The purpose of this monograph is twofold. First we think it is important to fleshout out our framework around Compounders and be very explicit in what we are looking for. Secondly we hope to build a common language with our readers. Brett Kelly, author and CEO of Kelly Partners Group, who we admire very much, likes to say “common ideas lead to a common language, you cant have a common culture without a common language”. In much the same spirit we want to create a common language so that when we talk about Moats, Hedgehog concepts and Outsider CEOs the reader can resonate and connect with us using this common language. None of the ideas that we use are new, they have all been developed by others and throughout this monograph we have supplemented our own writing with many quotes from those who can express the ideas far better than we can.
We will begin with an introduction on what a Compounder is. Next we will take a look at why we think Compounders will generate a good rate of return for WLCM. Then we will describe in detail what we think constitutes a Compounder and what characteristics we are looking for in a potential Compounder. Finally, we bring it back to the WLCM’s Compounder framework and we discuss the purpose and use case for this Framework. In this monograph we will introduce the concept of the WLCM Compounder scoresheet, which serves as a way to quantitatively compare Compounders and as an elevator pitch for our Compounders. The scoresheets for all of our current Compounders can be found at the end of this monograph attached as appendices.