Hi a few simple tricks I use while checking the firm
-is the firm held by the promoter directly or through a holding firm. If it is through a holding firm and that is privately held, it is difficult for us to know about it and it is a minus.
-what are related party transactions - if there are sales subtract the related sales,if costs add the costs then take the adjusted intrinsic value
-has the company given any deposits or taken loans from subsidiaries or holding companies
-does the company pay a very large royalty to parent firm just like that
-is the promoter salary ex of dividend {because this is shared with shareholders} rising faster than profits
-who are the independent directors are they on reputed firms.
-is the promoter a page 3 type, big minus though this is my personal view
-is the promoter unnecessarily pledging shares and is interested in real estate
-have they been fined for frauds etc in watchoutinvestor database.
-is the company involved in government projects etc especially in states like Bihar, North East etc
-type company and promoter name with words like problem, fraud, default etc type negative adjectives in google
-check equitydesk old threads
-does the management suffer from title inflation. For example does everybody have a title starting with Chief or President. For e.g in Pantaloon they had a Chief Belief Officer who used to tell ACK stories
-is the company giving dividend even when debt is high (e.g HCC
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-does the promoter focus more on capital structure timepass rather than improving operations e.g Munna Mobile
unfortunately none of these would help us with Satyam types, but I guess someting is better than nothing. And after some time this does not take more than 15 mins per company guaranteed.
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ha ha ha
