‘Playing safe wins matches’

Howard Marks’ four questions when entering a trade are gold:

How much money can I make if things go well?

What will happen if events don’t go as planned?

How much could I lose if things get bad?

And how bad would things have to get?

He compares investing to tennis and says playing safe wins. In most amateur tennis games and even professional tennis, the play style that minimizes errors (instead of going for winners - riskier shots) often wins Grand Slams (the biggest prize in tennis). Risk control wins.

However, investing is different.

Both Seth Klarman and Howard Marks' recent 10-year returns are less impressive (-10% and +200%, respectively), given their ultra-focus on risk management.

Hence, playing it safe doesn’t always win.

SWI’s approach - balanced

We also focus on protecting wealth, but we also want to position ourselves to participate in above-market gains.

Our 13 holdings have an average annualized return of 51% (ranging from 40% - 60% depending on the month). That didn’t come from playing ultra safe. It comes with buying enduring niche leaders, averaging up, paying up, and having a buying plan.

The latest one, Intellego, a niche leader in UV disinfection and curing validation [deep dive, 1st buy, 2nd buy, risk management, 1st live event], however, is down 39% after just 2 weeks of buying. But we are not panicking at all.

This is an excellent case study to help you understand why Intellego’s share decline/volatility doesn’t mean it’s risky (yet) and how we are positioned to win big.

Of course, we are ready to admit our mistake, but losses will be limited to a 5% position. For now, the facts suggest that we are not [1st live event]. Let me explain.

• What is risk, and why does it matter?

• Investing horizon

• Focus on facts

• Allocation

What is risk?

Risk is the permanent loss of your capital (locking in losses). Risk is not understanding the business you own as well as the market.

If you buy, why are others selling? If you sell, why are others buying? Can you make your case and provide factual evidence?

Why does it matter?

Gauging the level of your understanding of the business is a direct measure of the level of risk you are taking.

The above helps you determine the right amount of risk to take.

Not taking risks at all means you are not gaining anything (financially or intellectually). Taking too much risk means not understanding why your holdings are rising or falling in value.

Balancing it is key to learning, protecting, and growing wealth.

To help you, consider the following aspects to determine how much risk to take.

Investing horizon

When do you need the money?

• If it’s 10-15 years, buy stocks of great companies; valuation today matters very little. No one could have accounted for the value AWS created for Amazon 15 years ago, nor the value Advertising brought in since 2015. An extended time preference allows your chosen business to build on its economic model, and for you to understand the business and take advantage of opportunities that arise from dips/volatilities.

• If it’s just 1-3 years, I’d put my money in ultra-safe companies/index funds/interest-paying bonds. You won’t gain much, but you most likely preserve your capital.

• Anything in between, and you can employ a mix of both. And the rule of thumb is, the longer the time preference, the higher the amount of risk you can take.

Focus on facts

• Volatility of the stock can indicate risk or uncertainties, but it is not risk. Importantly, it can be significantly different from the volatility of business performance (sales, profit, cash flow, product value, customer stickiness, competitor actions, and industry trends).

• If you focus on the stock price, your thesis will be wrong one day and right the next. You become a slave to the market.

• If you focus on facts, you will know the trajectory of the business, what value it is creating, and crucially, which business is not. Hopefully, as a result, you become a better investor.

Allocation

• Allocate the ownership according to the level of your knowledge of the business and the likelihood of you being wrong.

• For example, 24% of the SW portfolio is in Sea Limited, 15% in Mercado Libre, 11% in Grab, 9% in Wisetech, and 6-9% in Veeva, CrowdStrike, and Fortinet. Meanwhile, 3% is in the 21st pick and 5% in the 22nd pick, Intellego.

• I know the top allocation very well, and I am comfortable letting them run and add more in dips. However, I need time for the more recent picks to prove themselves. When given the chance and it can’t, I will cut with no regret. The lower allocation and buying in stages will limit my financial losses.

