What Differentiates Zorik Capital
Highly successful investment track record across a broad portfolio; 35.5% IRR over 4.5 years
Unique understanding of the market trends and new technologies first adopted by the next generation; not attainable by Wall Street analysts
Modernized value strategy focused on patent-pending
Growth Adjusted Returns on Invested Capital to WACC (GROICw)
Strategy
Zorik Capital holds a long-term investment perspective (5+ years), focusing on earnings growth compounding on itself over time though our proprietary, patent-pending, Growth Adjusted Returns on Invested Capital to WACC (GROICw). The measure focuses on the long-term optimized profitability potential of businesses. The market is driven by natural volatile emotions, so to take advantage, we are contrarian investors who often find opportunities in downturns, and out-of-favor situations. We are more focused on ability to consistently compound excess returns over time, than market hype. We utilize a research-intensive approach in which every aspect of the business and financial fillings (10K’s, 10Q’s, etc.) are scrutinized deeply. Over 90% of investment opportunities are passed on through the process of analyzing the business. Once we are comfortable with the business, we construct a valuation analysis by running DCF, DDM, and other financial models.
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Benjamin Graham but, modernized…
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While we like Graham’s buying cigar butts for 50 cents on the dollar, we prefer a modernized approach of…​
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Buying companies at a discount to future free cash flows (which allows us to buy higher quality, safer businesses), with a focus on the GROICw methodology, which allows for net income to grow and compound on itself over time.
Our Ideal Business Has:
AN ASPECT UNDERAPPRECIATED BY THE MARKET
Items such as the ability to benefit from operating leverage without an impact on revenue, scalable business with COGS or OpEx that may grow slower than revenue, or merger synergies and added advantages to the combined company.
RECURRING REVENUES AND CUSTOMERS
Marketing spend is used for growth, not to maintain revenue. This gives the company stability and the ability to increase earnings without an impact on revenue by cutting selling and marketing spend.
STRONG GROICw or LOW PE/GROICw
Ability to earn over cost of capital and compound those earnings, driving excess return.
A ‘SECRET SAUCE’
Something that differentiates the product over its competition and provides a competitive advantage/barrier to entry. This allows the business to have a stable or increasing market share.
GROICw – Our homegrown metric
GROICw COMBINES THE ADVANTAGES OF GROWTH AND VALUE INVESTING,
Zorik Capital’s proprietary measure to identify and track companies that generate returns on invested capital (ROIC) above their cost of capital and have the capability to compound and grow this invested capital at superior rates.
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GROICw = (ROIC - WACC) * ((Normalized revenue growth rate)*100)
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How GROICw gives us an advantage:
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Helps us understand which companies are growing profitably and have the potential to compound their earnings growth over time
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Our PE / GROICw multiple helps us see how much you are paying for the potential to compound growth profitably (the lower the answer, the less expensive)