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Having lived through the fall-out of the last financial crisis, a key investment criteria for us at Blossom is investing in companies that we believe will be “recession proof.”
However, when Covid hit, we realised that this criteria didn’t necessarily extend to being “corona proof.” It’s easy to understand the impact of a recession, but seemingly impossible to navigate the sudden and unpredictable behaviour changes that could last, potentially indefinitely.
Over the past six months, we’ve realised that companies who performed well during Covid did so because of sound fundamentals built prior. Those who struggled have (largely) done so because of systemic issues that were prevalent before. Covid simply laid them bare.
Reflecting on these learnings, we believe a better way of thinking about companies being “recession proof” would actually be “crisis proof” — an ability for a company to navigate any storm; socio, economic and beyond. We think that boils down to six investment criteria:
1. Market tailwinds are critical
Covid doesn’t appear to be stopping any major industry shifts in their tracks. In fact, it’s accelerated trends, both positive and negative. Physical activity was moving online, digital transformation was underway, capital expenditure in heavy industry …
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