To summarise, risk is inversely correlated with knowledge. If you are confident in your research on the business and can extend your time horizon, take the emotion out of your investment process and allocate capital with discipline. You can take more risks.

**Current performance means little. I’m learning and appreciate your feedback and advice. Please leave a comment by clicking the button below.**

Leave a comment

If the SWI approach aligns with you, read more about us here, and our latest portfolio review here. We aim for above-market returns while taking low risk. You can read our Sleep Well Manual to gain a deeper understanding of our investment process.

Disclaimer:

As a reader of Sleep Well Investments, you agree to our disclaimer. You can read it in full here.

We are here to protect and grow your wealth while taking low risk. But risk is only low when you know what you own more than the market. I’ll front-load 100+ hours of research to ensure you only focus on businesses I consider low-risk.

To get the most out of Sleep Well Investments, this article provides a clear roadmap to the what, how, and why your wealth can be safeguarded by following my investment framework.

**As a reminder, Sleep Well Investments studies anti-fragile and time-tested businesses to make sure they generate predictable and above-market returns on our investments.**

First, they earn a ‘sleep well’ label if they pass my rigorous Sleep Well Checklist (step 1), which gives out a score (step 2) to each business.

Then, their resilience is ‘stress tested’ against external adversities. I examine this in my deep dives (step 3).

Next, I track their KPIs using the Sleep Well Thesis Tracker (step 4) and buy/sell if they add value to the Sleep Well Portfolio (step 5).

I take a very methodical and patient approach to my portfolio construction, and I don’t let my emotions control my decisions.

I intend to own around 15 businesses. I don’t chase ‘hot’ or ‘dirt cheap’ stocks nor flip ideas. I prefer to have a deep understanding and own great companies, and add slowly over time. I sell primarily because I find better opportunities. Some examples of annual returns for my picks are: Wisetech, 44% CAGR since IPO in 2016, and the 22nd pick, 220% CAGR since 2021. There is little need to flip around ideas.

Let’s go into the details of each step.

Framework in focus

If you are new to Sleep Well Investments, I present the flow chart again and explain the steps.

Links to each section

• SWI Checklist

• SWI Scorecard

• SWI Deep Dives

• SWI Thesis Tracker

• Sleep Well Portfolio

• Sleep Well Portfolio Buy/Sell Alerts

1. Sleep Well Investment Checklist

SWI is used to examine whether a business fits my investment philosophy.

At a high level, I have grouped the criteria into three categories in order of importance:

⏳ Survivability - Business quality [13 points]

🏃🏻‍♂️ Endurance - Competitive position and risks [4 points]

💰Valuation - Intrinsic Value [3 points]

The first group examines how a business has withstood the test of time and the likelihood that it will remain viable for decades; the key lies in product relevance and the evolution of the business model.

The second group assesses whether the business can endure the pressure of competition and external shocks by measuring its moat development.

Finally, I employ multiple valuation methods to estimate a business's intrinsic value and establish a price range for acquiring a stake in companies that offer a high margin of safety.

Notice that business quality (17/20 total points) is more important than valuation (3/20 total points). For me, a business’s margin of safety comes mainly from its resilience rather than its cheapness. I’m not discrediting value investing; as you can see, overvaluations do get penalized under the SWI framework (i.e., they receive a negative score). However, I am more comfortable choosing a high-quality business at a fair price over a low-quality company at a cheap price.

The checklist was adapted from

• Anti-fragility concept borrowed from Nassim Taleb,

• Irreplaceability from Anthony Deden,

• Mundane businesses from Matthew McLennan,

And various studies from other reputable investors (Terry Smith, Ralph Wanger, Scott Fraser, Peter Lynch, and more). They provided me with the knowledge and wisdom to judge if a business can endure the test of time.

Why did I create the SWI Checklist?

"Ultimately, nothing should be more important to investors than the ability to sleep soundly at night," Seth Klarman.

Unfortunately, I wasn’t sleeping well between 2018 and 2022.

