorite resources (books etc) or tools that you use for investment research and analysis?
For my resources, I like Marketscreener (Zonebourse in France), Morningstar, Seeking Alpha, and of course the company its website for investor presentations.
You mention the importance of long-term thinking and patience in investing. Could you share a specific example where your patience was rewarded, and how do you maintain conviction in your investment thesis despite short-term fluctuations in stock prices?
The first share I bought was LVMH around 90€. That speaks for itself for the importance of being patient.
For my conviction I simply look at the metrics and what the management is saying. If I have a doubt I do not hesitate to sell. For others, my selection process helps me to be sure to have very great companies for the long term. I assess them in detail twice a year to sell the less interesting ones and keep the best-performing ones.
Looking ahead, what trends or developments in the stock market do you find particularly exciting or promising for investors?
Some current trends are very strong: cloud, AI, cybersecurity, population aging, etc. And of course, can be good investment themes. But I don’t like being too trendy, so I love finding boring businesses.
Finally, what message or advice would you like to share with your audience, especially those who are just starting their investing journeys?
Being consistent is the key - and not too stubborn.
⚡Lightning round
If you were stranded on a desert island with access to only one financial metric to guide your investment decisions, which metric would you choose and why?
ROIC, because most of the time, a quality business has a stronger ROIC.
If you could have dinner with any three famous investors, living or dead, who would they be and what would be the main topic of discussion?
I am not too obsessed with famous investors. You can study their investment style but want to copy create bias and avoid developing and improving your investment style.
If you were given the opportunity to create your stock index comprised of companies from any industry or sector, what companies would you include and why?
A quality index of course, like the MSCI World Quality but with stricter criteria.
✅ Do’s and ❌ Don’ts
Do
Do your own research.
Invest in quality.
Be consistent.
Be humble.
Be curious.
Don’ts
Don’t sell the winners.
Don’t follow blindly what you find on the internet.
Don’t time the market if you don’t have the necessary skills.
Don’t average down when fundamentals are degrading.
Don’t look at your portfolio every day.
That is it for today!
Thank you for reading this first interview with Quality Stocks! I truly hope you got valuable insights about Quality Stocks and his investable universe.
I have learned a lot from Quality Stocks to this very day. I consider myself a seasoned investor, but Quality Stocks always publishes new content on X with new and refreshing insights. Quality Stocks adds tremendous value to my investable universe.
I am sure Quality Stocks will add great value to yours!
I want to thank Quality Stocks for taking the time and participate in this interview.
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