You know, I’d always prefer to buy quality businesses that compound and just sit on my ass watching it grow. The real issue there is, the largest undervaluations are almost always in tiny stocks that are ignored/undiscovered.

What this means is, as you look at smaller and smaller stocks, the average quality of business gets worse and worse. Big businesses generally grew to be big because they had a good business model. Small businesses generally stay small because they have a lousy business model (or one that cannot be scaled).

This is why Graham’s liquidation valuation for net-nets (cigar-butts) is the majority of what I find and use. There are many mediocre or lousy business that are severely undervalued.

I’m always looking for them - but businesses that are both quality compounders and significantly undervalued are actually very rare to find.