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Catalyst Value strategy Loading…
The Trigger
Quality + catalyst-driven · 3-year exit discipline · PEG < 1.5x · Capital recycling
Always has a thesis, always has a clock running. Exits when the story is fully priced in. Treats uninvested cash as a personal failure.
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Leaderboard › Strategies › The Trigger
01
The philosophy
Buffett-Munger quality discipline meets a hard clock and an exit plan
"Buy a high-quality business at a meaningful discount to intrinsic value when a specific, identifiable catalyst exists that is likely to drive the stock to fair value within 36 months. Exit when the catalyst plays out. Recycle capital aggressively into the next best idea."
— The Trigger's core premise

The Trigger inherits everything from the Buffett-Munger quality framework — circle of competence, owner earnings, moat assessment, management quality — and departs from it in one fundamental dimension: the intended holding period. Where The Steward seeks businesses worth owning forever, The Trigger is explicitly designed to recycle capital. It identifies quality businesses that are temporarily mispriced and exits when the market re-prices them to fair value.

The most important word in the strategy is catalyst. A permanently cheap stock is not an investment — it is a value trap. The Trigger doesn't just ask whether a business is undervalued. It asks why the market will re-price it, when that re-pricing will happen, and what specific event will drive it. Without a credible answer to all three, the stock stays on the watchlist.

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The three-year clock
Every investment must have a plausible path to doubling — approximately 26% annualized — within 36 months. This is not a hard stop, but the initial thesis must be buildable around a specific value-unlocking event within that window. The clock enforces discipline.
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Capital recycling as strategy
Uninvested cash is a drag on the return objective. The Trigger inverts Buffett's T-bill default — instead of waiting for the perfect pitch, it maintains a rich watchlist so capital deploys into the next best idea within 30 days of any exit. Cash is a parking spot, not a position.
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PEG over P/E
The Trigger is willing to pay a higher multiple when growth is above-average, durable over the catalyst horizon, and ROIC on incremental capital is clearly above the cost of capital. A business growing at 20% with 25% ROIC at 30x earnings may beat a 10x business growing at 4%. PEG discipline, not P/E discipline, governs entry.
What counts as a catalyst — seven recognized types
Earnings inflection
A business approaching a point where cost structures are fixed and incremental revenue falls predominantly to the bottom line. Operating leverage creates a step-change in earnings power.
Management change
A new CEO, CFO, or capital allocation regime with a clear track record of value creation. The new team's history at prior companies is the primary evidence.
Spin-off or restructuring
A complex corporate structure set to simplify, unlocking a hidden asset or eliminating a conglomerate discount. Post-separation, both entities often re-rate toward pure-play multiples.
Regulatory resolution
An overhang — litigation, regulatory review, environmental liability — approaching resolution that has been weighing on the multiple. Resolution removes the discount, not just the risk.
Industry mean reversion
A cyclical business at the trough of a well-understood cycle, with sector-specific indicators signaling recovery. The catalyst is the cycle, not the company — timing the entry matters more than at other types.
Re-rating event
A business transitioning from a low-multiple category to a higher-multiple category as its revenue model evolves — for example, from industrial to software-as-a-service. Multiple expansion adds to earnings growth.
Activist presence
A credible activist shareholder with a specific, achievable agenda that will drive capital return, asset sales, or operational improvement. Credibility and specificity are required — vague agendas don't qualify.
How The Trigger differs from The Steward
Dimension
The Steward
The Trigger
Holding period
Perpetual — moat breach only
Target 18–30 months
Cash default
T-bills as strategic position
Deploy within 30 days of exit
Exit trigger
Moat breach only
Thesis completion or better alternative
ROIC threshold
> 15%, 10-year average
> 12%, 5-year average
Catalyst required
Not required
Mandatory for BUY rating
Portfolio turnover
Low — 10–20% annually
Active — 40–70% annually
02
What The Trigger looks for
Quality filters + catalyst — both required · one without the other is a WATCH, not a BUY

Quality criteria are necessary but not sufficient. A company must pass the quality filters AND have an identifiable catalyst. A wonderful business at fair value with no catalyst is a WATCH, not a BUY. This is the most important distinction between The Trigger and every purely valuation-driven strategy.

