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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: StockHawk who wrote (6592)	9/19/1999 6:30:00 PM
From: Mike Buckley	Respond to of 54805

StockHawk, You asked what I mean by the phrase, >if a company is not screened out using my various filters Let's keep it to high-tech stocks as an example. My first set of screens is anything and everything having to do with gorilla-game criteria. Though I'm thrilled to discuss royalty games in this folder and am open-minded enough to anything that I wouldn't outright exclude the possibility of buying a king, I really do want to stick to potential or established gorillas. My second set of screens has to do with the balance sheet. I like a rock-solid balance sheet that better have a darned good explanation for any long-term debt or a history of increased number of diluted shares. The higher the net margins and the better the reason to expect increasing margins, the better chance the company has of passing through the very tiny holes of that screen. Last, I look at management. Why last? Sometimes I'd like to think that's the first thing we should look at. But in gorilla games, I really don't think management has to be as good as companies competing in other arenas, especially if we're talking about the management team of an established gorilla. Nonetheless, I do feel a lot more comfortable if, in the least, the members of the management have a track record of being critical to the success of a high-growth company in earlier days. If I find two companies with similar growth opportunities and everything is relatively equal, I might run some valuations to see if by a slight chance one stock is a lot better bargain than the other. But I don't remember ever being in that position. I do remember being very, very excited that Qualcomm, by every measure I could use, was undervalued at the time of the Ericsson news. Had it been more "pricey," I still would have bought just as many shares. After a company passes through all those screens, perhaps you can imagine why I really don't allow former stock prices to be a factor in my decision-making process. Again, it's just my way of looking at things from my teensy weensy corner of the universe. --Mike Buckley