The Philosophical Foundation: The TBFG Method
How We Actually Find Great Investments
Most investors think they are looking for great companies.
They’re not.
They’re either:
chasing growth that’s too expensive
or buying “cheap” companies that stay cheap
And over time, both approaches fail in predictable ways.
That’s where the TBFG Method starts.
Not with what to buy — but with what to avoid.
It Starts With a Simple Observation
The market does not reward:
the smartest narrative
the most exciting company
or even the fastest growth
It rewards durable compounding.
And durable compounding only happens when three things are true at the same time:
The business is resilient
The business is high quality
The price is reasonable
Miss one — and the outcome changes completely.
Step One: Survive First
Before we think about upside, we ask a much simpler question:
What happens if we’re wrong?
If the answer is “we lose a lot of money,” the investment is already rejected.
That’s why everything in the TBFG Method starts with downside protection.
We look for:
strong balance sheets
low leverage
high interest coverage
consistent free cash flow
Because in volatile markets, survival isn’t optional.
It’s the foundation.
Step Two: Find Businesses That Actually Compound
Once downside is protected, we move to what really matters:
Can this business reinvest capital at high returns over time?
This is where most investors make a critical mistake.
They focus on earnings.
We focus on returns on capital.
Because earnings can be manipulated.
But ROIC tells the truth.
The companies we prioritize tend to have:
consistently high ROIC
structural advantages (moats)
pricing power
And most importantly:
They don’t just generate cash —
they know what to do with it.
Step Three: Growth — Without Overpaying
Growth is where things usually go wrong. Because growth is easy to sell. And very easy to overpay for.
The TBFG Method treats growth differently: We don’t ask “Is this company growing?”
We ask:
“Is this growth worth the price?”
That’s a very different question.
We use tools like:
PEGY
Free cash flow yield
forward earnings power
But the principle is simple: Even great businesses become bad investments at the wrong price.
Where It All Comes Together
When you combine these three filters, something interesting happens. The universe of investable companies becomes much smaller. But much better.
You’re left with businesses that are:
financially resilient
structurally advantaged
and mispriced relative to their long-term potential
That’s where real opportunities exist.
What This Looks Like in Practice
Across our recent analyses, two patterns consistently show up:
Defensive Cash Machines
These are companies the market often ignores because they’re “boring.”
But they:
generate massive free cash flow
operate with extreme efficiency
and maintain high returns on capital
They don’t need hype. They compound anyway.
Mispriced Quality Growth
This is where things get more interesting. Some of the best businesses in the world:
still have strong moats
still generate significant cash
but are being repriced due to uncertainty (e.g. AI disruption)
This creates valuation gaps. And valuation gaps create opportunity.
What We Deliberately Avoid
Just as important as what we buy is what we don’t. We avoid:
hype-driven narratives without cash flow
structurally weak balance sheets
businesses without reinvestment opportunities
“cheap” companies with no real quality
Because these are the investments that destroy long-term returns.
The Real Edge
The TBFG Method is not about predicting markets. It’s about positioning for outcomes. If you consistently:
protect the downside
prioritize quality
and demand rational pricing
You don’t need perfect timing. You just need discipline.
TBFG Bottom Line
The goal is not to find the next big thing. The goal is to own businesses that:
survive stress
allocate capital intelligently
and compound over time
Do that consistently — and the results take care of themselves.
Stay boring - keep winning.