Anna Karenina

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Leo Tolstoy’s Anna Karenina is a study of human nature and Russian life.  The very first sentence captures the thesis of the novel:  “All happy families are alike; each unhappy family is unhappy in its own way.”

In our research, we have found that the opposite is true for companies.  Every year the winners are different and win for different reasons; meanwhile, the losers lose for the same reasons over and over again.  While the reasons for winning or losing may be complex, this simple insight is a powerful lever for dividing potential long and potential short research candidates.

I recently found an analysis that reaches the same conclusion as our bottoms-up work, but captures it in a simple, top-down image.  The chart illustrates that the factors that maximize success change every year, while the factors that perform the worst are the same year after year.  At least over the past 27 years.

bishoprockfactors

THIS ARTICLE REPRESENTS THE VIEWS OF BISHOP ROCK CAPITAL, L.P. AND SHOULD NOT BE CONSIDERED A RECOMMENDATION TO PURCHASE OR SELL A PARTICULAR SECURITY.

 

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