By Findley's Finance · Last reviewed: September 2026
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By Findley's Finance · Last reviewed: September 2026
A capstone exercise to synthesize your research and assess if a company aligns with your philosophy.
You have analyzed the numbers. Now it's time to connect those numbers to your own investment framework. This exercise is designed to force you to step back and ask: "Does this business actually fit the criteria for what I'm looking for?"
This step bridges the gap between mechanical analysis and true investment judgment, and the paragraph you create will be a required component of the final 'Investment Memo' capstone. Be sure to save your work.
Review all the notes you've taken on your chosen company from the previous exercises: growth metrics, balance sheet health, and cash flow analysis.
Open the personal investment policy statement you created in the 'Define Your Philosophy' exercise. Remind yourself of your core tenets, your circle of competence, and what you want to avoid.
Now, synthesize these two streams of thought by answering the following questions in your notes:
Based on your analysis, write a single paragraph that summarizes your initial investment thesis. This is not your final decision, but a preliminary conclusion based on your understanding of the business's quality. Try to support each claim with a data point from your analysis.
Both paragraphs are about the same hypothetical company. Only one is a thesis.
"Example Corp. is a great company with strong growth potential. The stock has momentum and analysts are bullish. I believe it will continue to do well because the industry is growing."
Why it fails: no numbers, no mechanism, no risk, no price. This paragraph would be equally true for a hundred companies — which means it says nothing.
"Example Corp. converts 22% ROIC into 12% annual earnings growth, yet trades at 14x earnings because the market treats it as cyclical. With 80% recurring revenue, that cyclicality is overstated. At 14x, I'm paying an average-business price for an above-average business. The thesis breaks if ROIC falls below 15% for two consecutive years or if the top-3 customer concentration (45% of revenue) loses a contract."
Why it works: every claim has a number, the mispricing is named, and the kill criteria are explicit.
Fill in the blanks. If you cannot fill one in, your research is not done.
Quality: "This is a [high/average/low]-quality business because [metric + number, e.g., ROIC of __% for __ years]."
Mispricing: "The market appears to misunderstand [specific thing], evidenced by [number]."
Price: "At [valuation metric], I am paying [more/less/the same as] the business deserves because ___."
Risk: "The single biggest risk is [specific risk]. This thesis breaks if [measurable condition]."
Fit: "This fits my [philosophy] because [tenet it satisfies] and sits inside my circle of competence in [industry]."
Action: Form Your Initial Investment Thesis · 0 of 4 answered
1 of 4“Example Corp. is a great company with strong growth potential. The stock has momentum and analysts are bullish.” Why does the lesson say this fails as a thesis?
2 of 4What makes the lesson’s strong thesis work?
3 of 4Your thesis states: “This thesis breaks if ROIC falls below 15% for two consecutive years.” What is this, and why does the lesson require it?
4 of 4You are filling in the thesis template and cannot honestly complete the “Mispricing” blank. What does the lesson say?
With your initial thesis formed, you are ready to proceed. Next, you'll learn how to test your thesis through valuation techniques.