I fell into the trap of buying companies that were growing at all costs and broken businesses at cheap valuations! While it looked great when the market was optimistic, it proved disastrous in uncertain times. With the benefit of hindsight, these baskets of stocks dropped the hardest.

This numbing experience led me to change my investment process radically.

From that day on (2022) -

1. I only considered time-tested businesses that can defend their moats and reinvest at a high return on invested capital over time — high-quality companies.

2. I only buy these businesses when they perform on the SWI Thesis Tracker and when the price is right. — disciplined ownership

To earn a position in my Sleep Well Portfolio, they must score at least 13/20 points on the Sleep Well Investment Scorecard (below).

2. Sleep Well Investment Scorecard

I score each business based on the Checklist. As mentioned above, there are three groups:

⏳Survivability - Business quality [13 points]

🏃🏻‍♂️Endurance - Competitive position and risks [4 points]

💰 Valuation - Intrinsic Value [3 points].

Each of the criteria under these 3 categories also has a range of points; for example, a business can score 0, 1, or 2 for ‘Management’, or be deducted 1, 2, or 3 points for the level of competition under ‘Competition and Market Share’.

There are 20 points in total. I consider a business investable if it has more than 13 points. Below, you will find the criteria in the SWI Checklist and their corresponding scores for some of the companies that SWI has analyzed in 2024-2025.

These companies are niche market leaders and have a very long runway for reinvestment.

The catch is that they are rarely offered at a reasonable price, which means you will need to own them for decades so that the value they will create outweighs the initial multiple you paid. Alternatively, you can try to find relatively unknown and under-appreciated (mostly boring) businesses. BCG research shows that sales, profit, and free cash flow drive 95% of stock performance, while valuation drives just 5% over 10 years.

3. Deep dives

A deep dive is a report (~10,000 words) where you can expect a breakdown of

• how the business has built its success,

• how it will overcome competition and future adversities, and

• a simple valuation framework to ensure we buy at a reasonable price.

In addition, it will give you the reasoning behind each of the scores in the SWI Scorecard.

Every industry and business model is different, but I always dig deep into understanding why the chosen company has a better product/platform, how it can adapt to changes, and what barriers it has built for new entrants. That, to me, is most important and will contribute the most to our sleep-wellness.

🔗 link - for all deep dives

4. Thesis tracking

I track the progress of each business in SWP and decide whether they still deserve a place in the Sleep Well Portfolio regularly. You will receive a write-up when any substantial changes affect the company. I also update the Sleep Well Scorecard if necessary.

Sleep Well Investments only stay ‘sleep well’ if they continue overcoming the competition and unknowns over time. They must perform and adapt to remain on the watchlist/portfolio, which I track under my Thesis Tracking updates.

It often boils down to one KPI - market share movements against key rivals - my proxy for the quality of the moats and barriers to entry.

🔗 link - Check out the Thesis Tracker section for follow-up updates.

Behind the KPI is a comparative report of (i) revenue growth, (ii) major client wins/losses, (iii) industry rankings, and sometimes (iv) product reviews, if relevant. You will know the market share movements and the why and how they gain/lose.

FREE tracking reports: MIPS, CRWD, and FND.

As shown in the table above, green indicates gaining market share, red indicates losing, and yellow indicates stability. Gaining or losing market share speaks volumes about the quality of the moats and barriers to entry.

Consider this:

A business expanding its market share relative to key rivals is likely a result of widened competitive moats and stronger pricing power. In theory, this should enable the company to sell products at a higher price, purchase supplies at a lower price, and enter new markets and products more effectively. Operationally, that likely leads to better cash conversion and higher free cash flow per share growth. From an investment perspective, the return on invested capital (ROIC) is likely higher than its peers.

Market share movements encapsulate all the underlying aspects above. Simple and elegantly effective.

Tracking market share also encourages investors to think long-term and provides an excellent opportunity to verify the business quality (Sleep Well Investment Scorecard).

