Lot of interest in US Listed stocks, so here is a thread on How to research them Independently ๐งต๐
Before we get started, a friendly warning, US Stock Market is a true 'free market' and unlike the ones we are accustomed to in India.
There are no training wheels (circuit filters, ASM etc.) so its highly imperative that you do deep research and build that important conviction to endure days where stocks drop by > 25% in a single day (happens more frequently than you may think!)
How to build that conviction?
Through research and this is how to do it โคต๏ธ
<You can use this format for any company, it just works better for US Listed companies as they have more easily accessible data available on them>
Through research and this is how to do it โคต๏ธ
<You can use this format for any company, it just works better for US Listed companies as they have more easily accessible data available on them>
Step 1: Start with the Basics
I rank myself on a scale of 1 to 10 for every company I research.
1 means 'I only know the name of the company and nothing else.' 10 means 'I am the CEO and can run the entire operations.'
The goal is to reach 7 before making an investment.
I rank myself on a scale of 1 to 10 for every company I research.
1 means 'I only know the name of the company and nothing else.' 10 means 'I am the CEO and can run the entire operations.'
The goal is to reach 7 before making an investment.
You will never reach Level 10 unless you work inside the company.
The most basic place to start is the Company's Website, followed on by the Investor Page
Most companies have a dedicated Investor Landing Page which can be accessed via adding the prefix 'ir' to their domain name
Example
ir.companyname.com
Most companies have a dedicated Investor Landing Page which can be accessed via adding the prefix 'ir' to their domain name
Example
ir.companyname.com
On the investor page you will find a few basic things
1. Latest Investor Presentation
2. Webcast for Latest Investor Meet
3. Quarterly or Annual Result Report (which ever is more recent)
4. Any latest News, Press Releases etc. about the company
1. Latest Investor Presentation
2. Webcast for Latest Investor Meet
3. Quarterly or Annual Result Report (which ever is more recent)
4. Any latest News, Press Releases etc. about the company
Here is an example of a typical Investor Page from one of my investee companies Coupang $CPNG
Going through the investor page will give you bare basic idea about the company, its history, products, industry it operates in and the financials.
Congratulations you have cleared Level 1 and can score yourself as a 2 on our previous discussed scale of 1 to 10.
Congratulations you have cleared Level 1 and can score yourself as a 2 on our previous discussed scale of 1 to 10.
Things get a bit harder from here on.
To go from Level 2 to Level 3, you need to first understand the industry a company is operating in.
Who are its competitors?
How big is the market in dollar terms?
What is the growth rate of the company, its peers, and the industry itself?
Who are the disruptors?
Who are its competitors?
How big is the market in dollar terms?
What is the growth rate of the company, its peers, and the industry itself?
Who are the disruptors?
A few good sources exist to find this information in depth
1. IPO Filings of the companies operating in the Industry
2. Industry Reports by Consulting Firms like McKinsey, BCG, Bain
3. YouTube videos by Respective Industry Associations
1. IPO Filings of the companies operating in the Industry
2. Industry Reports by Consulting Firms like McKinsey, BCG, Bain
3. YouTube videos by Respective Industry Associations
At this stage you are not looking to become the subject matter expert in the industry dynamics but learn as much as you can about the current lay of the land.
An important tool available to search all US Listed company filings is EDGAR
EDGAR is a free public database maintained by SEC to help common investors search for all types of filings by companies, mutual funds etc.
In US, companies file with the regulator instead of the exchange (like they do in India).
You can access EDGAR at sec.gov
In US, companies file with the regulator instead of the exchange (like they do in India).
You can access EDGAR at sec.gov
Few important documents to look for on EDGAR
10 K - Annual Reports
10 Q - Quarterly Reports
S 1 - New IPO Filing
11 K - Insider Buying
13 F - Quarterly Filings of Institutional Investors
10 K - Annual Reports
10 Q - Quarterly Reports
S 1 - New IPO Filing
11 K - Insider Buying
13 F - Quarterly Filings of Institutional Investors
Once you have learned about the industry, you have crossed Level 3 and now can proceed to Level 4 and 5.
Level 4 : Learn about the Financials
Level 5 : History of the Company
Level 4 : Learn about the Financials
Level 5 : History of the Company
Level 4 is all about Financials
There are lot of tools like tikr.com, koyfin.com and ycharts.com to help you with this task.
Free versions of these tools are enough to get a general sense of the financials.
There are lot of tools like tikr.com, koyfin.com and ycharts.com to help you with this task.
Free versions of these tools are enough to get a general sense of the financials.
To learn history of the company, documents like Annual Reports, IPO Filings help.
If the company has raised some capital before listing itself you can check for that history too on tools like Crunchbase to understand what sort of investors did the company attract in the past.
If the company has raised some capital before listing itself you can check for that history too on tools like Crunchbase to understand what sort of investors did the company attract in the past.
Before you reach Level 7 and get enough conviction to invest, you need to cross Level 6 - which has to do all about Management and Earning Triggers.
To me, this is the most important level of them all.
To me, this is the most important level of them all.
You can get a sense about the management from these sources
Glassdoor - Understand the Employee and Workplace Feedback
Blind - Anonymous feedback and inside view on the company
LinkedIn - History of the Management
Media Interviews and Twitter
Glassdoor - Understand the Employee and Workplace Feedback
Blind - Anonymous feedback and inside view on the company
LinkedIn - History of the Management
Media Interviews and Twitter
To understand the Earnings Triggers, there is unfortunately no shortcut but to go through the quarterly concalls, annual reports and industry changes that can act as tailwinds to the company later.
Final step before you can invest is to check the social media chatter.
Below websites are good places to source opinions on the company
1. Seeking Alpha
2. YouTube
3. Twitter
4. Substack
Below websites are good places to source opinions on the company
1. Seeking Alpha
2. YouTube
3. Twitter
4. Substack
Once you have completed all of the above, you are in a good position to independently judge whether investing in the said company is a good idea or not.
It really does take all the above effort & much more
Independent investing in US stocks is a 10x harder just cause its the big league
If you're not inclined to spend so much effort, my advice is stick to index funds or hire a financial advisor
End of Thread.
Independent investing in US stocks is a 10x harder just cause its the big league
If you're not inclined to spend so much effort, my advice is stick to index funds or hire a financial advisor
End of Thread.
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