We look for Rising Inflectors and Mature Inflectors.
Every durable franchise traces an S-curve: adoption inflects into a steep climb as the product wins its market, then flattens as penetration matures. Early on, a company builds nascent moats such as counter-positioning. Over time, these can harden into entrenched moats like network and scale effects.
The market struggles to value S-curve riders because it thinks linearly, whereas S-curve earnings scale exponentially. We cannot control price, but we can control how we model future earnings — differently, and correctly.
Two stacked S-curves, earnings moving from contestable to durable as the moat moves from forming to entrenched. Rising Inflectors sit on the first steep climb, Stable Compounders on the plateau where the first curve flattens and the moat transfers, and Mature Inflectors on the climb of the second curve.
Rising Inflectors
Virgin S-curve riders. These companies are on their first steep climb, where moats are still forming.
Stable Compounders
Stable companies that are harvesting profits. We do not invest in stable compounders.
Mature Inflectors
Repeat S-curve riders. These companies exploit entrenched moats (gained from winning a previous S-curve) to ride a second curve.
