Free AI web copilot to create summaries, insights and extended knowledge, download it at here

Abstract

">3. How they run</h2><h1 id="c3d7">WHAT they do</h1><ol><li>What industry is this company in?</li><li>What areas do they do business in?</li><li>What products do they offer?</li><li>What is their market, and how big is it?</li><li>What are their main sources of revenue? (concentration)</li></ol><h1 id="f79d">WHY they exist</h1><ol><li>What makes them stand out? (sustainable competitive advantage)</li><li>Why are they playing in their business areas? (capabilities)</li><li>Why did they start in the first place? (mission, vision, value add)</li><li>Why are customers choosing them?</li><li>Why are they able to stay in business? (profitability, costs, financials)</li></ol><h1 id="eb2e">HOW they run</h1><h2 id="710f">Strategy</h2><ol><li>How are they acting on their mission & vision?</li><li>How are they directing their focus short-term & long-term?</li><li>How are they prioritizing their projects, investments, business units?</li><li>How are they addressing high-level strategic risks?</li></ol><h2 id="9f7a">Structure</h2><ol><li>Industry structure: saturation, concentration, competitive position, bargaining power, threat of new entrants, etc.</li><li>Company structure: subsidiaries, geographies, etc.</li><li>Organizational structure: proportion & size of divisions show where their focus is (ie. how many people are in R&D vs. Sales?)</li><li>Management: competency, experience, past record, compensation policy</li><li>Capital structure: equity vs. debt, major shareholders, recent changes (ex. management increasing shareholding is often a sign of confidence)</li></ol><h2 id="9dec">Operations</h2><ol><li>How did they set up the

Options

ir supply chain?</li><li>How did they set up their processes?</li><li>How do they control efficiency, quality, and productivity in operations?</li></ol><h2 id="c741">Risks</h2><ol><li>How are they managing their legal, competitive, supply chain, operational, financial, and regulatory risks?</li><li>Has risk management in each area been effective? What is there to prove that?</li><li>If something catastrophic happened today to the company, its industry, or the economy as a whole, can they handle it, and how?</li></ol><h2 id="7486">A Final Word — Don’t Get Lost</h2><p id="b53d">I think the most dangerous thing about researching a company is getting too caught up in the framework. The series of questions I compiled should only act as a guide and are by no means comprehensive.</p><figure id="f575"><img src="https://cdn-images-1.readmedium.com/v2/resize:fit:800/0*ahy5ih3p6nH-5XS2"><figcaption>Photo by Daniel Jensen</figcaption></figure><p id="14dc">As a researcher, we need to exercise our own judgment on what’s important and what’s not, depending on the type of company, type of industry, and what information matters most to us in the first place. So, be sure to <b>adapt this list of questions to your specific situation.</b></p><p id="0485">My apologies for not having time to explain each question in depth — I’ll get to it in later articles. Also, I’ll keep updating this list as I test out what works and what doesn’t in my own research.</p><p id="ac8a"><i>As always, I hope this was helpful, and I’d love to hear from you and stay connected with you. Feel free to let me know your thoughts via message or in the comments.</i></p></article></body>

How to Research a Company Before Buying Their Stock

Who is this article for?

If you’ve long wanted to invest in stocks but don’t know where to start or want to make more informed investment decisions, then this article is for you.

If company research is part of your job (or your dream job) — like consulting, venture capital, private equity, high finance, or marketing — you’ll also benefit from this article.

Company research is so valuable because it informs us to make big decisions better — on top of being a marketable skill to employers.

Although I’ve had some exposure to company research, I’m learning how to do it better, and I’m here to share the insights I compiled in the process.

If you’re still with me, let’s get started.

The three-part process I follow to understand a company can be summarized by What-Why-How.

At a very high level, this translates to:

1. What they do

2. Why they exist

3. How they run

WHAT they do

What industry is this company in?
What areas do they do business in?
What products do they offer?
What is their market, and how big is it?
What are their main sources of revenue? (concentration)

WHY they exist

What makes them stand out? (sustainable competitive advantage)
Why are they playing in their business areas? (capabilities)
Why did they start in the first place? (mission, vision, value add)
Why are customers choosing them?
Why are they able to stay in business? (profitability, costs, financials)

HOW they run

Strategy

How are they acting on their mission & vision?
How are they directing their focus short-term & long-term?
How are they prioritizing their projects, investments, business units?
How are they addressing high-level strategic risks?

Structure

Industry structure: saturation, concentration, competitive position, bargaining power, threat of new entrants, etc.
Company structure: subsidiaries, geographies, etc.
Organizational structure: proportion & size of divisions show where their focus is (ie. how many people are in R&D vs. Sales?)
Management: competency, experience, past record, compensation policy
Capital structure: equity vs. debt, major shareholders, recent changes (ex. management increasing shareholding is often a sign of confidence)

Operations

How did they set up their supply chain?
How did they set up their processes?
How do they control efficiency, quality, and productivity in operations?

Risks

How are they managing their legal, competitive, supply chain, operational, financial, and regulatory risks?
Has risk management in each area been effective? What is there to prove that?
If something catastrophic happened today to the company, its industry, or the economy as a whole, can they handle it, and how?

A Final Word — Don’t Get Lost

I think the most dangerous thing about researching a company is getting too caught up in the framework. The series of questions I compiled should only act as a guide and are by no means comprehensive.

As a researcher, we need to exercise our own judgment on what’s important and what’s not, depending on the type of company, type of industry, and what information matters most to us in the first place. So, be sure to adapt this list of questions to your specific situation.

My apologies for not having time to explain each question in depth — I’ll get to it in later articles. Also, I’ll keep updating this list as I test out what works and what doesn’t in my own research.

As always, I hope this was helpful, and I’d love to hear from you and stay connected with you. Feel free to let me know your thoughts via message or in the comments.