I was curious if anyone could give me some insight as to how you initially screen for companies that you may be interested in researching more thoroughly. I realize this may be more of an art form than a science, but I'd really appreciate any help. I'm trying to find a good long position. I've been using low multiples (trailing and forward)/high-ish margins compared to peers as a starting point and I feel like all the companies I've started looking into have ended up being semi-shitty, but not shitty enough to short. Thanks a lot for your help.

For long ideas, I run a simple screen for small to mid-cap companies trading at low EV/EBITDA or EV/FCF, lower than normalized gross and operating margins, and lower than normalized ROIC. Usually, I find declining, over-leveraged companies, or companies in a predicament and go from there. If a declining company operates multiple business segments with only its main segment exhibiting top and bottom line decreases, a potential idea may exist.

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DaveMCR

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Value investor working in the hedge fund industry. Portfolio Manager, Analyst at a $380+ million Texas-based value investing HF. Former Research Consultant, Analyst at a NYC-Based deep value and special situations HF.

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