5. Sleep Well Portfolio (SWP)

Annual subscribers get full access to the SWP, which is my daughter’s JISA with a redemption date of 2037. I use it to demonstrate how I would construct a long-term portfolio from scratch.

🔗 link- to track the portfolio in real-time (available to annual subs only)

What makes the Sleep Well Portfolio sleep-well?

✔ The portfolio will consist of between 10-20 market leaders
✔ The portfolio consists of businesses that we want to own long-term, hence the 2037 redemption date.
✔ No market timing. We buy at a price that offers a healthy margin of safety
✔ The portfolio only invests in deep-dived stocks that are monitored closely
✔ They are market leaders who:

• have a stable / strengthening market position

• have enduring competitive advantages

• have management with aligned interests and a strong capital allocation track record

• have anti-fragility attributes (i.e., a healthy balance sheet, excess capability, an adaptable business model, and have previously endured competitors and crises)

• have plenty of reinvestment opportunities

• is trading at a fair valuation

Investing is a life-long journey, not a sprint. That’s why the portfolio redemption year is 2037. I buy stocks that I intend to keep for the long-term, so no short-term trades. A few extra percentage points of return aren’t as important as sleeping well, achieved through knowing why I own a business and trusting my investment process.

For this reason, access to the portfolio is only available for annual paid subs who are in it for the long run. I apologize to monthly subscribers; I don’t want to mislead or tag you along for a marathon when you are looking for a sprint. You will still have full access to my deep dives and thesis-tracking updates.

Important note: It doesn’t matter if you manage a $50K or a $50M portfolio; if you can’t manage a small amount responsibly, then managing $50M will magnify your mistakes. Hence, I do not provide ownership details in absolute $ value.

The purpose of showing how I manage my daughter’s and my family's portfolio is to encourage long-term ownership, showing I eat my own cooking, and that it is possible to have a lasting investment process over multiple cycles. Please don’t copy it blindly; your saving is finite; treat it responsibly. It’s likely we have very different financial goals and circumstances.

Finally, I will only reveal new Sleep Well Portfolio positions after publishing my deep dive. I believe an investor should only consider an investment after thoroughly researching it.

6. Sleep Well Portfolio *Buy/Sell Alert*

For transparency and disclosure, I share my detailed thought process behind every BUY and SELL. I also review the portfolio monthly.

🔗 link here - to view all buys and sells (available to annual subs only)

I aim to own these businesses as long as they perform well in my Thesis Tracker, which I update as new data becomes available.

I believe in ‘knowledge is key’, so as a paid member, you will also get access to

1. Key lessons I’ve learnt throughout my investing journey

2. My write-ups on quality traps, i.e., companies that seem like a good investment at first but under the surface lie more permanent issues.

Disclaimer

As a reader of Sleep Well Investments, you agree to our disclaimer. You can read the full disclaimer here.

New companies often excite investors the most. However, it requires a steeper learning curve. Balancing between ‘excitement’ and ‘discipline portfolio management’ is key to participating in the upside while limiting potential mistakes.

Today, I would like to share my buying strategy for new picks. Using the 20th and 21st picks as examples, I discuss

(i) Why am I buying them

(ii) How am I buying them

I have completed the initial portion (3% allocation each), and I will explain my thought process for approaching the next two portions (5-6% total).

Links to the deep dives and the first purchases are below:

• 20th pick - a supply chain network leader [deep dive, first buy]

• 21st pick - a public safety SaaS leader [deep dive, first buy]

First, preparation is everything

Buying is easy.

The caveat is that you must ensure the business you buy has a high likelihood of being correct.

At Sleep Well Investments, our first aim is not to lose. Hence, we only

1. Study winners, 21 so far.

2. Own them, 12 so far (see below)

3. Sell when we find better opportunities, 4 so far. (see portfolio updates)

To maintain a clean record since Oct 2023 (24/26 transactions are green), we prep, prep, prep, on a few critical things.

• Prep by focusing on what matters most: key customers, key competition, solutions to past failures, and direction of the industry.

