The Misfits: ExlService Holdings (EXLS)

Sometimes, even the "too hard" stocks are worth extra attention.

Hercules and the Lernaean Hydra, Gustave Moreau, 1875/76, oil on canvas (Art Institute of Chicago)

How “hard” is your “too hard” pile?

Being a good investor requires a decent helping of introspection. Knowing one’s strengths and limitations reduces the risk of a hubristic error. A component of introspection is being able to walk away from an investment idea when it becomes too challenging. Whether it is because the industry is more complex than initially thought (banks and healthcare frequently fit this description), the way it makes its money isn’t simple, or it requires insight into global markets where we have limited data, there are plenty of instances where we’re probably better off tossing a stock in the “too hard” pile.

That same introspection keeping us from tackling a challenging subject also calls us to expand our knowledge base. We need personal growth as much as we need portfolio growth.

Tech and tech-adjacent companies frequently end up in the “too hard” pile for me. I have an engineering background, but there isn’t a lot of skill transfer between wastewater treatment design and cybersecurity software protocol.

That should make me pickier about investing in tech, but that doesn’t mean I should avoid the sector altogether.

So, let’s call this a running journal on unpacking a business that would often land in my “too hard” pile: ExlService Holdings (NASDAQ: EXLS). It took me four readthroughs of the data analytics and AI implementation specialist’s business description to get a basic idea of what the company does.

I think it was worth it.

Let’s dig in…

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