Thursday, September 12, 2013

Reminders of things to do before I initiate a position

This is a reminder for myself to do due diligence before initiating a position. Sometimes I like a company from the first review and I might buy something on impulse, or what some will say, be trigger happen.

1) Check latest important metrics.

-Gearing level, assets levels, FCF, earning resilience, and depending on what  is the story of the company and reason for buy, the dividend yield, PE, PB or FCF.

2) Excel list for numbers

-Trend for capex

-Trend for revenue, GP, NP, margins for all segments 

- Quarters inventories, receivables, parables 

3) Read all announcements made by company in the last five years. Look for 

- Shares sale

-Corporate actions

-Acquisitions and disposals

-Renewal of contracts, update of order books

-Management movement; resignations and designations

4) Read the AR and the accompanying footnotes.

- Capital management

- Management pay

- Business review and future plans (Track their track records)

5) Read the prospectus, particularly important if it has history of less than 5 years. 

- Risks

- Major customers

- Reits (Fees structure)


Well, there is no end to it, keep digging and will understand the story better. 

The problem is, I am a lazy person, I usually do all 5 after I buy, motivation to move, muhahaha... Stupid, isn't it


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