Sapna Devi

Ever since I was a child, I wanted to buy companies with a mix of debt and equity

Balance sheet actually balances in the model

Growing up is realizing that management team is ultimately the single most important variable in investing You can build complex models, run scenario analyses and apply all sorts of fundamental frameworks like DCFs, LBOs or SOTP valuations But at the end of the day, every assumption across very model hinges on management executing on their plans In a DCF valuation, you discount future cash flows back to present value with the assumption that all of the residual cash flows will go back to shareholders But in a company with bad management, excess cash flow can be spent on > bad R&D and moonshots that will never go anywhere > buying private jets for executive teams > value destructive M&A transactions > excessive compensation across the organization > balance sheet mismanagement and excess leverage Even if your model assumptions are perfect and the business generates more cash than you can dream of, bad management can direct that cash away from shareholders Competent management is truly the most underrated tenet of investing, and most people (surprisingly) dont spend enough time evaluating it