• Prep by following where value is created (not charts!). It often takes a few quarters to fully understand what KPIs drive the business and how they fare relative to the competition.

That sounds like a lot of work, but it becomes easier with practice and a sense of ownership.

But as always, when the prep work does not yield the desired results, we acknowledge our failures and sell, so far, four times, and all of these decisions have been correct.

Ok, how do we buy new picks?

For businesses we haven’t owned for years, we prefer to remain conservative, splitting our buys into stages and limiting their allocation so that it doesn’t harm the portfolio or harm your returns.

1. First buy: a 2-3% position. No timing, if we are happy to own the business for 10 years, we buy when prices are reasonable.

2. Second buy: another 2-3% position if the following few public announcements are what we expected and prices remain reasonable.

3. Third buy: another 2-3% to take advantage of the market volatility (broad market sell-offs) when prices are at the cheap end.

This is a more patient and conservative approach. We did that with Wisetech (first buy, second buy) and Sea Limited (first buy, second buy, third buy), and are doing the same with the 20th and 21st pick.

• Wisetech (first buy Feb 2025, second buy Mar 2025)

• Sea Limited (first buy Jun 2024, second buy Mar 2025, third buy Apr 2025)

• 20th pick (first buy Jun 2025)

• 21st pick (first buy Jun 2025)

Above, buying in stages allows us time to reflect and bet bigger if the thesis works out (SE, WTC) or retract and limit the losses if they don’t achieve the KPIs we expect. Finally, if they disappoint (or we need the cash to pursue better opportunities), then we must be prepared to cut the position (FND, MEDI, WSC).

20th and 21st sleep well - second and third buy

Buying strategy:

1. First bought in June 2025, the price paid was 26x EV/FCF and 38x EV/FCF, respectively.

2. The next buy will be decided around Q2 results announcement (August 14th), provided the thesis and price remain attractive.

3. The final buy is reserved for when Mr. Market throws a discount.

Details:

Read more

Build your Sleep Well Portfolio today

How I average up, and note on recent dip.

I am building the egg nest for 2037, when my first daughter turns 18. So, until then, as long as the portfolio businesses create more value per share than the % gain in the share price, I will continue to take advantage of dips.

It’s simple but not easy to execute (if you can’t control your dopamine level).

The following chart shows the price changes from last month. Bright orange is the 21st pick, which has dropped the most, by -18%. The setup is similar to Wisetech’s 25% drop in January (which it mostly recovered from) and the 20th pick’s CEO uncertainties in recent months, which partly caused the share price to drop by ~10%.

The remaining picks have only dropped a little, namely Grab, Meli, and Dino Polska. Sea Limited dropped in the last week after news of Meli’s increasing investments in logistics (more free shipping for lower ASP items) in Brazil to counter Sea Limited’s formidable growth in the region (10% of Sea’s total GMV and 40% of Meli’s Brazil GMV).

So, the dip isn’t tempting me yet. I am not after a few % gains, and I want to continue adding to companies that can create value (free cash flow per share) faster than their share price rises.

This indicates that they have created more value than the market is giving them credit for, and this should be reflected in a higher multiple. Some have duly received this, but I argue that as fcfps grows faster, the multiple can still rise. Let's look at a few charts.

Since its IPO, Fortinet’s value creation has been more than 2x the share price gain.

Veeva’s 3x

Since turning positive, Crowdstrike’s free cash flow per share has grown more than ten times the share price gain.

Grab has also performed similarly, growing free cash flow per share 10 times more than the growth of its stock.

Meli, 28 times, is the most impressive!

Sea Limited, created value 12 times the stock gains, is only getting started as Shopee, the largest division, has only turned profitable in the last few quarters.

I purposely left out a few to reserve the best for paid members.

So, despite the dip not being as ‘attractive’ as it looked in the past month, zooming out to years and decades, you can see which company has consistently created value to shareholders.

I consider investing like a long hike over the mountains. I visualize the destination as a motivation while enjoying my current view (i.e., keeping things simple).

