What’s the single most important metric you look at when evaluating whether a company is a true compounder vs. a cyclical pretender?

For us, it comes back to incremental returns on capital. Not what the business earned on its legacy base, but what it’s earning on every new dollar deployed.

A high ROIC on a shrinking capital base is a melting ice cube with good optics. A moderate ROIC on a rapidly expanding reinvestment runway is where the real wealth gets built.

What’s your filter?