- Investment strategies
- Why invest in the stock market?
- Buy and hold or technical analysis? Why you need an investment plan
- Value investing and short selling in volatile markets
- Using technical analysis to support value investing
- Investing in the unexpected
- Franking credits, explained
- What is dividend stripping and is it a sensible strategy?
- Investing in quality IPOs
- How to invest in stocks that benefit from a moving Australian dollar
- Reasons to avoid bonds when interest rates are low
- How value investors use Skaffold
- Quality, growth and value = a winning strategy
- Know your investor type and boost your performance
- Technical + fundamental analysis = better buy and sell decisions
- Fundamental investing
- Value investing and the price earnings ratio
- Intrinsic valuation models and methodology
- Value investments or value traps?
- How to find value stocks in a bull market
- Find value investments in expanding markets
- Why capital raisings struggle to add investment value
- How to value an insurance company
- Top stocks
- 5 qualities of top stocks
- How to find stocks with a competitive advantage
- Why return on equity is the best measure of business performance
- Using cash flow to find value investments
- Finding high quality dividend stocks
- Debt is not always a dirty word
- Why Skaffold share investment software makes sense
- Using economic factors to uncover the best investment options
- How do experts find top stocks to invest in?
- Investing in global stocks
- How to invest in international shares on global stock markets
- Benefits of investing in international shares
Monitoring business performance in your portfolio
When you buy shares, you are actually buying into a business. Are your managers working for you?
It’s easy to forget sometimes that when you buy shares, you’re actually buying a piece of a business.
With all the noise that comes from the stock market, removing yourself from the day-to-day rhetoric can be a challenge.
Indeed, investing in a business listed on the stock market is no different to acquiring 50 per cent of your local newsagency. Both represent part-ownership of a business.
How well are your managers managing?
When you buy a piece of a business, you’re relying on the leaders of that business to operate it with your interests at heart (most of the time it works out).
Here’s a simple process you can follow to monitor the performance of the managers of your businesses.
Step 1: Get your hands on as many Annual Reports as you can find – 10 years is a good start – and print off the Chairman’s and Managing Director’s report from each.
Step 2: Create two piles, one for the Chairman’s report and one for the Managing Director’s. Put the most recent reports at the bottom of each pile, and the oldest on top.
Step 3: Start reading. Read the reports like you’d read a book, from cover to cover.
Step 4: Time to do some thinking…
What did management say they were going to do in 2005? By 2006, did they achieve what they set out to do?
How have their views of the business changed? And the competitive landscape?
Do the reports mention any ongoing issues? Project delays, debt collection issues and a changing market place are a few things to look out for.
Is the Managing Director who wrote the report in 2005 still writing the report today, or is the company churning through senior management? Changing management styles can severely disrupt the underlying business and impact staff retention.
Step 5: Finally, follow the transactions of the company’s directors.
If you find a situation where you feel the business’ prospects have deteriorated and management are selling, that can only reinforce your analysis.
If however you believe the business has bright prospects, management’s decision to sell may be of a personal nature and while it should be investigated, it may not necessarily be a reason for alarm.
Use Skaffold to focus on the best businesses and your job as your own private fund manager becomes a whole lot easier.
For more tips on monitoring your managers download Skaffold's free whitepaper.