Caveats: I have a high degree of confidence that the destination is worthwhile (owning niche leaders) and that my path (selection process) to get there is directionally correct, so I worry very little over small market dips.

Averaging up - aka ‘watering flowers’

Before you leave, I’d like to share a question from a member regarding my framework for averaging up positions that have run up significantly (10/11 positions have done this).

Averaging up is like taking extra care of your flowers. You want to ensure they continue adding the most value to your portfolio.

Additionally, I don’t wait until everyone thinks it’s cheap, and I try to strike a balance between making money and avoiding decision fatigue.

I hope you find the question and answer useful. I am a student of the market (not a slave to money) and welcome your feedback.

See you next week!

Sleep well,

Trung

Build your Sleep Well Portfolio today

Hi friends,

I recently bought the most expensive Australian software company, Wisetech (WTC). It’s a 3% position in the Sleep Well Portfolio, valued at 70x FCF and 26x Sales for 17% growth (15% organic and 2% inorganic) per the H1’25 report. It was a mistake not buying it last year. I am not making the same mistake this year.

Check out my Jan 2024 SWI deep dive, H1’25 update, Buy Alert, CEO update, FY24 update, for more details.

On to you, what would it take you to pay for this business?

Before I explain my reasoning, you must know that at Sleep Well Investments.

• Valuation is more art than science, where I attempt to match a company's story to a rough price at a particular time.

• Hence, the stronger the company, and crucially, the longer the time preference, the higher the price I am willing to pay. 

As a result, what you pay today matters less.

The following 20-year study by BCG supports my reasoning above. It shows that valuation explains just 5% of the stock performance for top-quartile companies in 10 years and 46% in the next 12 months. In other words, what you pay matters less if you extend your investing horizon.

The caveat is that you must ensure you are right about the company. The findings above apply to top-quartile businesses only! Looks like Wisetech is one —one of a kind product, with 30% and 40% revenue and free cash flow CAGR 10yr growth [deep dive, H1’25 update, Buy Alert, CEO update, FY24 update].

Next, you have to conquer your worst enemy - yourself!, your price anchoring bias, and your habit of trying to price everything and make quick bucks.

Your craving for short-term gain is likely the most significant hurdle to owning companies like Wisetech.

So, if you want to protect and build your wealth (money, time, knowledge), looking at the daily price and finding reasons why it goes up or down each day (which does nothing to the business) is stressful.

I hope you find this writeup helpful.

I’ll open with this.

Wisetech is at A$90/share today, up from A$70/share at my deep dive last year.

But did you know it’s cheaper today than it was last year?

Yes, it’s valued at 66x FCF vs the previous year at 70x FCF.

Core understanding of why you and I should pay up.

I didn’t learn to pay up for quality from the start. I used to love cheap stocks! However, the concept of return on invested capital and focus on owning instead of trading paper shares for quick profit changed everything.

Terry Smith said:

Investing in a quality company requires a longer time horizon, as the company may take years or decades to realize the result of the invested capital. Even so, it may not be, so you need to understand the competitive landscape well. Moreover, you often pay for a high multiple in the first place.

Terry Smith means that if you look at a company with a view of 10-20 years, you can imagine the results of what it invests today. Similarly, you will eat the fruits of an apple tree in 5-10 years by taking care of it (invest). But you can’t if you cut (sell) it next quarter because it grows slower than expected.

So,

• Think 10-20 years, ideally forever, like owning a home.

• Focus on the strength of the company vs. the competition.

• Learn how it reinvests in itself - durability of growth (likelihood and level)

Wisetech

Core strength vs. competition

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Sleep Well Investments is a newsletter that focuses on long-term investments in high-quality businesses. These are enduring businesses equipped with a timeless purpose, adaptability, and resilience. We average a 70% annualized return per pick with a 90% success rate (26/29 transactions in the money).

Low risk doesn’t mean fewer returns.

