Investment Thesis Tracker

We monitor our picks by tracking moats and market share movements vs. key rivals, keeping things simple, long-term and effective.

Hi, my fellow Sleep Well Investors (SWIs),

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 -

Ryan Reeves

, author of

Business Breakdowns

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

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:

MIPS helmet at Tour de France 2023, Sleep Well Investments

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.