F/A, T/A or Combo?
- Thread starter ceasar73
- Start date
Hi nizar - which books (if any) do you recommend for a beginner?
thanks.
ceasar.
1. Alexander Elder - Trading for a living
2. Van Tharp - Trade your way to financial freedom
3. Stan Weinstein - Secrets to profiting in bull and bearmarkets
The fundamentalists do loose me on one point however, I agree that the management of a company is super important and that it would be best to invest in a company with a great management team....BUT how does an investor make this assessment of a companies management team? Unless you have worked with them closely, I would suggest it is near impossible to pick a bad,good or great manager. I would love to hear how the fundies amongst us are able to do this?? Please let me know if I am missing something when it comes to assessing management teams.
ceasar,
This is taken from an excellent book called A wonderful company at a fair price for those interested in F/A. The following is a good checklist of what to look for in identifying bad management.
[*]A fondness for empire-building with overpriced acquisitions that permanently diminish ROE.
[*]The use of share buy-backs to support the price rather than paying suppliers or reducing debt.
[*]Unbridled and unfounded optimism, leading to irresponsible actions.
[*]A lack of full and proper disclosure. Failure to keep the market informed ahead of time, and reluctance to highlight the negatives and take responsibility for bad decisions.
[*]Misrepresentation - failing to revalue assets to market value or make proper provision in the accounts for replacement cost.
[*]The payment of unfranked dividends when the company needs additional capital.
[*]A failure to think as proprietors.
- Various naive acts of share price promotion, including splitting shares under the guise of bonus issues, or the stated intention of making the stock more marketable.
- The employment of remuneration systems such as options, that not only make an investment in the business less viable, but also provide incentives for management to work against shareholder's interests.
- The payment of dividends that could be beneficially reinvested in the business.
- The retention of profits that do not add sufficient value to the business and therefore would be more beneficially distributed as dividends.
The author goes on to say that nearly all companies have at least 2 of these traits but that the first 7 (highlighted in bold) are bad omens whilst the others you may choose to live with - at least for a while.
If you are looking for good management traits have a look at Westfield Holdings (WDC) as a case study in how to run a very successful well managed business.
Julia
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Hi Snake,
Yep, the weather is wonderful, but bring your own water. I will PM you.
Plenty of ways,
In addition to the list above,
Capitalising costs
Changing depreciation rates
raising capital to pay dividends
just to name a few.
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And all the examples dhukka provided are found in the Financial results.
The financial results are the managements scorecard.
Bad score = bad management.
jog on
d998
The financial results are the managements scorecard.
Bad score = bad management.
jog on
d998
Found this site :
http://www.directorstransactions.com.au
is there any use in knowing the moves of company directors?
does anyone know of a better source for type of information?
thanks
ceasar.
http://www.directorstransactions.com.au
is there any use in knowing the moves of company directors?
does anyone know of a better source for type of information?
thanks
ceasar.
Caesar,
Just took a quick glance at that site it seems it only covers a certain amount of companies. You can access all director's interests notices for all companies in the announcements section of www.asx.com.au
btw. If you are looking for a case of blatant mismanagement, go back and read the last 6 months of announcements for AWS culminating in their application for voluntary administration today.
Just took a quick glance at that site it seems it only covers a certain amount of companies. You can access all director's interests notices for all companies in the announcements section of www.asx.com.au
btw. If you are looking for a case of blatant mismanagement, go back and read the last 6 months of announcements for AWS culminating in their application for voluntary administration today.
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