We cover a wide range of industries, from Drug Development and Crime Investigation software to the ‘Amazon of Southeast Asia’ and lately the Special Light Technology platform. To learn more about us, visit our ‘About 🌘’ page.

We intend to own ~15 holdings and only sell if we find better opportunities. We don’t trade or chase ‘hot’ stocks. We aim to know our businesses deeply because the deeper we know them, the lower the risk.

Below, I have sorted my in-depth research into categories:

1. SWI Manual 📓

2. The Sleep Well Portfolio and Buy/Sell track record 🎯

3. Deep dives and sleep-well scores 📋

4. Follow-up reports

5. Investment framework and tools

6. FREE write-ups

1. SWI Manual 🌘

To get the most out of Sleep Well Investments, this article provides a clear roadmap to the what, how, and why your wealth can be safeguarded by following my investment framework.

Access the SWI Manual below:

2. The Sleep Well Portfolio

Every month, I review the portfolio, revisiting any buy/sell and highlighting the best buys for the month.

Sleep Well Portfolio monthly portfolio reviews are below:

Aug 2025, July 2025, June 2025, May 2025, April 2025, March 2025, February 2025, January 2025. FY 2024, November 2024, October 2024, September 2024, August 2024, FY2023

Sample of ownership alert (Buy/sell):

1. 1st Ownership - MEDI at NOK 180 (SOLD at NOK 170)

2. 2nd Ownership - FND at $86

3. 3rd Ownership - MIPS at SEK 300

4. 4th Ownership

5. 5th Ownership

6. 6th Ownership - Dino Polska at PLN 374

7. 7th Ownership

8. 8th Ownership - KNSL at $383

9. 9th Ownership - SE at $73.50 and Trimmed CRWD at $381.64

10. 10th Ownership - CRWD at $205 (Add FTNT and Sell MEDI)

11. Buying An Anti-fragile Business

12. Buying this Cash Rich and Generative Monopoly at 25x FCF

13. Buying A Wonderful Business At A Cheaper Price

Transaction performance, 24/26 is correct.

3. Deep dives and sleep-well scores

The table below lists all deep dives and tracks their performance. You can access it in the Sleep Well Portfolio spreadsheet, a one-stop shop that shows all positions, tracking updates links, my research list, and a scorecard of all businesses (see sample below). Access is available to annual sub only.

All picks above undergo a checklist and are given a sleep-well score. When a reasonable price is available, we buy them for the Sleep Well Portfolio.

