When does it make sense to take risks?

This week we got the news that Salesforce.com has acquired MuleSoft for $5.6 Billion, and the company's shareholders pocketed a nice return. The acquisition news brought back the memory of when I published MuleSoft's Stock Card (not available anymore due to the acqusition). It all started when one of our users sent a request. Once the data was pulled into the Stock Card, and I had a chance to look at it, I was faced with a dilemma. What would you do when half of the data points you need to make a good investment decision are unavailable?

Because MuleSoft has been public only for a few years, there was limited data about the company's historical investment return. Similarly, there was just not enough data available to be able to estimate the company's fair share price range. Out of the four big questions we answer on Stock Cards, two were grayed out. I looked at the other two dimensions; market opportunity and operational strength, and the company was dazzling green. Then and there, I had an aha moment.

The market opportunity was big, and the company was well-managed. I was willing to take the risk of not having the full information!

Risk is being defined in many different ways. For us at Stock Card, the risk is equal to missing data points. With each missing data point, we have one reason to doubt if the company will pull it off and earn a spot in our portfolio. If you measure risk as to the number of missing data points, it is a lot easier to figure out how much risk you will have to take. For us, when a company gets a perfect market opportunity and operational strength scores, we are willing to bear the risk and make a bet. In the case of MuleSoft, it paid off. Here are a few other stocks that are MuleSoft look-alikes and are worthy of a spot in our portfolio:

Have you had a chance to play around with Stock Card's advanced filters? For me, personally, it is one of the best ways to find new investment opportunities. Here is how I used the filters to find MuleSoft's look-alikes:

That's it for this week's Stock Card weekly. It would be great to hear from you and your views about how you decide to take risks. Join us on our Facebook group and let's have an intelligent investing conversation. More than 2000 intelligent investors have already joined us and we have fun discussing new investment ideas every day! Intelligent investing never stops!

This week thanks to several of our community members we published 22 new Stock Cards. Make sure to submit your Stock Card request as you explore new investment opportunities! As always, you know that sharing this email with a friend or two makes the gods of investing smile! :) ​

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