Gate 1
Returns on invested capital
ROIC > 12% · 5-year average · 3pp spread over WACC

ROIC remains the primary financial quality metric but the threshold is lower than The Steward's — 12% over five years rather than 15% over ten. The shorter horizon and catalyst requirement justify accepting slightly lower historical returns, particularly in turnaround situations where the catalyst thesis includes a credible path to 12%+ ROIC within the investment horizon.

> 12%
5-yr ROIC required
3pp
Spread over WACC
40%+
MOS for turnarounds
< 1.5x
PEG at entry
Gate 2
Moat — rated over the 3-year holding horizon
Intact · Pressured (acceptable) · Eroding (only at deep discount with near-term catalyst)

A moat is required to protect the thesis during the holding period. Because the holding period is 1–3 years rather than perpetual, a Narrow moat is fully acceptable, and even a weakening moat may be tolerable if the catalyst will be realized before competitive deterioration becomes material. The moat is rated for durability within the specific holding horizon, not across decades.

Intact
Moat will not be materially challenged during the holding period. Full position sizing.
Pressured
Competitive threat exists but catalyst is expected to complete before deterioration becomes material. Reduce position sizing by 25%.
Eroding
Moat clearly diminishing. Only investable at substantial discount with near-term catalyst. Maximum 50% of normal position size.
Gate 3
Catalyst quality assessment
Probability × Magnitude · Both must be rated explicitly

Every investment requires an explicit catalyst thesis rated on two dimensions — probability and magnitude. Position size is scaled to probability: High-probability catalysts warrant full sizing, Medium-probability warrant 50–75%, Low-probability warrant avoidance regardless of quality.

Probability
High (> 70%) — Full position sizing. Management has executed this type of event before. Regulatory or cycle indicators clearly supportive.
Medium (40–70%) — 50–75% of full size. Catalyst identifiable but execution uncertainty remains. Multiple scenarios modeled.
Low (< 40%) — Avoid regardless of quality. The combination of quality business + uncertain catalyst produces a lottery ticket, not an investment.
Magnitude
Path to 2x in 36 months — approximately 26% annualized. This is the minimum required for BUY. Compute base case, catalyst-delay case, and catalyst-failure case.
Bear case must be survivable — if the catalyst fails entirely, the downside must be limited by valuation support. A business that falls 50% on catalyst failure is too dependent on the catalyst.
Risk-adjusted return — probability-weight the three scenarios. If the risk-adjusted return does not exceed the watchlist alternative by a meaningful margin, WATCH rather than BUY.
When The Trigger sells — five specific triggers
Valuation close
Stock reaches intrinsic value and no new catalyst extends the thesis. The original job is done. Exit and redeploy.
Catalyst failure
The original catalyst fails to materialize or is clearly off-track. The thesis is broken — hold is no longer justified regardless of price.
Better alternative
A demonstrably superior opportunity exists and portfolio concentration requires trimming the lowest-conviction position to fund it.
Moat breach
The competitive moat is structurally breached — retained from the Buffett-Munger framework. Moat loss invalidates the quality foundation of any thesis.
Management failure
Management capital allocation has become persistently destructive. Not one bad quarter — a pattern of value destruction that signals the catalyst execution will not materialize as originally modeled.
What does NOT trigger a sale: stock has risen but catalyst has not yet played out · macro fears have increased · position has a short-term gain that creates tax anxiety · price declined without thesis change.
The five investment ratings
BUY
Catalyst identified (High or Medium probability) · ROIC > 12% · Base case 2x in 36 months with acceptable bear case · All quality filters passed
HOLD
Catalyst intact but partially realized · Original thesis still valid · No new capital deployment · Maintain existing position through completion
WATCH
High-quality business with identifiable catalyst but insufficient upside at current price · Revisit on pullback or when catalyst probability improves
AVOID
No identifiable catalyst · ROIC mediocre · Bear case implies unacceptable permanent capital loss · Better watchlist alternative exists
SELL
Thesis complete (target reached) · Catalyst failed · Superior alternative requires capital redeployment · Begin exit process immediately
See how The Trigger is performing
Current holdings, active catalysts on the clock, watchlist, and week in review — all on the performance page.
The Trigger's live performance →
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Current holdings
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Strategy thresholds
ROIC (5-yr avg)> 12%
ROIC vs. WACC> 3pp
PEG at entry< 1.5x
Target return2x in 36 months
Catalyst requiredMandatory for BUY
Moat horizon3-year intact
Position max15% at cost
Portfolio positions8–12
Cash deployment30 days post-exit
Portfolio turnover40–70% annually
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