1. CrowdStrike - Cloud security leader +27% CAGR since IPO

2. The VAT Group - Vacuum valve leader +32% CAGR

3. Shimano - Bike component leader +12% CAGR

4. Floor and Decor - Future leader in hard-surface flooring +30% CAGR

5. MIPS - Helmet safety leader +45% CAGR

6. Thor Industries - RV leader +14% CAGR

7. Medical device leader +17% CAGR

8. NVR - Top US east coast homebuilder +30% CAGR

9. WSC - Space and storage solution leader [Part 1, Part 2] +24% CAGR

10. Life science platform leader [Part 1, Part 2] +43% CAGR

11. Global logistics software leader [Part 1, Part 2] +31% CAGR

12. Network security leader [Part 1, Part 2] +13% CAGR

13. Polish success food retailer +38% CAGR

14. Leader in E&S insurance submarket +50% CAGR

15. Tech Titan in Southeast Asia +30% CAGR

16. The most sleep-well business in LATAM +33% CAGR

17. SuperApp monopoly and turning free cash flow positive (-36%) CAGR

18. Naval engineering gold standard +19% CAGR

19. European Centurian Business +7% CAGR

20. Supply Chain Network leader +29% CAGR

21. Public Safety SaaS leader +16% CAGR

4. Thesis Tracking - In-depth follow-ups

**Links to thesis updates, buy-and-sell, and deep dives are all in the Sleep Well Portfolio spreadsheet.

5. Investment Framework

Ideas

• 20 sleep-well businesses

• 10 serial acquirers

Timeless Lessons

• Invest like Peter Lynch

• Pulak Prasad’s guide

• 5 lessons from Scott Fraser

• 7 lessons from Ralph Wanger

• 5 lessons from Terry Smith

6. FREE write-ups

1. NVR Inc (NVR) - Homebuilding black sheep - deep dive

2. Fortinet (FTNT) - Safest bet in cyber security - deep dive

3. WillScott (WSC) - Storage and space solution leader - deep dive

4. CrowdStrike (CRWD) - Fal.Con investor update Sept 2023 - thesis tracker

5. ‘Ownership Alerts’ (1st, 2nd, 3rd, 4th, 9th)

6. Sleep Well Portfolio FY2023 review, FY2024 review.

If you don’t know the quality of my work, read them 👆

Subscribe now

As a reader of Sleep Well Investments, you agree to our disclaimer. You can read the full disclaimer here.

Tickers:

$MIPS.ST $SMNNY $VAT $DNP.WA

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I am Trung. I write 10+K words deep-dives on market leaders. I also write Thesis Trackers updates to follow up on their performance. When the right price comes, I buy them for the Sleep Well Portfolio, which I am building for my 4-year-old daughter to redeem in 2037. I disclose the reasoning of all BUY and SELL (ideally never) transactions (1st, 2nd, and 3rd). Join me in building generational wealth.

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New feature: Thesis tracker

To earn the label ‘sleep well,’ businesses must have a long track record of outlasting competition and enduring market downfalls. But the future is uncertain, and change is constant, so these businesses must continue to create value to stay on the portfolio.

To monitor their progress, I introduce the - Thesis Tracker. I keep things simple and effective to focus on what matters most. Thus, there is only one KPI.

Market share movement relative to key rivals.

You will receive an update every quarter on this metric or when data is available.

As shown in the table above, green means gaining market share, red means losing, and yellow means stable. Gaining or losing market share speaks volumes about the quality of the moats and barriers to entry. Consider this:

A business expanding its market share relative to key rivals is likely a result of widened competitive moats and stronger pricing power. In theory, that should allow the business to sell products at a higher price, buy supplies at a lower price, and enter new markets and products more effectively. Operationally, that likely leads to better cash conversion and higher free cash flow growth. From an investment perspective, the return on invested capital (ROIC) is likely healthy vs. its peers, too.

Market share movements encapsulate all the underlying aspects above. Simple and elegantly effective (as my fellow investor - , author of summed it up succinctly) Thank you, Ryan 🙏.

Tracking market share also encourages investors to think long-term and provides a good opportunity to update the sleep well scorecard, which measures the quality of deep-dived businesses. You can see the current score below.

While there is only one KPI, there is much digging behind it. The makeup of it is often triangulated from 3-4 sources.

1. Revenue generated vs. peers,

2. Big client wins/losses

3. Industry rankings

4. Alternative metrics

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I’ll show you two examples of alternative metrics:

For MIPS, it’s the number of teams wearing MIPS helmets at the Tour de France.

The following table results from my digging through each team in the Tour de France and investigating which helmets they wear each calendar year. The results are outlined below:

It shows 22 teams at the 2023 Tour de France. Only four teams wore non-MIPS helmets; thus, in 2023, MIPS’s market share is 82%, a slight increase from the 2022 Tour de France. So, combined with management commentaries in the latest Q2’23 earnings call, I assign MIPS as gaining market share - denoted as a green box, as shown in the Thesis tracker at the top of this article.

For CrowdStrike, an alternative metric is reading through customer reviews and product rankings of top security products, particularly Microsoft’s Defender.

I encourage you to check out the thesis tracking updates of MIPS, CRWD, and FND to appreciate the breadth and depth of my research.

I will still monitor long-term and short-term financial targets, but to be laser-focused on the long-term and the big picture, I find market share movement the most effective KPI. I will adapt and change, so please leave your feedback in the comment section.

Credit to Silver Ring Value Partners for this new feature, as I adapted from reading their owner’s manual.